Foreign & Colonial Investment Trust
MPN
Posts: 365 Forumite
The Foreign and Colonial Investment Trust (FRCL) seems to be a particular favourite for many investors in global equities, in fact it has the second highest amount of total assets in the global IT sector with only Scottish Mortgage ahead of them.
FRCL whilst well diversified over a number of regions/sectors and holding over 500 companies with its active management does the performance really merit the fees compared to a good all world index tracker? Why is it so popular?
FRCL whilst well diversified over a number of regions/sectors and holding over 500 companies with its active management does the performance really merit the fees compared to a good all world index tracker? Why is it so popular?
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Comments
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I hold FRCL in my SIPP and it has been a consistent performer over a number of years so I'm happy with it. I wouldn't really consider selling out of F&C to invest in an all world tracker. In my opinion they are completely different investments.0
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I also hold this FRCL and have for some years.
That said its not my only global exposure, (as said it isn't a tracker), and I supplement it to get a different overall geographic allocation.0 -
Does the performance merit the fees?FRCL whilst well diversified over a number of regions/sectors and holding over 500 companies with its active management does the performance really merit the fees compared to a good all world index tracker?
Well, over the 15 years to last Friday (a bull market starting 2003, with one major crash in the middle): after F&C took their fees, you would be left with about 400% net return.
Whereas the total return from the FTSE All-World over that timescale was more like 300%, which is the pure index return before you get someone to construct a tracker fund following that index and charge you fees and operating costs for doing so.
If you extended the timescale to 20 years, F&C is more like 500% after fees whereas FTSE All-World is under 350% before fees. Figures from trustnet.com charting.
So, I think it's fair to say that if your criteria is total return over a long term positive market (and accepting that generally, markets are positive in the long term) you would not be crazy to pay the fee and get the F&C result rather than pay a lower fee for a tracker result.
You can 'prove' whatever you want by cherry-picking timescales of course. But at the end of the day, they are different options.I wouldn't really consider selling out of F&C to invest in an all world tracker. In my opinion they are completely different investments.
Exactly. Using a global index based on country free float market cap of public equities is going to get you a different result than using an active manager to exercise his discretion to select the exposure taken to geographies and industries, using a mix of public and private equities and some gearing when considered appropriate. The latter is more 'expensive' in terms of cost per pound of NAV. But it is not 'wrong' to spend that money to adopt the strategy, if it is a strategy in which you are interested.0 -
I have only held F&C for just over 5 years but I'm very happy with the performance and the Manager. For me personally it works much better than a global index fund but I can understand those that would choose a tracker.0
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If you use this as a global core is there really anything else you need?
People seem to collect global IT's and at some point it must dilute into a tracker?0 -
Happy enough with F&C. It's given me a 55% price gain since just before the referendum, with the dividends on top, helped a lot by the devaluation. In fact I had to sell some and rebuy to crystalise some capital gains along the way. I use Vanguard ETFs for various world area trackers in addition.0
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bowlhead99 wrote: »I think it's fair to say that if your criteria is total return over a long term positive market (and accepting that generally, markets are positive in the long term) you would not be crazy to pay the fee and get the F&C result rather than pay a lower fee for a tracker result.
The problem with considering any active investment is the inability to determine if the outperformance will continue. The danger is you end up chasing the tail of a strategy that used to work.
Alex0 -
May not be the case for the likes of seasoned investors on here but there could be people who see the past performance of passive investing and think that is a strategy that can only continue0
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FRCL whilst well diversified over a number of regions/sectors and holding over 500 companies with its active management does the performance really merit the fees compared to a good all world index tracker? Why is it so popular?
Provides access to Private Equity etc. Doesn't just have holdings in quoted entities.
Often gets overlooked how many large companies have no stock market listing.0 -
True, and the other danger is that the outperformance is the result of taking on additional risk. In some cases that might be appropriate, in others not.The problem with considering any active investment is the inability to determine if the outperformance will continue. The danger is you end up chasing the tail of a strategy that used to work.0
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