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ISA Full - choosing an Investment Trust!?

DoctorW
Posts: 58 Forumite
For those who are already investing in them, can anyone give me a little run-through of how they arrived at the decision for a particular Investment Trust? How did you weigh them up, how do they complement your existing portfolio etc.
I've seen the other forum post regarding the best platform for IT - and Bowlhead (who is usually right on the mark) says buy direct from the fund manager which sounds logical, due to these being non-ISA wrapped investments as I'll be able to fill an ISA every year and will have a bit left over for other investments.
I've got the AIC website bookmarked and have read through a few Monevator articles which cover the benefits of buying into discounted ITs (but only when they are still regarded as good discounted ITs) etc. but that's about the sum of my knowledge and I imagine there is still a lot to learn before making the jump.
I'm generally quite set on the passive investing philosophy, though for an IT would not be completely adverse to paying for active management of the trust. Though wondering if there are many ITs that offer a mix of passive/active investing or any such thing?
For background info (not that i'm expecting anyone to recommend a choice based on this) but i've got about a 25-30 year investing horizon and have recently filled my first S&S ISA in the Vanguard Lifestrategy 100% Equity.
Thanks a lot,
D
I've seen the other forum post regarding the best platform for IT - and Bowlhead (who is usually right on the mark) says buy direct from the fund manager which sounds logical, due to these being non-ISA wrapped investments as I'll be able to fill an ISA every year and will have a bit left over for other investments.
I've got the AIC website bookmarked and have read through a few Monevator articles which cover the benefits of buying into discounted ITs (but only when they are still regarded as good discounted ITs) etc. but that's about the sum of my knowledge and I imagine there is still a lot to learn before making the jump.
I'm generally quite set on the passive investing philosophy, though for an IT would not be completely adverse to paying for active management of the trust. Though wondering if there are many ITs that offer a mix of passive/active investing or any such thing?
For background info (not that i'm expecting anyone to recommend a choice based on this) but i've got about a 25-30 year investing horizon and have recently filled my first S&S ISA in the Vanguard Lifestrategy 100% Equity.
Thanks a lot,
D
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Comments
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If you want passive investments have you considered etf's or why not stick to the funds you are already familiar with - you can hold them outside an isa - probably on the same platform you are using for your isa.
I would never buy into a IT unless it was on a decent discount.0 -
Thanks Pip - had considered buying into the same/similar VLS funds, though would be paying the Vanguard fee, the platform fee plus tax on any gains right? Lot left to think about, probably a long way away from being clued up enough to make a decision here to be honest ha!0
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IMO the LS100% is very light on smaller companies and also a bit light on Emerging Markets so, as these 2 areas have recently sold off but now starting to rise again, it may be an idea to use an IT to buy into one or both areas to balance the mix.
I would choose a provider who offered a range of different IT options within the one account so Aberdeen would probably be top of my list as they are EM specialists but also have some decent smaller company ITs on offer.
Depending on how much per month you want to invest I would probably go for EM first and build a decent position whilst this market is rising and then move into smaller companies in about 12 months when they should be rising again.
Just my opinion thoughOld dog but always delighted to learn new tricks!0 -
plus tax on any gains right?
Only above £11,000 CGT allowance per year.Old dog but always delighted to learn new tricks!0 -
Is there a reason why you particularly want an IT? I'd suggest you first decide what you want to invest in and only then decide on the best way to do that.
A few years ago when there were still decent discounts to be had, I made a lot of posts suggesting people considered ITs. To some extent that ship has sailed, and while many reasons to consider IT's remain, I find myself in the odd position of being in the cautious camp: particularly with many ITs on a historically narrow discounts or even premiums.
I get the impression that some recent new buyers have been looking only at the increasing share price driven in part by narrowing discounts, rather than looking at the underlying NAV. They may be ignoring that discounts move both ways so boosting share prices in a bull market but increasing losses when they turn. The use of leverage that ITs can employ is two edged too.
There have also been changes in relative costs between ITs and UTs, particularly since RDR, so that in some cases the cost advantage of ITs, especially taking into account performance fees, has reduced or in some cases reversed. Popular managers running both ITs and UTs like Neil Woodford and Nick Train now have OEICs with OCFs of 0.60% or less so don't assume ITs will always be cheaper and make comparisons.
That said, with everything equal, my preference is for ITs, just not at current prices (with possibly a few exceptions). Some ITs have buying schemes but the disadvantage is that you usually won't know the price in advance and buy blind. I don't see much point in them when stockbrokers like SVS charge just over a fiver a trade with no account charges.
So certainly consider ITs but do your homework first and understand how they differ from OEICs/UTs.0 -
Westy,
Those two areas are exactly where I was thinking to increase my weightings in - (was asking about Small Cap here previously - https://forums.moneysavingexpert.com/discussion/5019730) though was considering doing so in a recently-opened SIPP.
http://www.invtrusts.co.uk/aam.nsf/investmenttrusts/search
^
This the right page to start off having a look? Could really do with maybe stepping back first and deciding whether these or an Index ETF might be the choice more suitable for me. Kind of lost...again!
Thanks for your reply anyway mate, appreciated.0 -
Rollinghome wrote: »Is there a reason why you particularly want an IT? I'd suggest you first decide what you want to invest in and only then decide on the best way to do that.
Haha - have just refreshed the page after submitting my reply to Westy and seen this. Definitely agree. Lot of reading to do first before I even get to the stage of choosing a particular investment.
The lizard part of my brain half wants to stockpile up my spare cash so that I can put a lumper into an investment if anything goes south in the next couple of years, I do realise the silliness of this. Just seems with so much global political instability yet very little (to me at least) market reaction this, I would expect some sort of drop soon, which would be a good time (oh no he said time!) to enter in. Then my more sound-minded "Time in the market, not timing the market" side of the brain gives me a telling off.
Will get doing my homework anyway Rolling, thanks for the reply.0 -
I prefer ITs to funds and, over the years, have put together a 'basket' of trusts which I hold mainly for the steady and predictable income.
They offer a good way to diversify a portfolio - particularly smaller companies and overseas markets like Asia, Japan etc.
I hold just a couple of trackers - Vanguard All World Income is one - and find that the basket of trusts provides slightly better returns even allowing for the higher annual fees - well, the past 3 yrs in which I have held the trackers.
Tyhe ones I would recommend are Finsbury Growth & Income, City of London, Aberforth Smaller, Bankers, Edinburgh and Murray Intl. Whether they are good value at present, I cannot say but over the longer term they should continue to deliver a decent return.
A couple of sites for further research are diy investor https://www.diyinvestoruk.blogspot.co.uk and John Barons blog https://www.johnbarronportfolios.co.uk also the Motley Fool have an inv. trust discussion board https://www.fool.co.uk0 -
As part of a portfolio of ITs/ETFs/Vanguard funds, you could consider Personal Assets Trust. It aims to attenuate market collapses, recently its %age in equities was only 44%, and then shift into equities to capture the upswings. In other words, it's an active investor, which you might like to balance any passive funds that just track the market. It has a discount control mechanism that means it always trades at round about zero discount. They offer a zero charge ISA and Investment Scheme, so the only charge you pay is the unavoidable stamp duty to HM Treasury.Free the dunston one next time too.0
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If ISas are full, why not put ITs into a pension?0
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