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  • FIRST POST
    • Robie
    • By Robie 6th Oct 17, 3:21 PM
    • 131Posts
    • 28Thanks
    Robie
    Lindsell Train
    • #1
    • 6th Oct 17, 3:21 PM
    Lindsell Train 6th Oct 17 at 3:21 PM
    Hi

    I previously held Lindsell Train Global Equity Income Fund in my portfolio. Since then I had to sell it (so as to not to pay high exit fees) when I moved from HL to IWeb.

    I am thinking of adding it to my portfolio again so:
    1. Should I buy Lindsell Train Global Equity Income Fund or
      Lindsell Train Investment Trust plc (The) (LTI)?
    1. What is the difference between them?

    Thanks.
    Robie
    Save £8k in 2013, Num 046, £5000/£8000 (received £2000 unexpectedly from someone)
Page 1
    • ColdIron
    • By ColdIron 6th Oct 17, 3:57 PM
    • 4,256 Posts
    • 5,385 Thanks
    ColdIron
    • #2
    • 6th Oct 17, 3:57 PM
    • #2
    • 6th Oct 17, 3:57 PM
    You mean what's the difference between a global OEIC with an ongoing charge of about 0.75% and a UK focused investment trust with an OCF of over 3% trading at a premium above 20%?

    I would suggest that reading their respective fact sheets would be the very least you could do before parting with any cash
    • Robie
    • By Robie 6th Oct 17, 4:01 PM
    • 131 Posts
    • 28 Thanks
    Robie
    • #3
    • 6th Oct 17, 4:01 PM
    • #3
    • 6th Oct 17, 4:01 PM
    You mean what's the difference between a global OEIC with an ongoing charge of about 0.75% and a UK focused investment trust with an OCF of over 3% trading at a premium above 20%?

    I would suggest that reading their respective fact sheets would be the very least you could do before parting with any cash
    Originally posted by ColdIron
    Thanks Coldy.

    You are correct, I should have done some reading. Jumped the gun before reading up on it.
    Last edited by Robie; 06-10-2017 at 4:13 PM.
    Save £8k in 2013, Num 046, £5000/£8000 (received £2000 unexpectedly from someone)
    • bostonerimus
    • By bostonerimus 6th Oct 17, 6:15 PM
    • 1,933 Posts
    • 1,273 Thanks
    bostonerimus
    • #4
    • 6th Oct 17, 6:15 PM
    • #4
    • 6th Oct 17, 6:15 PM
    I really think people should avoid investment trusts. Their discount/premium, high fees and freedom to use borrowing make them a bit opaque for the average investor.
    Misanthrope in search of similar for mutual loathing
    • chiang mai
    • By chiang mai 6th Oct 17, 11:36 PM
    • 88 Posts
    • 17 Thanks
    chiang mai
    • #5
    • 6th Oct 17, 11:36 PM
    • #5
    • 6th Oct 17, 11:36 PM
    I'm curious why you think you would have incurred exit fees since the prospectus only allows for a discretionary maximum of 2% at times of net subscriptions, aka a run on the fund?
    • Alexland
    • By Alexland 7th Oct 17, 7:22 AM
    • 2,561 Posts
    • 1,939 Thanks
    Alexland
    • #6
    • 7th Oct 17, 7:22 AM
    • #6
    • 7th Oct 17, 7:22 AM
    The OP is probably refering to the HL in specie transfer charge rather than an exit charge on the fund itself.
    • planteria
    • By planteria 8th Oct 17, 10:03 AM
    • 5,000 Posts
    • 1,110 Thanks
    planteria
    • #7
    • 8th Oct 17, 10:03 AM
    • #7
    • 8th Oct 17, 10:03 AM
    i'd have thought so too. Robie might want to confirm.
    • MPN
    • By MPN 8th Oct 17, 4:07 PM
    • 254 Posts
    • 90 Thanks
    MPN
    • #8
    • 8th Oct 17, 4:07 PM
    • #8
    • 8th Oct 17, 4:07 PM
    I really think people should avoid investment trusts. Their discount/premium, high fees and freedom to use borrowing make them a bit opaque for the average investor.
    Originally posted by bostonerimus
    A lot of forum users on here invest in IT's so maybe it's not a great policy advising people in such general terms to 'avoid IT's'!
    • jimjames
    • By jimjames 8th Oct 17, 8:17 PM
    • 12,649 Posts
    • 11,312 Thanks
    jimjames
    • #9
    • 8th Oct 17, 8:17 PM
    • #9
    • 8th Oct 17, 8:17 PM
    A lot of forum users on here invest in IT's so maybe it's not a great policy advising people in such general terms to 'avoid IT's'!
    Originally posted by MPN
    Totally agree. ITs definitely have a place in most portfolios, discounts are an advantage not a negative. What's not to like about buying £1 of assets for 90p!
    Remember the saying: if it looks too good to be true it almost certainly is.
    • bowlhead99
    • By bowlhead99 8th Oct 17, 9:51 PM
    • 7,975 Posts
    • 14,510 Thanks
    bowlhead99
    Totally agree. ITs definitely have a place in most portfolios, discounts are an advantage not a negative. What's not to like about buying £1 of assets for 90p!
    Originally posted by jimjames
    True. But those ITs can still move to an even larger discount by the time you want to sell. If the £1 halves in value and the public lose faith in the strategy even further, your selling point when you want to get out might only be 40p, which is not a great return on your 90p cost.

    And for the one specifically mentioned on this thread (Lindsell Train) a major component of the portfolio is an investment in an unlisted company (the LT management company itself) whose 'fair value' is inherently difficult to assess even if you had all the private company data - rather than just the limited public data you can actually access - so it is tricky to come up with a reasonable personal assessment of NAV before you even start to decide whether you are happy to pay the implied premium.
    • TBC15
    • By TBC15 9th Oct 17, 6:52 PM
    • 489 Posts
    • 250 Thanks
    TBC15
    Isn,t Lindsell train IT the one Nick said he wouldn't buy at the moment?
    Last edited by TBC15; 27-04-2018 at 6:21 PM. Reason: spelling
    • LookingForTheSun
    • By LookingForTheSun 27th Apr 18, 10:20 AM
    • 7 Posts
    • 0 Thanks
    LookingForTheSun
    I was going to invest in LT class D income on HL, the fund price has increased from £1.6 to £2 since the start of Jan, a 20% premium, looking at a sample of the top 10 holdings (Pepsi, Diageo, Unilever, etc) they've lost around 6% since the start of the year. I can't see a good justification for the price increase, other than people jumping on the band wagon due to advertising and the fund being listed in some top 10 lists.
    • greenglide
    • By greenglide 27th Apr 18, 10:34 AM
    • 3,103 Posts
    • 2,020 Thanks
    greenglide
    Lindsell Train Global Equity Class D is a fund, not an IT.

    Under these circumstances use of the term "20% premium" isn't appropriate.

    The price of a fund (it is an OEIC) is determined solely by the market value of its holdings.

    Whether or not it is popular or not doesn't come into it.
    • ColdIron
    • By ColdIron 27th Apr 18, 10:43 AM
    • 4,256 Posts
    • 5,385 Thanks
    ColdIron
    3 month cumulative performance shows an increase of 1.1%. Could you be comparing pounds to dollars or euros?

    This may be of interest, price today - £2.02, price 02/01/2018 - £1.99

    https://markets.ft.com/data/funds/tearsheet/historical?s=IE00BJSPMJ28:GBP
    Last edited by ColdIron; 27-04-2018 at 11:00 AM.
    • firestone
    • By firestone 27th Apr 18, 10:45 AM
    • 246 Posts
    • 106 Thanks
    firestone
    I really think people should avoid investment trusts. Their discount/premium, high fees and freedom to use borrowing make them a bit opaque for the average investor.
    Originally posted by bostonerimus
    You could say the same about passive investing by the amount of questions askedThe more you read the more you learn about any investment
    • bowlhead99
    • By bowlhead99 27th Apr 18, 12:59 PM
    • 7,975 Posts
    • 14,510 Thanks
    bowlhead99
    I was going to invest in LT class D income on HL, the fund price has increased from £1.6 to £2 since the start of Jan, a 20% premium, looking at a sample of the top 10 holdings (Pepsi, Diageo, Unilever, etc) they've lost around 6% since the start of the year. I can't see a good justification for the price increase
    Originally posted by LookingForTheSun
    The answer is simple, you are looking at a price change from Jan 2017 over which time it has gone up from the £1.60 range to the £2.00 range.

    If you look at the performance from the start of January 2018 , the almost five month period over which you were looking at Pepsi or Unilever's price, you'll see it was £2 then, which is similar to what it is now.

    It's an open-ended fund priced daily in line with the values of the assets it holds. So it's value is justified by what it owns, because it's value *is* what it owns.

    That's a different system to the Lindsell Train investment trust plc, which is valued by the stock market based on supply and demand. A large component of the value of the investment trust is its ownership of the Lindsell Train management company, which is a private business and buyers of the trust will all have their own opinions on what that's worth, aside from the merits of being invested in Unilever and Diageo and Nintendo etc.

    So the investment trust (but not the global equity fund you're talking about) might have a price on the stock market that is higher than the declared value of the underlying assets.

    other than people jumping on the band wagon due to advertising and the fund being listed in some top 10 lists.
    The fact that an open ended fund like lindsell reason global equity is popular or heavily advertised by HL etc increases the amount of money invested in the fund and generally might be expected to lower the operating costs per pound invested (to some extent) as the fund gets bigger over time. It doesn't change the price you pay, because the price you pay is based on the value of its assets and liabilities at the point you invest.

    Which is different from the price you might pay for their investment trust, because the price to buy the investment trust is based on supply and demand for the shares of the trust on the open market.
    Last edited by bowlhead99; 27-04-2018 at 1:02 PM.
    • LookingForTheSun
    • By LookingForTheSun 27th Apr 18, 4:39 PM
    • 7 Posts
    • 0 Thanks
    LookingForTheSun
    Thanks bowlhead, my mistake - I had the wrong dates in mind when I made that statement! I'll take another look at the fund before - I'm looking for a long term investment that's "relatively" safe with a return of around 7%, this seems like one of the better options on the market
    • bowlhead99
    • By bowlhead99 27th Apr 18, 9:04 PM
    • 7,975 Posts
    • 14,510 Thanks
    bowlhead99
    Thanks bowlhead, my mistake - I had the wrong dates in mind when I made that statement! I'll take another look at the fund before - I'm looking for a long term investment that's "relatively" safe with a return of around 7%, this seems like one of the better options on the market
    Originally posted by LookingForTheSun
    It is a decent fund IMHO. However:

    Funds that invest 100% of their money into equities (company shares) are considered riskier and more volatile than investment funds which invest into other asset classes too (like bonds, commercial property and other types of stuff)

    Then, compared to the average fund that invests around the world exclusively in equities, it is a higher risk option than average because the manager selects a pretty concentrated set of stocks that he like to invest in, with only between 20 and 35 holdings at any point in time. 60% of the fund was in just ten companies at the end of March. Yet there are tens of thousands of companies in the world to choose from. So the manager is following his personal convictions strongly and in a global market crash you should not be in any way surprised to see the value drop by more than a half. The fund's objective is to deliver capital growth and income over the long term but there's no guarantee it will do that and unlike more defensively-positioned funds it does not have an objective of preserving capital.

    So, if you are describing it as a "relatively safe" investment, that needs a lot of context of what you are comparing it to.

    Sure, a fund that invests in Iranian tourism, Chinese copyright infringement gangs or Nigerian identity thieves, or a fund that invests only in private startup businesses which aren't listed on any stockmarket, is probably "relatively unsafe" on your scale which rates this fund as "relatively safe".

    However a fund such as this - with only 20-30 investments in businesses such as Nintendo, Heineken, Pepsi and the company that operates the London stock exchange - is not particularly "safe", just because those businesses sound like respectable companies and you've heard of them.

    Over the long term, the fund will probably hit your annualised 7% target if you leave it long enough, like a couple of decades. If you are looking at returns in the factsheets or charts to date, remember the fund only launched in March 2011 - two years after the bottom of the market was reached in the last major global financial crash and was going back up again; it has been relatively good news in world markets for the last seven years straight, with just a few blips along the way. The fund has done very well and exceeded your target by a decent amount, but you haven't seen it go through a worlwide market crash to know whether, if global indexes drop 40%, whether this fund will drop 20% or 60% or more.
    • Filo25
    • By Filo25 27th Apr 18, 9:53 PM
    • 1,502 Posts
    • 2,194 Thanks
    Filo25
    I definitely take the point with regards to the global fund not being tested in particularly challenging market conditions, although would say for what its worth that at least investors might take some comfort from the investment approach having had some exposure to more challenging markets in their standalone Japan and UK funds and from a quick glance at those charts I wouldn't say there was much evidence they had underperformed the respective benchmarks in falling markets.

    Obviously though while the approach may be the same there is clearly a different mix of equities in the global fund.
    • Thrugelmir
    • By Thrugelmir 27th Apr 18, 10:55 PM
    • 58,914 Posts
    • 52,232 Thanks
    Thrugelmir
    I'm looking for a long term investment that's "relatively" safe with a return of around 7%, this seems like one of the better options on the market
    Originally posted by LookingForTheSun
    When you find one let me know. Those are high hurdles to achieve consistently year in year out.

    Hence why diversification is key to investing. Being in the right fund at the right time is nigh impossible.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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