Rituximan wrote: That could be because I still have a lot of reading to do on here, but I was wondering if there might be reasons for preferring investment trusts over ETFs or vice versa? I have read most of Lars Kroijer's book now, and that seems quite keen on ETFs.
ITs Diversification/Balance.
One of the tenets of HYP investing is to diversify amongst different sectors by capital weight.
Investing in the FTSE100 using an ETF is easy and low cost. It also comes skewed in terms of capitalisation towards Oil, Miners, etc. So while it may be diversified in terms of the number of stocks, it is somewhat too concentrated by sector.
In the lead up to the GFC, the FTSE100 was very dominated by financials - in retrospect, not a great position to be in.
Generalist Income ITs, such as City Of London Investment Trust CTY do seem to be a little more balanced.
ITs Lower income volatility
ITs have the ability to borrow money, and also to park earnings in reserves. They use this to 'smooth' dividends.
CTY make a big issue of having held or increased dividends every year for >50 years.
Easier to manage if you are living off the income provided
ETFs Lower cost
ETFs tend to run lower costs