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Suggestions on ITs & passive funds?

Closed-end funds and OEICs
LooseCannon101
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Re: Suggestions on ITs & passive funds?

#399399

Postby LooseCannon101 » March 26th, 2021, 11:15 pm

AleisterCrowley wrote:Are you worried about the concentrated risk ?
Genuine question - I have >60% of net worth in various manifestations of Lloyd's (HSDL, Halifax etc)


F&C Investment Trust is well managed, is very large - £4.9bn, has low borrowings, is highly diversified with over 400 individual companies in its portfolio, the fund manager (Paul Niven) has over £1.3m of his own money invested in the trust, and is a closed fund - hence no forced selling as in the Neil Woodford fund.

AleisterCrowley
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Re: Suggestions on ITs & passive funds?

#399400

Postby AleisterCrowley » March 26th, 2021, 11:24 pm

Lloyd's is pretty large (!) but I do worry...

tramrider
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Re: Suggestions on ITs & passive funds?

#399594

Postby tramrider » March 27th, 2021, 6:10 pm

Marky72 wrote:Hi guys,

It is really great being a new member of this forum and am overwhelmed by everyone's ideas and thoughts. I have a question about global tracker funds and IT's if you don't mind :) I am wanting to invest in a few funds/trackers/IT's and was wondering which of the following to invest in for 10 years ish. I would put a lump sum in and leave it, then probably top them up a bit more each new tax year re-investing any dividends. What are your thoughts/opinions on these? Can you rank them ? Are there any others you think I should consider in current climate?

* Monks
* VWRL global tracker
* JP Morgan Global Growth and Income Trust (JGGI)
* F&C
* Fundsmith
* Templeton Emerging Markets IT

Looking forward to hearing back from you,

Mark


As the global ITs are actively managed and selective, they have the opportunity to outperform a 'simple' index tracking global ETF by hopefully choosing mostly winners and rejecting the worst global dross (which is included in the index tracker). You could look at the 5 year total return figures for the ITs on the AIC website and compare them with the 5 year total return figure for VWRL. I think you will find that several of them are beating VWRL.

To conduct an experiment, put 50% in VWRL and 25% each in e.g. JGGI and MNKS. See their relative performance over a couple of years. Then readjust if desired.

Tramrider

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Re: Suggestions on ITs & passive funds?

#399636

Postby Marky72 » March 27th, 2021, 9:04 pm

tramrider wrote:
Marky72 wrote:Hi guys,

It is really great being a new member of this forum and am overwhelmed by everyone's ideas and thoughts. I have a question about global tracker funds and IT's if you don't mind :) I am wanting to invest in a few funds/trackers/IT's and was wondering which of the following to invest in for 10 years ish. I would put a lump sum in and leave it, then probably top them up a bit more each new tax year re-investing any dividends. What are your thoughts/opinions on these? Can you rank them ? Are there any others you think I should consider in current climate?

* Monks
* VWRL global tracker
* JP Morgan Global Growth and Income Trust (JGGI)
* F&C
* Fundsmith
* Templeton Emerging Markets IT

Looking forward to hearing back from you,

Mark


As the global ITs are actively managed and selective, they have the opportunity to outperform a 'simple' index tracking global ETF by hopefully choosing mostly winners and rejecting the worst global dross (which is included in the index tracker). You could look at the 5 year total return figures for the ITs on the AIC website and compare them with the 5 year total return figure for VWRL. I think you will find that several of them are beating VWRL.

To conduct an experiment, put 50% in VWRL and 25% each in e.g. JGGI and MNKS. See their relative performance over a couple of years. Then readjust if desired.

Tramrider

What an excellent suggestion! Many thanks Tramrider!

AleisterCrowley
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Re: Suggestions on ITs & passive funds?

#399641

Postby AleisterCrowley » March 27th, 2021, 9:17 pm

tramrider wrote:
As the global ITs are actively managed and selective, they have the opportunity to outperform a 'simple' index tracking global ETF by hopefully choosing mostly winners and rejecting the worst global dross (which is included in the index tracker).

Tramrider



hopefully choosing mostly winners and rejecting the worst global dross

Ah, if only it were that simple...

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Re: Suggestions on ITs & passive funds?

#399694

Postby Wuffle » March 28th, 2021, 8:31 am

Before dwelling on snatching back 0.22-0.09=0.13%, I would consider the likelihood of FCIT making back the 8.5% discount. Orders of magnitude and all that.
And you get some gearing on the punt overall, which if you believe in it enough to invest in the first place......
I would take FCIT over VWRL when at a good discount.
The level playing field in which actives and passives are measured and compared is, in fact, not level.

W.

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Re: Suggestions on ITs & passive funds?

#399706

Postby Spet0789 » March 28th, 2021, 10:11 am

Wuffle wrote:Before dwelling on snatching back 0.22-0.09=0.13%, I would consider the likelihood of FCIT making back the 8.5% discount. Orders of magnitude and all that.
And you get some gearing on the punt overall, which if you believe in it enough to invest in the first place......
I would take FCIT over VWRL when at a good discount.
The level playing field in which actives and passives are measured and compared is, in fact, not level.

W.


Good post. FCIT has about 10% gearing at 2.5% cost of debt. That and the 8.5% discount are far greater drivers of potential outperformance than a few bp in fees.

To keep the maths easy, assuming a conservative 7.5% long term nominal return and no narrowing of the discount, those two factors will provide over 65bp of out-performance vs an equivalent un-geared portfolio trading at NAV.

At the moment, I prefer FCIT to VWRL or VEVE for these reasons.

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Re: Suggestions on ITs & passive funds?

#399716

Postby Hariseldon58 » March 28th, 2021, 11:01 am

tramrider wrote:
Marky72 wrote:Hi guys,



To conduct an experiment, put 50% in VWRL and 25% each in e.g. JGGI and MNKS. See their relative performance over a couple of years. Then readjust if desired.

Tramrider


Interestingly enough I am in the process of doing something similar with 'real' money.

I have been adjusting my portfolio for a few months into two units, a passive one, bit like a giant LifeStrategy fund, but with nods to factors and a slightly more equal weighting of regions. The second is a collection of my Investment Trust favourites over the years, plus two operating companies Berkshire Hathaway and Brookfield.

Both portfolios have quite a few holdings and both portfolios are low seven figures, I commence April 6th this year, the allocations have been set, the real money is not quite at the set allocations, the reality of some CGT liabilities and money being spread across numerous brokerages/accounts, but the reality is fairly close to the allocation amounts. The investment trust portfolio has a slightly higher risk profile, lacking cash/bonds.

The reality of living in deaccumulation will always cause differences in outcome to the theoretical portfolio, a need to spend money day to day ! However rather than another model portfolio I will be doing it for real, I will add no new investments to either portfolio unless forced to by corporate events. I may drop some investments if I believe there are material changes to the management or outcome, its real money after all !!

I will do a post in Portfolio Review in due course.

GrahamPlatt
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Re: Suggestions on ITs & passive funds?

#399755

Postby GrahamPlatt » March 28th, 2021, 1:06 pm

fisher wrote:I found this article comparing 20 Global Investment Trusts a very interesting read. It is from June 2020.

https://www.itinvestor.co.uk/2020/06/20 ... -compared/


As you say, interesting. Though as to the contention that the easy year’s were the ‘90s, he takes no account of the background high RPI of that decade. Taking a broad view, and with RPI in mind, it looks to me that these ITs performed better in the 2010’s

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Re: Suggestions on ITs & passive funds?

#399843

Postby Peter1B1 » March 28th, 2021, 5:08 pm

Going back to OP Marky72's enquiry, I'd add Bankers IT to the 'stalwart active IT' list, alongside Monks and Fundsmith. I don't follow indexes and am happy to pay for active management as hope money towards achieving my intended investment outcome, over the long term.

I use 5-year CAGR (including yield), as my performance measure and so long as ITs stay the right side of 'reasonable' (I'd say 15% pa on that measure), then I am more content to carry them on as long term core holdings.

Starting in ignorance but after ten years plus of IT investing, I am settling into a comfortable 'salt on the salad' style using core holdings alongside thematics. The 'salt' currently picks up tech, robotics, pharma and private equity. Asia/Pacific is a notable gap in coverage that I am now addressing: but this will be as solid long-term contributions to the 'salad', rather than single-focus themes.

It is very important to have a clear view of what you are trying to achieve - purpose, timeline, accessibility - from which follows acceptance of volatility, appetite for risk and IT selection. Hope this helps. Peter1B1

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Re: Suggestions on ITs & passive funds?

#399862

Postby 1nvest » March 28th, 2021, 5:52 pm

AleisterCrowley wrote:
tramrider wrote:
As the global ITs are actively managed and selective, they have the opportunity to outperform a 'simple' index tracking global ETF by hopefully choosing mostly winners and rejecting the worst global dross (which is included in the index tracker).

Tramrider



hopefully choosing mostly winners and rejecting the worst global dross

Ah, if only it were that simple...

+1

Many try, mathematically maybe half succeed, but factor in high expenses also, often north of 1%, and broadly :( ... But as ever with hindsight you can pick the exceptions that applied over a particular timeframe, just not reliably predict such in advance.

LooseCannon101
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Re: Suggestions on ITs & passive funds?

#400137

Postby LooseCannon101 » March 29th, 2021, 5:39 pm

Peter1B1 wrote:Going back to OP Marky72's enquiry, I'd add Bankers IT to the 'stalwart active IT' list, alongside Monks and Fundsmith. I don't follow indexes and am happy to pay for active management as hope money towards achieving my intended investment outcome, over the long term.

I use 5-year CAGR (including yield), as my performance measure and so long as ITs stay the right side of 'reasonable' (I'd say 15% pa on that measure), then I am more content to carry them on as long term core holdings.

Starting in ignorance but after ten years plus of IT investing, I am settling into a comfortable 'salt on the salad' style using core holdings alongside thematics. The 'salt' currently picks up tech, robotics, pharma and private equity. Asia/Pacific is a notable gap in coverage that I am now addressing: but this will be as solid long-term contributions to the 'salad', rather than single-focus themes.

It is very important to have a clear view of what you are trying to achieve - purpose, timeline, accessibility - from which follows acceptance of volatility, appetite for risk and IT selection. Hope this helps. Peter1B1


15% Compound Annual Growth Rate (CAGR) hasn't been achieved by any investment trust over the long term e.g. 20+ years. 'Reasonable' in my book is about 8% per annum total return (dividends re-invested).

The following article gives the rates of return since 1992.

https://www.itinvestor.co.uk/2020/06/20 ... -compared/


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