The Lemon Fool

Could someone help me out with getting started with a portfolio of ITs, probably more focussed on growth than income but more likely a mixture of the two, and with some level of diversification. I’m also curious to know if there are any that you might have recommended/bought pre-pandemic that you would not today, and if so why.

Which 5 would you buy today if you were starting from scratch?

Thanks

A little more information from you would help. E.g. What are your goals? What are your timescales? How old are you? What other investments do you already have? What are your pension arrangements? Etc ...

mc2fool wrote:A little more information from you would help. E.g. What are your goals? What are your timescales? How old are you? What other investments do you already have? What are your pension arrangements? Etc ...

It’s for someone in their 60s claiming the state pension but with no other pension provision. They have a steady income from self employment. Half their investable funds are in an index tracker and they’re keen to invest the other half in equities with the main objective of protecting and hopefully growing their funds, income being a secondary consideration. A small basket of ITs might be one relatively low risk way of achieving this.

Obviously hypothetical and in no way proper independent financial advice, however if I was choosing just 5 trusts (excluding etfs) for myself, looking for some growth and income with risk and limited protection in totality across the five, NOT wealth preservation, then I would likely choose the following as a broad spread across different managers:

SSON

JGGI

RCP

HVPE

SAIN.

Please note that all 5 would tumble in any market meltdown and would not protect the capital sum.

thebarns wrote:Obviously hypothetical and in no way proper independent financial advice, however if I was choosing just 5 trusts (excluding etfs) for myself, looking for some growth and income with risk and limited protection in totality across the five, NOT wealth preservation, then I would likely choose the following as a broad spread across different managers:

SSON

JGGI

RCP

HVPE

SAIN.

Please note that all 5 would tumble in any market meltdown and would not protect the capital sum.

Thanks for the ideas thebarns, SSON is the only one of these I'm familiar with. Wonder what's causing the HVPE 24% discount? Different question I know, I'll look into it.

Smithson SSON

Brunner Investment Trust BUT

Caledonia Investments Plc CLDN

Murray International trust MYI

Finsbury Growth and Income Trust FGT

this lot should keep you out of trouble and at the same time provide you with growth and some income.

flyer61 wrote:
Smithson SSON

Brunner Investment Trust BUT

Caledonia Investments Plc CLDN

Murray International trust MYI

Finsbury Growth and Income Trust FGT

this lot should keep you out of trouble and at the same time provide you with growth and some income.

I hold four of these five so I would not argue with that choice. Obviously Brunner could be changed to another big generalist such as Alliance or say F & C. GIves a good spread of different sectors and managers. If pressed I might substitute Rothschild Capital Partners for Murray International as it has a better record on the capital front I think (but a very modest dividend).

Dod

Fluke wrote:....Wonder what's causing the HVPE 24% discount? Different question I know, I'll look into it.

Large (and fluctuating) discounts are common with private equity ITs. The one I hold (SLPE) has varied between -7% and -56% over the past couple of years.

Dod101 wrote:

flyer61 wrote:
Smithson SSON

Brunner Investment Trust BUT

Caledonia Investments Plc CLDN

Murray International trust MYI

Finsbury Growth and Income Trust FGT

this lot should keep you out of trouble and at the same time provide you with growth and some income.

I hold four of these five so I would not argue with that choice. Obviously Brunner could be changed to another big generalist such as Alliance or say F & C. GIves a good spread of different sectors and managers. If pressed I might substitute Rothschild Capital Partners for Murray International as it has a better record on the capital front I think (but a very modest dividend).

Dod

Excellent! Thank you both.

Fluke wrote:

mc2fool wrote:A little more information from you would help. E.g. What are your goals? What are your timescales? How old are you? What other investments do you already have? What are your pension arrangements? Etc ...

It’s for someone in their 60s claiming the state pension but with no other pension provision. They have a steady income from self employment. Half their investable funds are in an index tracker and they’re keen to invest the other half in equities with the main objective of protecting and hopefully growing their funds, income being a secondary consideration. A small basket of ITs might be one relatively low risk way of achieving this.

Ok, well given that background, in particular noting that:

a) state pension with no other pension provision + self employment, that will probably end when they finally decide to "retire"
b) the main objective of protecting and hopefully growing their funds
c) the desire for a relatively low risk way, and
d) that they are already 50% exposed to equities by their index tracker (you don't say which index...)

It seems to me that "the wealth preservers" is what's needed here. The classic ones are as follows (the main links are to the AIC site):

Capital Gearing (CGT) chart
Personal Assets (PNL) chart
Ruffer (RICA) chart
RIT Capital Partners (RCP) chart

CGT is the best in the "wealth preserver" role, as you'll note that it sailed through the 2002/3 and 2007/8 bear markets as if they didn't exist, and has still managed to produce an unexciting but reasonable return over the years. It certainly doesn't shoot the lights out, but then it's not intended to: note their "Objective" on the AIC page, which matches up with (b) above.

PNL and the newer RICA have done similarly, although with more volatility and drawdowns (PNL) and longer periods of going sideways (RICA); see the charts.

RCP, which is the Rothchilds' vehicle for their funds, is only arguably a "wealth preserver", as they take a longer term view on that. It is, over the long term, the best performer but it also the most volatile.

I couldn't get advfn to put them all on one chart for the full periods. Here's CGT, PNL & RCP for the last 15 years, and all of them for the last 13. All of the charts are share price only of course, not total return, although the yield on all of them is small (0.5%-1.5% range).

Here is a link to an article (which I've posted on this site many times before) from June 2020 looking at 20 Global Investment Trusts and their performance over 3 decades. I think it is well worth a read.

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

Fluke wrote:Half their investable funds are in an index tracker and they’re keen to invest the other half in equities with the main objective of protecting and hopefully growing their funds, income being a secondary consideration.

With 50% already allocated to equities through an index tracker (a very good foundational investment) and the main objective being protecting and hopefully growing their funds, in my humble opinion it is worth considering allocating at least some of the remaining 50% to one or more of the funds mc2fool highlighted. RIT Capital Partners with two thirds of its capital providing long only exposure in public and private equity markets has the most risk on stance of the four currently. The other three have a higher emphasis on capital preservation currently.

Previous posts recommend some good trusts offering equity exposure. Of those, I don't own but am sorely tempted by both Smithson and Finsbury Growth & Income Trust.

I am predominantly a single name equity investor but own Index Funds and Investment Trusts too. RIT Capital Partners is one of my larger holdings and in my opinion would make a good long-term core holding. I also hold Personal Assets and Capital Gearing Trust to help me sleep at night. With some equity markets at record highs both PNL and CGT are top up candidates for me. I also own Caledonia Investments but prefer RIT Capital Partners. I am loyal by nature so will most likely hold Caledonia for the long haul, however, if I started again I would have put that money into RIT. RIT and Caledonia both provide Private Equity exposure which is valuable given the growth in Private Equity markets and either may be preferable to a dedicated private equity investment trust for a conservative investor worried about capital protection.

Best of luck with it.

Pendrainllwyn