Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to tea42,yyuryyub,Howyoudoin,Anonymous,EverybodyKnows, for Donating to support the site

SWDA and THRG : Active to Passive In Difficult Times

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
AWOL
Lemon Slice
Posts: 369
Joined: October 20th, 2020, 5:08 pm
Has thanked: 247 times
Been thanked: 165 times

SWDA and THRG : Active to Passive In Difficult Times

#499595

Postby AWOL » May 10th, 2022, 9:49 am

Hi,

I have a significant holding in THRG and it is hurting performance. I've gradually been moving all my investments to SWDA (iShares MSCI World tracker). I am intentionally not investing in EM as I have long held concerns and views about governance, rule of law, values, and state interference (others may disagree but we all select what we are comfortable with). However like most people my portfolio is falling in value at the moment. My last active holding, THRG (Throgmorton UK Smaller Companies) is having a very bad year and therefore exacerbating things. This was predictable given what it invests in however we are where we are.

My instinct is that this is not the time to finish my journey to all passive however I am a little unsettled as this holding is a chunky 10%.

I am not buying dips as I am retired and therefore drawing down. I have cash to fund the next two years which I intend to use before touching anything.

Am I right to wait until THRG is in the ascendancy, if not at it's apex, before selling out?

Thanks,
AWOL

BullDog
Lemon Slice
Posts: 627
Joined: November 18th, 2021, 11:57 am
Has thanked: 539 times
Been thanked: 243 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499599

Postby BullDog » May 10th, 2022, 10:03 am

I am buying into Throgmorton presently as I had no prior exposure to the stuff it invests in. It might take quite some time to get back near to the ~1000p mark it hit a few months ago. In your shoes, I would be patient, I think.

monabri
Lemon Half
Posts: 6233
Joined: January 7th, 2017, 9:56 am
Has thanked: 921 times
Been thanked: 2345 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499618

Postby monabri » May 10th, 2022, 11:23 am

BullDog wrote:I am buying into Throgmorton presently as I had no prior exposure to the stuff it invests in. It might take quite some time to get back near to the ~1000p mark it hit a few months ago. In your shoes, I would be patient, I think.


I am also investing for the first time into THRG (no previous exposure) and into BRSC (no previous exposure), the discount to NAV on the latter has significantly widened recently. Currently at ~2.5% of p/folio value limited by available funds so , by no means, a significant exposure. I will look to add as dividends accrue.

Hariseldon58
Lemon Slice
Posts: 670
Joined: November 4th, 2016, 9:42 pm
Has thanked: 84 times
Been thanked: 404 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499623

Postby Hariseldon58 » May 10th, 2022, 11:55 am

Likewise I mainly focus on Developed World trackers and have previously held Throgmorton THRG off and on over the years, a small premium is now a discount of around 8% and I would not be surprised to see that increase, it has certainly been at larger discounts for quite a while in the past.

I have thought about buying at these levels and over a 5 year period I imagine it will do just fine.

The dilemma the OP has now is what to do ? If you sold THRG would you put it into SWDA ?

Do you expect SWDA to outperform THRG over the next five years ?

Clearly no one knows but the outlook for THRG at the current price level is probably not bad, considering the sector is hated...

In your position logically I would just hold, however the temptation is to cut a loser and remove the red ink from the spreadsheet !!

hiriskpaul
Lemon Quarter
Posts: 3190
Joined: November 4th, 2016, 1:04 pm
Has thanked: 366 times
Been thanked: 944 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499696

Postby hiriskpaul » May 10th, 2022, 6:09 pm

THRG and SWDA are very different investments with THRG far more risky. I can understand why you might want to invest in a small cap fund, but why pick just UK small caps? I would want to spread that out geographically.

AWOL
Lemon Slice
Posts: 369
Joined: October 20th, 2020, 5:08 pm
Has thanked: 247 times
Been thanked: 165 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499711

Postby AWOL » May 10th, 2022, 6:57 pm

hiriskpaul wrote:THRG and SWDA are very different investments with THRG far more risky. I can understand why you might want to invest in a small cap fund, but why pick just UK small caps? I would want to spread that out geographically.


UK Small Caps and UK Small Cap trusts in particular have done very well in the long term (compare with ISP6 if you'd like a view of the next best small cap market and the vehicle that I'd likely select for it if valuations were not off-putting). I expect in the long term that will continue although there are headwinds such as the friction and barriers to trade resulting from the UK leaving the EU (our main trading partner) in order to acquire additional sovereignty.

Ultimately I intend to move away from the sort of active decision making but I have done very well out of BRSC prior to switching to THRG and have long held a small cap bias. The last vestige of this being THRG (F&C Smaller Companies, now BMO and others all having been divested and funds reinvested in SWDA.

Ultimately I think that holding a broad basket of large caps will capture equity returns and doing so globally I expect will lead to lower volatility than focussing on specific countries. However I am only 90% migrated.

I am increasingly of the view that even with growth being overvalued I will just grit my teeth and ride out the storm.

77ss
Lemon Quarter
Posts: 1183
Joined: November 4th, 2016, 10:42 am
Has thanked: 129 times
Been thanked: 332 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499723

Postby 77ss » May 10th, 2022, 8:06 pm

AWOL wrote:....

I am increasingly of the view that even with growth being overvalued I will just grit my teeth and ride out the storm.


FWIW, that is what I am doing - easier if you only have 3% in THRG perhaps!

If I had any spare cash I might be tempted to top-up even.

BullDog
Lemon Slice
Posts: 627
Joined: November 18th, 2021, 11:57 am
Has thanked: 539 times
Been thanked: 243 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499725

Postby BullDog » May 10th, 2022, 8:35 pm

77ss wrote:
AWOL wrote:....

I am increasingly of the view that even with growth being overvalued I will just grit my teeth and ride out the storm.


FWIW, that is what I am doing - easier if you only have 3% in THRG perhaps!

If I had any spare cash I might be tempted to top-up even.

I think Throgmorton quite compelling on a mid term view. Only my opinion, of course, but the IT is invested in some pretty solid companies. As soon as the economic weather forecast looks brighter, Throgmorton should appreciate very nicely.

Bought two lots myself recently. About 3% of total portfolio.

OldPlodder
Posts: 40
Joined: October 28th, 2020, 2:03 pm
Has thanked: 31 times
Been thanked: 48 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#499755

Postby OldPlodder » May 11th, 2022, 8:17 am

BullDog wrote:
77ss wrote:
AWOL wrote:....

I am increasingly of the view that even with growth being overvalued I will just grit my teeth and ride out the storm.


FWIW, that is what I am doing - easier if you only have 3% in THRG perhaps!

If I had any spare cash I might be tempted to top-up even.

I think Throgmorton quite compelling on a mid term view. Only my opinion, of course, but the IT is invested in some pretty solid companies. As soon as the economic weather forecast looks brighter, Throgmorton should appreciate very nicely.

Bought two lots myself recently. About 3% of total portfolio.


I think this applies to a lot of growth ITs at the mo. On a few year’s forward view, my wife and I see current prices as good top up points. We have therefore been gradually re-investing the ‘ammo’ we created when some of our holdings were flying in 21, plus adding new funds too. Doing this has served us well over the years. No certainty to catch the bottom of course, there never is, but when things pick up it it just as hard to catch good prices imho. Nothing ventured…

Plodder

AWOL
Lemon Slice
Posts: 369
Joined: October 20th, 2020, 5:08 pm
Has thanked: 247 times
Been thanked: 165 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#500037

Postby AWOL » May 12th, 2022, 10:42 am

Growth is still expensive so i am not sure it it's yet time to top up. I think value will continue to rerate and inflation won't be transitory. However the future is unknowable.

Ultimately my biggest concern now is the performance of the post-BREXIT UK economy and the lack of a credible economic strategy. This isn't because of exposure to it through my investments. It's because it's where we live. I think their will still be UK small caps that thrive even in a shrinking UK economy.

hiriskpaul
Lemon Quarter
Posts: 3190
Joined: November 4th, 2016, 1:04 pm
Has thanked: 366 times
Been thanked: 944 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#500057

Postby hiriskpaul » May 12th, 2022, 11:57 am

AWOL wrote:Growth is still expensive so i am not sure it it's yet time to top up. I think value will continue to rerate and inflation won't be transitory. However the future is unknowable.

Ultimately my biggest concern now is the performance of the post-BREXIT UK economy and the lack of a credible economic strategy. This isn't because of exposure to it through my investments. It's because it's where we live. I think their will still be UK small caps that thrive even in a shrinking UK economy.

UK small caps face a lot of headwinds. Brexit red tape has hit small businesses hard, much more so than larger businesses, with many completely abandoning EU exports. There are significant staff shortages affecting many small businesses. This puts pressure on earnings as they have to increase labour costs to attract staff and/or hold on to those they already have. UK small caps are much more reliant on the UK domestic economy than big caps and that is looking to be headed for trouble due to the cost of living crisis. Much of this is likely to already be in the price of course. Even so, I would not want to bet 10% of my equities portfolio on UK small caps in a single IT. Admittedly I wouldn't want to do that in boom times either.

monabri
Lemon Half
Posts: 6233
Joined: January 7th, 2017, 9:56 am
Has thanked: 921 times
Been thanked: 2345 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501409

Postby monabri » May 18th, 2022, 8:45 pm

Interesting ...explanation of the discount at THRG (section titled "The whale dumping Throgmorton")

https://citywire.com/investment-trust-i ... d/a2387507

BullDog
Lemon Slice
Posts: 627
Joined: November 18th, 2021, 11:57 am
Has thanked: 539 times
Been thanked: 243 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501437

Postby BullDog » Yesterday, 6:52 am

monabri wrote:Interesting ...explanation of the discount at THRG (section titled "The whale dumping Throgmorton")

https://citywire.com/investment-trust-i ... d/a2387507

Thanks, that does help explain the present price weakness. Note, CityWire log in is required to read the article.

doug2500
Lemon Slice
Posts: 539
Joined: November 4th, 2016, 11:51 am
Has thanked: 192 times
Been thanked: 189 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501487

Postby doug2500 » Yesterday, 10:13 am

Any chance of a summary please? I hate signing up for more than I have to.

I presume it's as simple as a large holder selling out?

BullDog
Lemon Slice
Posts: 627
Joined: November 18th, 2021, 11:57 am
Has thanked: 539 times
Been thanked: 243 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501494

Postby BullDog » Yesterday, 10:41 am

doug2500 wrote:Any chance of a summary please? I hate signing up for more than I have to.

I presume it's as simple as a large holder selling out?

Yes, Prudential with profits fund managed by M and G selling because of fund management change. Essentially, any way.

Newroad
Lemon Slice
Posts: 646
Joined: November 23rd, 2019, 4:59 pm
Has thanked: 5 times
Been thanked: 203 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501496

Postby Newroad » Yesterday, 10:44 am

Hi Doug2500.

An excerpt from the article linked to

    "... However, it is likely some of the persistent selling pressure is coming from Prudential’s £94bn with-profits fund, which had been a leading investor in investment trusts and overweighted the sector.
    M&G Investments, the overall manager, has outsourced the management of a passive UK equity portfolio within the with-profits fund to an external index-tracking specialist, Citywire revealed at the start of the April. A subsequent rebalancing is seeing trust holdings being sold or scaled back ..."

Regards, Newroad

doug2500
Lemon Slice
Posts: 539
Joined: November 4th, 2016, 11:51 am
Has thanked: 192 times
Been thanked: 189 times

Re: SWDA and THRG : Active to Passive In Difficult Times

#501552

Postby doug2500 » Yesterday, 2:38 pm

Thank you both.

It's not an 'informed' sell then, just a change of policy. I'd love to know how it turns out in 5 years time. I know where I'd rather be, but then I'm not accountable to anyone and have my own views on risk and aims.


Return to “Investment Strategies”

Who is online

Users browsing this forum: minnow and 2 guests