ITs that pay as income rather than dividends?

[CryptoPlankton]

OK, I'll do some hunting, but the 1% annual fees don't look that inviting now that I look closer.

I'm not trying to be funny, but why? Whether you are looking for yield (currently 5.46%) or growth (fairly modest, given the recent 10% pull back), what is the real significance of the fees - isn't it just the net performance that matters? It's something that has really perplexed me and I've asked this question a few times, but nobody who mentions fees as a concern has ever answered...

[scotia]

but nobody who mentions fees as a concern has ever answered...

For a Fund Manager to consistently beat the market over a long period is a difficult task, and to do it while pocketing a sizeable annual fee makes it highly improbable.

[CryptoPlankton]

but nobody who mentions fees as a concern has ever answered...

For a Fund Manager to consistently beat the market over a long period is a difficult task, and to do it while pocketing a sizeable annual fee makes it highly improbable.

That's true, in fact so difficult that very many of them consistently don't beat the market, regardless of fees!

http://www.thisismoney.co.uk/money/diyi ... ecade.html

But active v passive is another argument. What I can't fathom is why fees can be so influential in some people's decision-making process - whether it's 0.5% or 1.5%, surely all that matters is what you are getting for your money? In the case of CMHY, if you are happy with its history and the underlying portfolio generating the 5.46% yield on your prospective investment then why would a "fee" (that you will never see or feel) deter you? Similarly for growth (I have used this example before), I hold The Biotech Growth Trust (BIOG) in order to have exposure to a good spread of biotech shares. Apparently it has a TER of 1.10% but, having seen the holding 4-bag over the past few years, I'm very glad it didn't occur to me to allow this to put me off investing!

I don't see people considering the management costs of FTSE 100 companies before investing (I believe the CEO of WPP alone "earned" well over 2% of his company's net income last year). If you were to compare the total salaries of the boards and senior management at these companies (as a proportion of profits/market cap) I expect they would differ significantly, but who cares? All that matters to the investor is how the companies perform and what SP growth and/or dividends they generate. In the same way, I can't see the relevance of a fund manager's percentage cut when assessing an IT - the net performance is all that concerns me.

Oh well, just a harmless puzzlement I can live with...

[Itsallaguess]

I hold The Biotech Growth Trust (BIOG) in order to have exposure to a good spread of biotech shares.

Apparently it has a TER of 1.10% but, having seen the holding 4-bag over the past few years, I'm very glad it didn't occur to me to allow this to put me off investing!

Was there an alternative Trust that had exposure to a similar set of biotech shares?

If there was, and it had a TER of 2%, then this is where a TER comparison between alternatives might be entirely valid....

I think where quite a few TER's are mentioned on boards like this, it might be during discussions of more mainstream areas of the market, and might be equally valid, so we might have to be careful not to use a specific and possibly less common investment pool as a reason to completely discount TER comparisons.

Well done with your BIOG holding by the way. I hope you're going to let a good chunk of it run for a few years yet.

Cheers,

Itsallaguess

[CryptoPlankton]

I hold The Biotech Growth Trust (BIOG) in order to have exposure to a good spread of biotech shares.

Apparently it has a TER of 1.10% but, having seen the holding 4-bag over the past few years, I'm very glad it didn't occur to me to allow this to put me off investing!

Was there an alternative Trust that had exposure to a similar set of biotech shares?

If there was, and it had a TER of 2%, then this is where a TER comparison between alternatives might be entirely valid....

I think where quite a few TER's are mentioned on boards like this, it might be during discussions of more mainstream areas of the market, and might be equally valid, so we might have to be careful not to use a specific and possibly less common investment pool as a reason to completely discount TER comparisons.

Thanks for your reply, Itsallaguess. I see your point, but would still think comparing factors such as performance and premium/discount would be far more significant. But I guess, in the unlikely event that all other things are equal, fees could then come into consideration as a potential drag on growth. For pure income seekers, though, I still can't see why they would be unduly influenced by fees - surely the net yield (and its sustainability) are far more important? I've been happily picking up my 5% or so on a few IT's for years without a thought about the underlying fees...

Well done with your BIOG holding by the way. I hope you're going to let a good chunk of it run for a few years yet.

Cheers,

Itsallaguess

Thanks, if only they were the norm! They've stuttered a bit over the past couple of years, but I can afford to let them run - one day they'll either be converted to income or used for some capital project (or, of course, they could shrink to nothing!)

CP

[BusyBumbleBee]

The only one I know is RMDL - RM Secured Direct Lending PLC which has declared all of its dividends to date as interest distributions : this from a recent RNS

"Dividend Declaration

The Directors of the Company, an investment trust specialising in secured debt investments, have declared an interim dividend of 2.0 pence per ordinary share in respect of the period from 1 October 2017 to 31 December 2017:

Ex-Dividend Date - 22 February 2018

Record Date - 23 February 2018

Payment Date - 23 March 2018

The Company has elected to designate the interim dividend for the period as an interest distribution to its ordinary shareholders."

Annual report here to see what the company is about.https://www.investegate.co.uk/rm-secdir ... 00012994H/

[BusyBumbleBee]

Oh, and for those interested in Zero Preference shares : RMDL are about to issue some of those as well see : https://www.investegate.co.uk/rm-secdir ... ng%20Alert