Choice of Global Growth IT

[richfool]

http://citywire.co.uk/money/can-monks-emerge-as-the-safer-scottish-mortgage/a875554

An oldish article but describes the differences between Monks and Scottish Mort. Both of which I have holdings in and have done very well for me.

MM

Thanks, tjh, MaraMan and 77ss, for your posts. I have decided to split the investment between FRCL and Monks.

I felt SMT was too strongly focussed on technology, with high proportions in their top ten holdings such as Amazon (10%), and likely to be more volatile in the event of a tech sell-off. Also, I wasn't so keen on its commitment to Tesla. Whereas Monks had lower proportions in those tech stocks and had more of a spread across other perceived growth areas/stocks. So I saw Monks as less volatile and more broadly invested. Though I noted virtually no dividend yield (0.15%).

I felt FRCL would top up those tech exposures a little, whilst maintaining a broader based portfolio along with a dividend yield (albeit of c 1.52%). FRCL's involvement with Private Equity noted, thanks.

[MaraMan]

Very understandable richfool, I too worry a little about the pricing of tech stocks, but personally I do not consider Amazon to be a tech stock. In my view its a market disrupter and could do well in the scenario of a tech sell off. I took a good look at them many moons ago in a previous professional life, and met with some of their senior execs. Even at that stage it looked like they would take over the world, like it or not. I have had held their shares individually and in ITs ever since, I see no reason to change my mind on them, with the possible exception of US legislation from Trump who clearly hates them (or more accurately he hates Jeff Bezos).
MM

[richfool]

I am very conscious that I pick up further exposure to several technology stocks through other IT's that I hold.

For example (from top ten holdings):-

Amazon: Monks: 4.1% FRCL: 1.81%
Tencent: JAI: 6.8%
Alibaba: Monks: 2.14% JAI: 3.6%
Alphabet: Monks: 1.84% FRCL: 1.01% Witan: 1.24% JPGI: 3.9%
Samsung: JAI: 7.50% SOI: 4.48% AAIF: 3.75%

[Lootman]

I felt SMT was too strongly focussed on technology, with high proportions in their top ten holdings such as Amazon (10%), and likely to be more volatile in the event of a tech sell-off. Also, I wasn't so keen on its commitment to Tesla.

I didn't know this until reading a different topic here today, but SMT has done so well that it is now number 66 in the FTSE-100 index. It is the only IT in the FTSE-100, except for 3i which is a special case anyway.

Leaving aside the question of whether ITs should be in the indices anyway, it is perhaps instructive that every IT that has ever been in the FTSE-100 in the past has later dropped out of it. I believe this is because in bear markets they suffer the double whammy of declining NAV and increasing discounts.

The hall of shame for ITs that did that include F&C, Alliance and Globe. I believe that RIT and Templeton Emerging Markets may have had briefs stays in the 100 as well. Where are they now? In the case of Globe, nowhere - it was wound up.

[Backache]

The hall of shame for ITs that did that include F&C, Alliance and Globe. I believe that RIT and Templeton Emerging Markets may have had briefs stays in the 100 as well. Where are they now? In the case of Globe, nowhere - it was wound up.

I think Globe succumbed to a take over from a pension fund rather than being wound up.

[Dod101]

I am very conscious that I pick up further exposure to several technology stocks through other IT's that I hold.

For example (from top ten holdings):-

Amazon: Monks: 4.1% FRCL: 1.81%
Tencent: JAI: 6.8%
Alibaba: Monks: 2.14% JAI: 3.6%
Alphabet: Monks: 1.84% FRCL: 1.01% Witan: 1.24% JPGI: 3.9%
Samsung: JAI: 7.50% SOI: 4.48% AAIF: 3.75%

I think you illustrate the danger in holding too many ITs. I hold 9 ITs all in very different areas of the investment universe. (surprised it is as many as that!) I will undoubtedly have the usual FTSE suspects in more than one, but none are in the least as volatile as your tech stocks might be I think.

Your concentration with say Alphabet and Samsung illustrates my point.

Dod

[richfool]

I am very conscious that I pick up further exposure to several technology stocks through other IT's that I hold.

For example (from top ten holdings):-

Amazon: Monks: 4.1% FRCL: 1.81%
Tencent: JAI: 6.8%
Alibaba: Monks: 2.14% JAI: 3.6%
Alphabet: Monks: 1.84% FRCL: 1.01% Witan: 1.24% JPGI: 3.9%
Samsung: JAI: 7.50% SOI: 4.48% AAIF: 3.75%

I think you illustrate the danger in holding too many ITs. I hold 9 ITs all in very different areas of the investment universe. (surprised it is as many as that!) I will undoubtedly have the usual FTSE suspects in more than one, but none are in the least as volatile as your tech stocks might be I think.

Your concentration with say Alphabet and Samsung illustrates my point.

Dod

Dod, yes, indeed.

Though I have to say as a general point, I don't mind some overlap/duplication, as I take the view that it does two things. One it increases my exposure to a particular stock or sector, where that may be desired, without holding it in one (possibly specialised) IT. Secondly, I do get the perspective and expertise of different managers in determining when to buy, hold or sell that stock. I would for example, rather hold 5% of Amazon, spread over 2 or 3 IT's, than hold 10% of it in just one IT (as would have been the case with SMT). Thus I obtained my desired exposure to Amazon by buying Monks and FRCL.

The above said, I had previously noted that several IT's I hold included Taiwan Semi-Conductor Manufacturing Co in their top ten holdings. So last night I went through my IT holdings to see which held it and in what proportion. The result was quite surprising. This is a list of the percentages held by the various IT's, which note are from several (3) different sectors. There were 8 in total:

Murray Int Inc- 5.15%
Henderson Int Inc - 3.41%
Invesco-Perp G & I - 2.60%
Monks - 2.24%
Witan - 1.54%
JP Morgan Asian Inc - 4.80%
Schroder Oriental Inc - 5.51%
Aberdeen Asian Inc - 4.25%

So, yes I do think the duplication of Taiwan SCMC is excessive, and presents an increased risk if anything untoward affected that stock. (As Bruce Stout holds it, I trust it is among the safer stocks to hold (wink!).)

[Dod101]

[ I don't mind some overlap/duplication, as I take the view that it does two things. One it increases my exposure to a particular stock or sector, where that may be desired, without holding it in one (possibly specialised) IT. Secondly, I do get the perspective and expertise of different managers in determining when to buy, hold or sell that stock. I would for example, rather hold 5% of Amazon, spread over 2 or 3 IT's, than hold 10% of it in just one IT (as would have been the case with SMT). Thus I obtained my desired exposure to Amazon by buying Monks and FRCL.

That is an interesting point and I may have a look at my own ITs for the same point. They will be duplicating some shares I hold in my HYP I guess but not too much duplication in those you are highlighting.

Dod

[77ss]

The above said, I had previously noted that several IT's I hold included Taiwan Semi-Conductor Manufacturing Co in their top ten holdings. So last night I went through my IT holdings to see which held it and in what proportion. The result was quite surprising. This is a list of the percentages held by the various IT's, which note are from several (3) different sectors. There were 8 in total:

Murray Int Inc- 5.15%
Henderson Int Inc - 3.41%
Invesco-Perp G & I - 2.60%
Monks - 2.24%
Witan - 1.54%
JP Morgan Asian Inc - 4.80%
Schroder Oriental Inc - 5.51%
Aberdeen Asian Inc - 4.25%

So, yes I do think the duplication of Taiwan SCMC is excessive, and presents an increased risk if anything untoward affected that stock. (As Bruce Stout holds it, I trust it is among the safer stocks to hold (wink!).)

I wouldn't get too hung up about this kind of thing. It depends upon your overall portfolio, but if you have 3% (say) in an IT, and the IT holds 5% (say) in any given share, then your exposure to that share, via that IT is just 0.15%. You just have to do the arithmetic. Glancing at your figures above, it looks as though you have a bit under 1% in Taiwan SCMC (I haven't done the arithmetic) - and that is assuming that you only have those 8 ITs in your overall portfolio.

Having said that, like Dod101, I do try to keep my few ITs in different sectors of the 'investment universe'. Health, IT, midcap, smallcap, property, private equity......

[richfool]

A trust I missed in my research for a global growth'er with a strong technology focus was: Manchester & London (MNL).
(Though it is in the UK growth sector!).

Holds all the usual techno and internet stocks, inc Amazon (11.90%), Alphabet, Alibaba, Facebook etc, along with Polar Capital Technology (PCT) and SMT.

TER: 0.88%. Yield: 0.68%. Currently trading at a discount of -1%. I note it is a smaller trust c £125m assets.

http://citywire.co.uk/money/investment- ... undID=3080

http://www.hl.co.uk/shares/shares-searc ... lc-ord-25p

[richfool]

I have been looking at this again and wondering whether taking a piece of MNL might well be a cheaper way of increasing one's exposure to technology and internet stocks, as opposed to the mighty SMT. Currently MNL is at a discount of -3.4% whereas SMT is at a premium of +2.4%.

I don't know why MNL should be in the UK growth sector!

(Links to Citywire factsheets in post above).

[Dod101]

I have been looking at this again and wondering whether taking a piece of MNL might well be a cheaper way of increasing one's exposure to technology and internet stocks, as opposed to the mighty SMT. Currently MNL is at a discount of -3.4% whereas SMT is at a premium of +2.4%.

If you look at your OP I wonder why on earth you would want to buy Manchester and London. It has nearly 50% of its assets in 6 shares, nearly all of which can be called technology or very similar. I would think that, whilst they have had stellar results in this area, M and L is bound to be volatile to say the least. They look as if they are trying to be a miniature SMT (and just so that they do not forget that they have a small holding in that trust as well), which by the way also contains all six shares.

Dod

[richfool]

I have been looking at this again and wondering whether taking a piece of MNL might well be a cheaper way of increasing one's exposure to technology and internet stocks, as opposed to the mighty SMT. Currently MNL is at a discount of -3.4% whereas SMT is at a premium of +2.4%.

If you look at your OP I wonder why on earth you would want to buy Manchester and London. It has nearly 50% of its assets in 6 shares, nearly all of which can be called technology or very similar. I would think that, whilst they have had stellar results in this area, M and L is bound to be volatile to say the least. They look as if they are trying to be a miniature SMT (and just so that they do not forget that they have a small holding in that trust as well), which by the way also contains all six shares.

Dod

Thanks for your thoughts Dod. I was looking at it from the perspective of taking a smaller position in a trust which deliberately has a high exposure to those technology and internet type stocks. I have a much lower and more diversified exposure through Monks. I realise volatility would be higher with something like MNL. I would however be avoiding the significant premium that would come with SMT., though I suspect that MNL being a smaller animal would be trading with a bigger spread between buying and selling prices.

[gbjbaanb]

I have been looking at this again and wondering whether taking a piece of MNL might well be a cheaper way of increasing one's exposure to technology and internet stocks, as opposed to the mighty SMT. Currently MNL is at a discount of -3.4% whereas SMT is at a premium of +2.4%.

If you look at your OP I wonder why on earth you would want to buy Manchester and London. It has nearly 50% of its assets in 6 shares, nearly all of which can be called technology or very similar. I would think that, whilst they have had stellar results in this area, M and L is bound to be volatile to say the least. They look as if they are trying to be a miniature SMT (and just so that they do not forget that they have a small holding in that trust as well), which by the way also contains all six shares.

Dod

IIRC Finsbury income and growth has 20 shares, and is highly regarded. So this is another tightly focused trust. That wouldn't put me off necessarily, sometimes a trust like this is much better than one with a thousand shares.

[Dod101]

IIRC Finsbury income and growth has 20 shares, and is highly regarded. So this is another tightly focused trust. That wouldn't put me off necessarily, sometimes a trust like this is much better than one with a thousand shares.

I agree. The total number of shares does not bother me either but it is the high concentration on technology or similar that does. Their top holdings are Amazon, Alphabet, Facebook, Microsoft, Tencent and Alibaba and they make up close to the 50% of the entire trust. That of course explains their stellar results over the last couple of years or so, but it is bound to make M & L more volatile. And to add to these they have a small holding in Scottish Mortgage which also holds most if not all of those as more or less their biggest holdings.

I am sure you would agree that Finsbury cannot be compared, with its concentration on well known brands. I hold Finsbury and Scottish Mortgage but not Manchester and London which is too small for me.

Dod

[gbjbaanb]

IIRC Finsbury income and growth has 20 shares, and is highly regarded. So this is another tightly focused trust. That wouldn't put me off necessarily, sometimes a trust like this is much better than one with a thousand shares.

I agree. The total number of shares does not bother me either but it is the high concentration on technology or similar that does. Their top holdings are Amazon, Alphabet, Facebook, Microsoft, Tencent and Alibaba and they make up close to the 50% of the entire trust. That of course explains their stellar results over the last couple of years or so, but it is bound to make M & L more volatile. And to add to these they have a small holding in Scottish Mortgage which also holds most if not all of those as more or less their biggest holdings.

I am sure you would agree that Finsbury cannot be compared, with its concentration on well known brands. I hold Finsbury and Scottish Mortgage but not Manchester and London which is too small for me.

Dod

Well, Finsbury holds 45% in "consumer goods", 24% in "financial services" and 20% in "consumer services" so that's pretty incredibly concentrated. Its no more different to holding 50% in global tech stocks that are also well known brands.

I'd say the risk is the same between the two of them, hopefully we'd be paying a manager to close those positions and get into something else if the sector wobbles or is seen as no longer a rewarding bet, for the risk. In fact, the risk is possibly greater in FGT as it holds 100% UK stocks.

[Dod101]

I am sorry but I have to disagree with you. Finsbury has high quality global brands and the fact that they are mostly incorporated in the UK is almost an irrelevance. They trade all over the world and that is what matters. Secondly I would say that as a portfolio it is likely to be much less volatile than one with 50% technology stocks. If you think the risk is the same between the two of them you go right ahead but I am fairly certain that you will be taking a much bigger risk with M & L.

I do not care about sectors, only the share and if it happens that my portfolio is 50% financials I would not worry. As it is I do not know how my portfolio would break down but it would most likely be 'incredibly concentrated' by your measure.

Anyway the OP was looking for an IT with a technology bias. he would certainly get that with M & L.

Dod

[richfool]

Thanks for the comments on this. I didn't want to start any disagreements.

I do take the point that MNL is even more concentrated than SMT. MNL also had a very large B/O spread. In the event I have added SMT to my growth portfolio, alongside Monks.

I do also hold FGT in my growth & income portfolio (UK sector).

(I've just been watching Trump laying into the other NATO countries (apart from Britain and Poland) for their under-contributing to NATO and particularly Germany for getting all its oil & gas from the very country it wants protection from! So the European sector should now be falling!)

[Dod101]

I think a robust discussion does no harm but thanks for your comments richfool. I think you are right to choose SMT. I have held it for years (probably about 20 I think) and it has not always been as it is now but overall it has been a wonderful share for me. I also hold Finsbury to plug into Nick Train as I like his style (although probably too pedestrian for Fred)

Good for Trump. As you may know I do not buy into geographically biased ITs and so I have no specific exposure to Europe but obviously many generalists will hold European shares. I saw in my newspaper yesterday that Germany will only reach 1.5% of GDP spending on defence by 2025!

Dod

[richfool]

Moderator Message:
referenced quote deleted at request of poster.

After flirting with SMT (Scottish Mortgage) and Monks, I ended up adding FRCL (Foreign & Colonial) from the Global Growth sector, against the background that it was more broadly based and thus less susceptible to a correction in technology. I already held Witan from that sector.

I then topped up on JPGI (Global Grth & Inc sector), as I am aware that it holds technology stocks and supports a yield of just under 4% (subsidised from capital).