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British Empire (BTEM)

Closed-end funds and OEICs
Aminatidi
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British Empire (BTEM)

#180040

Postby Aminatidi » November 13th, 2018, 5:04 pm

Does anyone have any history or a view on this please?

Looking at some of the "Unusual Suspects" and this looks like it holds some things that you don't find in the "Usual Suspects" both in terms of region and specific holdings.

scotia
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Re: British Empire (BTEM)

#180097

Postby scotia » November 13th, 2018, 9:43 pm

Aminatidi wrote:Does anyone have any history or a view on this please?
Looking at some of the "Unusual Suspects" and this looks like it holds some things that you don't find in the "Usual Suspects" both in terms of region and specific holdings.

Many years ago I held BTEM when it was a high performer. At that time it held a number of other Investment Trusts and Funds - so its manager's skill seemed to be the selection of the work of other (underrated?) managers. I dropped out in 2005. Looking at its past 5 years performance, and in particular on its year-on-year volatility, I can't see it as an attractive current investment.

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Re: British Empire (BTEM)

#180126

Postby Minesadouble » November 14th, 2018, 5:58 am

I hold British Empire and have held for 3 and half a years.
Over that time I’m 26% up and of course have also had some dividends, although yield is low.
I hold as part of a 24 IT Portfolio, it’s not one of my larger positions so I don’t watch it closely.
Against each of my ITs I put a short note to remind myself why I hold.
My note against BTEM indicates: Internationally diversified, seeking undervalued assets.
It’s performance looks to have been broadly comparable to RIT Capital Partners and Scottish Mortgage within my Portfolio.
Glad I bought and glad I hold, hope that helps.
MAD

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Re: British Empire (BTEM)

#180131

Postby Dod101 » November 14th, 2018, 7:10 am

Minesadouble wrote:I hold British Empire and have held for 3 and half a years.
Over that time I’m 26% up and of course have also had some dividends, although yield is low.
I hold as part of a 24 IT Portfolio, it’s not one of my larger positions so I don’t watch it closely.
Against each of my ITs I put a short note to remind myself why I hold.
My note against BTEM indicates: Internationally diversified, seeking undervalued assets.
It’s performance looks to have been broadly comparable to RIT Capital Partners and Scottish Mortgage within my Portfolio.
Glad I bought and glad I hold, hope that helps.
MAD


These comments surprise me, especially against Scottish Mortgage and if that is the case it is time that I looked at British Empire again. Against RIT that may be the case. I held British Empire for a long time but that was maybe up until about 2005. It had been a great performer and then decidedly went off the boil and I got fed up and sold. The proposition seems good. It seeks out undervalued assets, often big investment companies which are trading at well below NAV and waits until they have got nearer to asset value and then sell and move on.

Scottish Mortgage has performed much better than RIT but is more volatile as recent falls have shown. RIT has hardly moved but Scottish Mortgage is down around 15/20% from its peak (I have not checked). In a diversified portfolio of ITs British Empire may have a place.

Dod

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Re: British Empire (BTEM)

#180136

Postby Minesadouble » November 14th, 2018, 7:19 am

These comments surprise me, especially against Scottish Mortgage and if that is the case it is time that I looked at British Empire again. Against RIT that may be the case. I held British Empire for a long time but that was maybe up until about 2005. It had been a great performer and then decidedly went off the boil and I got fed up and sold. The proposition seems good. It seeks out undervalued assets, often big investment companies which are trading at well below NAV and waits until they have got nearer to asset value and then sell and move on.

Scottish Mortgage has performed much better than RIT but is more volatile as recent falls have shown. RIT has hardly moved but Scottish Mortgage is down around 15/20% from its peak (I have not checked). In a diversified portfolio of ITs British Empire may have a place.


Dod, i was also surprised when I looked. Scottish Mortgage has suffered from recent Technology falls, the picture would have looked much different six months ago. I agree with your last sentence, I think British Empire offers something different in a broad diversified portfolio, if I was limited to say six ITs, I might take a different view.
MAD

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Re: British Empire (BTEM)

#180139

Postby Dod101 » November 14th, 2018, 7:31 am

Thanks MAD. Scottish Mortgage as I said is volatile and with respect, to compare its performance with British Empire is I think misleading. They are like chalk and cheese. Scottish Mortgage is a worldwide IT with a wide ranging mandate, a lot in unquoted companies, a lot in leading edge technology companies, and they like what they call 'disruptors'. That has done very well for them until the recent falls. They were at £5.40 at the end of September and are now around £4.80 and that is against £2.50 or so in 2015.

Maybe the outcome is not that different over a long enough period but I do not have time to dig out the numbers for British Empire at the moment.

I like British Empire and maybe it is that they achieve the same results by a very different route.

Dod

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Re: British Empire (BTEM)

#180143

Postby Aminatidi » November 14th, 2018, 7:41 am

To add a little context I'm looking for around a 10% position that is "diverse".

Already have:

Lindsell Train £16K
Fundsmith £16K
CGT £9.5K
PNL £9.5K
RCP £4K
Ruffer RICA £2K

Looking to free approx £4K from the LT/Fundsmith positions (no rush) in the attempt to diversify a little both geographically in away from large growth.

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Re: British Empire (BTEM)

#180146

Postby Dod101 » November 14th, 2018, 7:46 am

Aminatidi wrote:To add a little context I'm looking for around a 10% position that is "diverse".

Already have:

Lindsell Train £16K
Fundsmith £16K
CGT £9.5K
PNL £9.5K
RCP £4K
Ruffer RICA £2K

Looking to free approx £4K from the LT/Fundsmith positions (no rush) in the attempt to diversify a little both geographically in away from large growth.


That is of course a very conservative portfolio and if you want to continue in that vein then it may be that British Empire would suit you well, taking account of MAD's figures. You do not seem to like big generalists such as F & C, Alliance or Witan. In fact with some spare cash I might take another look at British Empire.

Dod

StOmer

Re: British Empire (BTEM)

#180191

Postby StOmer » November 14th, 2018, 10:44 am

Very little in the US so perhaps a useful diversifier from the usual suspects. The latest report indicates a desire to deal with the discount although it is perhaps just a nudge to the directors rather than anything concrete.
There are many levers available to the Board to tackle the discount which, at the time of writing, remain resolutely un-pulled. We will continue to engage with the Board.

The z-score is +0.79 whilst the share price and nav are downward whilst Caledonia currently looks more positive. BTEM is a punt on Japan with its 15% holdings there, may be worth further investigation with the potential bonus of seeing that discount narrow.

I do wonder though whether putting 10% into BTEM would offset any advantage in having the conviction sized holdings in Smith & Train.

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Re: British Empire (BTEM)

#180199

Postby Dod101 » November 14th, 2018, 11:09 am

What is the z score please?

Dod

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Re: British Empire (BTEM)

#180217

Postby Aminatidi » November 14th, 2018, 12:16 pm

StOmer wrote:Very little in the US so perhaps a useful diversifier from the usual suspects. The latest report indicates a desire to deal with the discount although it is perhaps just a nudge to the directors rather than anything concrete.
There are many levers available to the Board to tackle the discount which, at the time of writing, remain resolutely un-pulled. We will continue to engage with the Board.

The z-score is +0.79 whilst the share price and nav are downward whilst Caledonia currently looks more positive. BTEM is a punt on Japan with its 15% holdings there, may be worth further investigation with the potential bonus of seeing that discount narrow.

I do wonder though whether putting 10% into BTEM would offset any advantage in having the conviction sized holdings in Smith & Train.


Ah sorry, there would be another 10% going somewhere else - where/what/style not decided.

That would put me roughly 1/3 LT & FS, 1/3 defensive and 1/3 "other" diversifiers/other.

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Re: British Empire (BTEM)

#180221

Postby scotia » November 14th, 2018, 12:35 pm

Expanding on my earlier comments about BTEM - I don't see it as a growth rival to other worldwide funds, nor do I see it as a steady low volatility fund.
Comparing the total return (from HL) over 5 years:- Fundsmith (139%), Scottish Mortgage (158%), British Empire (62%).
And looking at the past 12 months, which includes the current drop:- Fundsmith (7.64%), Scottish Mortgage (5.04%), British Empire (-1.68%)
And to reinforce my comment on year on year volatility, looking at the two consecutive 12 month periods commencing November 2014, we have Fundsmith (12.07% and 29.74%), Scottish Mortgage (6.94% and 20.53%), British Empire (-8.27% and 36.87%)

StOmer

Re: British Empire (BTEM)

#180237

Postby StOmer » November 14th, 2018, 1:27 pm

Dod101 wrote:What is the z score please? Dod

Apologies for the delay in response, I wrote one but then the Internet failed and the post was lost. I'll try again :-)

The z-score is a statistical measurement showing the value in the current price relative the premium or discount. Whilst it is usually shown as a 1 year figure, it is worthwhile looking at that against the 3 year etc. The z-score is just one of the metrics available so I wouldn't consider it as a single indicator. A better explanation can be found at Morningstar - http://www.morningstar.co.uk/uk/investmenttrust/itsolutions.aspx?docid=357229recently

Citywire publish an article each Friday showing various trusts sitting on cheap or expensive z-scores. Whilst their list is not a complete one it does give the most popular trusts alonsgide a few others. The latest one can be viewed at https://citywire.co.uk/investment-trust-insider/news/investment-trust-watch-stifel-downgrades-dear-fandc/a1174130?ref=investment-trust-insider-comment-analysis-list

In the case of BTEM, the current z-score (+0.93) is high compared to the 3yr (+0.27), 5yr (-12) & 10yr (-0.76) scores which are negative values. Thus suggesting BTEM may be a little pricey just now. Another example for RIT Capital which is on a 10% premium, the z-scores are 1 yr (+1.07), 3 yr (+1.76), 5yr (+1.59) and 10yr (+1.99). Here you can see the premium is high but the z-scores indicate the trust is typically expensive anyway. RCP has apparently been downgraded to Sell / Hold by some brokers. Caledonia on the other hand is at its usual discount nearing 20% whilst the z-score is just -.54, indicating the trust is not particularly cheap compared to its historical z-score which is typically around -1.50.

As I say, don't blindly trust z-scores, they are just something of interest in the overall picture. The current lowest z-scores for a Genralist IT are Majedie (-1.50), Bankers (-0.91) and then Independent at -0.81.
Last edited by StOmer on November 14th, 2018, 1:34 pm, edited 2 times in total.

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Re: British Empire (BTEM)

#180239

Postby StOmer » November 14th, 2018, 1:33 pm

Aminatidi wrote:That would put me roughly 1/3 LT & FS, 1/3 defensive and 1/3 "other" diversifiers/other.

Interesting 3-way split, is this idea similar to a typical core/satellite approach of 70% core where your core allocation would be LT, FS and defensives?

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Re: British Empire (BTEM)

#180250

Postby Dod101 » November 14th, 2018, 1:59 pm

Thanks StOmer. Not something I have come across before and I am not sure that is worth a great deal but interesting nevertheless.

The figs produced by Scotia are more what I would have expected. They may be on to something in Japan with a lot of what they call over capitalised companies and the share prices well below their NAV and yet much of the NAV is made up of cash. I must say that I cannot believe that the investments in Jardine and Swire make a lot of sense except on paper.

I think in all that I can do without British Empire at the moment.

Dod

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Re: British Empire (BTEM)

#180312

Postby monabri » November 14th, 2018, 5:23 pm

I had a quick look at the BTEM top holdings as listed by Hargreaves L.

I think I would rather top up FGT (I like what's in there) or FCIT ( = FRCL as was).


FGT
Security Weight
Diageo plc Ordinary 28 101/108p 9.97%
Unilever plc Ordinary 3.11p 9.86%
RELX plc Ord 14 51/116p 9.74%
Hargreaves Lansdown plc Ordinary 0.4p 8.69%
London Stock Exchange Ordinary 6,79/86p 8.39%
Burberry Group plc Ordinary Shs 0.05 7.70%
Mondelez International Inc NPV A 6.99% (Kraft)
Schroders plc Vtg Shs Ordinary GBP1 6.28%
Heineken Holdings Ord EUR1.6 5.74%
Sage Group Ordinary 1 4/77p 5.02%

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Re: British Empire (BTEM)

#180336

Postby Aminatidi » November 14th, 2018, 6:25 pm

StOmer wrote:
Aminatidi wrote:That would put me roughly 1/3 LT & FS, 1/3 defensive and 1/3 "other" diversifiers/other.

Interesting 3-way split, is this idea similar to a typical core/satellite approach of 70% core where your core allocation would be LT, FS and defensives?


Don't know as to some degree I'm making it up as I go along :D

Put it this way, I have many years ahead of me so in theory I'm in the "accumulation" stage but candidly I don't have the stones to put everything in stocks which is where the 1/3 defensives comes from.

I'm quite happy with 1/3 in conviction/concentrated stocks which is basically the Fundsmith/Lindsell Train approach.

That leaves around 1/3 where I could go with the likes of Bankers/FCIT (and still may) but within that 1/3 there's still room for several IT's where I'd like a balanced approach.

I'm throwing in the full ISA allowance most years for the foreseeable as I have money in the bank.

Throw in Brexit uncertainty and what feels a fairly general opinion that making money won't be as easy as it has been and I'd say I'm trying to take sensible precautions - better to not make as much than to lose a lot.

StOmer

Re: British Empire (BTEM)

#180381

Postby StOmer » November 14th, 2018, 10:02 pm

The long-gone IT magazine used to run a portfolio of 10 trusts as the editor found that worked best for him, easy to manage and rebalance where necessary. Your 1/3 split could easily be moved to a 70/30 core/sat structure where your satellite holdings take advantage of the fact that IT's offer opportunities in many diverse areas such as Biotech, Mining etc.

Not a criticism, just interested in why you have gone more defensive from earlier posts. Looking at your current split of LT, FS, Defensives and then the likes of BTEM, suggests a very cautious approach that could do well but will almost certainly miss out on much of any further growth and likely to perform worse than a single global generalist such as F&C, Monks, Bankers etc. Has the move to a more cautious approach resulted from a belief in a market downturn or has something such as the October fall caused a rethink?

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Re: British Empire (BTEM)

#180414

Postby Aminatidi » November 15th, 2018, 5:52 am

StOmer wrote:The long-gone IT magazine used to run a portfolio of 10 trusts as the editor found that worked best for him, easy to manage and rebalance where necessary. Your 1/3 split could easily be moved to a 70/30 core/sat structure where your satellite holdings take advantage of the fact that IT's offer opportunities in many diverse areas such as Biotech, Mining etc.

Not a criticism, just interested in why you have gone more defensive from earlier posts. Looking at your current split of LT, FS, Defensives and then the likes of BTEM, suggests a very cautious approach that could do well but will almost certainly miss out on much of any further growth and likely to perform worse than a single global generalist such as F&C, Monks, Bankers etc. Has the move to a more cautious approach resulted from a belief in a market downturn or has something such as the October fall caused a rethink?


There may be trouble ahead to borrow a lyric. Of course, there may not be, but the recent wobble made me realise I don't like volatility that much.

This is money that was in the bank earning nothing so making a reasonable return would be a good start rather than chasing larger returns at the risk of larger falls/more volatility.

The 10 trust thing is roughly how I've been allocating things in my head.

I'm already considering something like F&C for a chunk and if I had a platform that supported it (thanks Fidelity) something like BMO Managed Growth was an option I referred to on here that I'm also considering.

But.. as I read on another thread, when a simple trust like F&C is on a premium you do wonder whether it's tracker time for that kind of broad global exposure....

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Re: British Empire (BTEM)

#180506

Postby scotia » November 15th, 2018, 11:53 am

Aminatidi wrote:There may be trouble ahead to borrow a lyric. Of course, there may not be, but the recent wobble made me realise I don't like volatility that much.
This is money that was in the bank earning nothing so making a reasonable return would be a good start rather than chasing larger returns at the risk of larger falls/more volatility.

I don't like the volatility either, but I would be substantially poorer if I had continued to hold all of my cash in a bank. A lot depends on your time horizon. I keep a significant proportion in cash which should cover all likely short to medium term needs. It used to be suggested by family lawyers that such a sum should amount to at least three times your annual income. Then for the rest I tend to go for growth stocks, and just put up with the volatility.
I tend to agree with you - there may be trouble ahead, but who knows where? Bonds used to be considered a reasonably safe haven, but with world interest rates likely to rise (at last!), then Bond rates need also to rise, and consequently existing Bond prices need to fall. And I'm not a gold believer! So where are supposedly low volatility funds going to put their money?


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