The Investment Trusts Handbook 2019

[LittleDorrit]

The free ebook copy of this years handbook has now been published (registration required).
https://downloads.harriman-house.com/15 ... 026d1ee7fd

[StOmer]

A good read, thank you for the link. Nice to see it uses the old name and identifier for Foreign & Colonial, also a good piece in there from John Newlands. Very interesting.

[nmdhqbc]

I'm about 10% in. One of the chapters talks about Investment Trusts being more complex and that being one reason they'll never be as mass market as open ended funds. Am I the only one who actually finds them much simpler to get my head around? I find open ended funds much more opaque hard to fathom. Things such as equalisation, inc/acc units, different class of units that charge different amounts, predictability of dividends, differing platform charging for them. IT's just make sense to me.

[StOmer]

... Am I the only one who actually finds them much simpler to get my head around? I find open ended funds much more opaque hard to fathom. Things such as equalisation, inc/acc units, different class of units that charge different amounts, predictability of dividends, differing platform charging for them. IT's just make sense to me.

I agree with you. I also find the smaller universe of IT's to be easier to navigate.

[ADrunkenMarcus]

Am I the only one who actually finds them much simpler to get my head around? I find open ended funds much more opaque hard to fathom. Things such as equalisation, inc/acc units, different class of units that charge different amounts, predictability of dividends, differing platform charging for them. IT's just make sense to me.

Same here!

Best wishes

Mark.

[XFool]

I'm about 10% in. One of the chapters talks about Investment Trusts being more complex and that being one reason they'll never be as mass market as open ended funds. Am I the only one who actually finds them much simpler to get my head around? I find open ended funds much more opaque hard to fathom. Things such as equalisation, inc/acc units, different class of units that charge different amounts, predictability of dividends, differing platform charging for them. IT's just make sense to me.

I agree also. I have never really understood the use of the term 'complicated' when referring to straightforward ITs, especially when compared to the universe of Unit Truts, OIECs etc. It seems to be tied solely to the matter of discounts.

[XFool]

The free ebook copy of this years handbook has now been published (registration required).
https://downloads.harriman-house.com/15 ... 026d1ee7fd

No registration required for PDF version.

[Hariseldon58]

Interesting , many thanks for the link.

I found no registration was required for kindle version and it mentioned emailing the file to your kindle email address, I downloaded the file on iPad and opened with kindle and all worked fine.

[yorkshirelad1]

The free ebook copy of this years handbook has now been published (registration required).
https://downloads.harriman-house.com/15 ... 026d1ee7fd

Thank you: very useful url! Like the pdf (no regn reqd'd).

[Leither]

I'm about 10% in. One of the chapters talks about Investment Trusts being more complex and that being one reason they'll never be as mass market as open ended funds. Am I the only one who actually finds them much simpler to get my head around? I find open ended funds much more opaque hard to fathom. Things such as equalisation, inc/acc units, different class of units that charge different amounts, predictability of dividends, differing platform charging for them. IT's just make sense to me.

Thanks to LittleDorrit (wonderful book) for highlighting this handbook, I'm slowly progressing through it.

I too was struck by Mark Dampier's (he of Hargreaves Landsdown) for saying ITs were complicated. But of course I think they've made their pots of money through unit trust commissions. And coincidentally there was an item in yesterday's Times criticising HL for their high fees and mentioning that they don't include in ITs in their latest list of rec'd investments. Dampier repeated what he'd said in the AIC handbook, ie

Dampier says that if Hargreaves promoted an investment trust on its Wealth 50 on a Saturday, platforms would be swamped with buy orders by Monday and would struggle to execute them and the price would rise sharply as the market moves against buyers. Things would be even worse if a sell signal was issued.

this was followed by

Rebecca O’Keefe, the head of investments at Interactive Investor, says: “Most investment trusts on our Super 60 list have market capitalisations of about £1 billion or more, particularly the more mainstream trusts such as Foreign & Colonial, Scottish Mortgage and Murray International. Trusts of this size have ample market liquidity to justify inclusion.”

https://www.thetimes.co.uk/past-six-day ... -j5r759727

Seems to me that HL is driven more by commissions rather than the merits of the individual investments. But of course I'm sure I'm wrong in thinking that.

Regards,

Leither.

[scotia]

Seems to me that HL is driven more by commissions rather than the merits of the individual investments. But of course I'm sure I'm wrong in thinking that.

Well it may be commissions, but it could also reflect on their customer base. They have introduced large numbers of UK persons to investing. And their basic product is the Unit Trust or OEIC. This can be marketed in an extremely straightforward manner - you pay for what you get. But with an IT you pay for what the market currently thinks it may be worth, and when market sentiment alters significantly this can result in price variations which are uncorrelated with the value of the equity contained within the IT. So for newcomers to investment I see the UT or OEIC as being a safer haven , and it seems reasonable for HL to provide a list of UTs or OEICs which they consider to be "best buys", along with articles on these funds. Small top-up purchases of UTs and OEICs are also more cost efficient than ITs
A more experienced investor may prefer ITs, but since they hopefully know what they are doing, they won't need a "best buy" list. And HL charge less for substantial investments (presumably from more experienced investors) in ITs.
So I think HL is behaving reasonably with a wide selection of investors.
As an aside, I notice that most contributors on this site favour ITs - but that may be because they are experienced investors. However I sometimes find IT investors becoming apparently irrational in their choice. I remember back in the dot com boom, the largest Tech Fund had both an IT and a UT with (nearly) the same constituents. As the fever gripped the market, the IT went to a large premium, and the fund managers issued a statement pointing out that it was more sensible to buy the UT - but it didn't seem to reduce the IT fervour. Guest what suffered most when the bubble burst.
So possibly directing less savvy investors (and others) to UTs and OEICs is not a bad idea.
If this sounds like an advertising promotion for HL, I should add that I hold no shares in HL, although I hold the majority of my investments with HL. For historical reasons I also have smaller portfolios with Charles Stanley Direct, and Fidelity.

[Dod101]

I missed this in December but have just caught up with it. It surely deserves a wide audience. It is a well balanced and informative effort I think.

Re the comments on ITs v OEICS etc, I think what we forget is that most of the general public (I think) are not really interested in investment and that we are a small band of specialists with a real interest. The HL founders have made a fortune by concentrating on selling to the masses and for them I am prepared to say that OEICs etc are probably best even although I own only one or two bond funds in that form.

Thanks to the OP for posting this.

Dod

[everhopeful]

Thank you Little Dorrit for posting the link. This is an excellent summary of ITs and how they work. I have held ITs for many years and at one time had all of my personal pension (small compared with my Final Salary pension) in F&C. As Dod says it deserves a wide audience.There are often questions on TLF about using ITs in portfolios and I think a reference to the OPs link to this Handbook should be a standard response.