OEICs to IT's

[OttawaCitizen]

I am considering switching the following to IT's principally to save on HL fees - Artemis Global Income, M&G Global Dividend and M&G Strategic Corporate Bond. I hold HEFL, MYI & MRCH at the moment. Is this worth doing and what ideas does anyone have?

[Spet0789]

I am considering switching the following to IT's principally to save on HL fees - Artemis Global Income, M&G Global Dividend and M&G Strategic Corporate Bond. I hold HEFL, MYI & MRCH at the moment. Is this worth doing and what ideas does anyone have?

Sensible choices (my family hold MYI and MRCH). VHYL is also an option. Massively diversified, cheap, less US-heavy than the index, yields 3.4%. For fixed income, ETFs also make sense.

[scrumpyjack]

Fairly minor but buying ITs incurs stamp duty but buying most ETFs does not as they are Irish domiciled.

[Dod101]

Switching from OEICs to ITs simply to save fees is not a good idea. You need to look at the advantages/disadvantages of holding either collective investment. You can after all change platforms. Nevertheless I would move to ITs because they are in my opinion at least, much better investment vehicles. They have an Annual Meeting, a Board of Directors (as well as in most cases an investment manger), they can borrow, they do not have to pay out all their income each year and they are companies in their own right. As closed end funds they do not have the problems that for instance Woodford funds had recently with liquidity. So go for it but not simply in order to save fees.

Dod

[OttawaCitizen]

Thanks Dod. I have begun to realise the benefits of IT's also. I was wondering how the OEICs I mentioned could by replicated by IT's bearing in mind that I already hold HFEL and MYI.

[Dod101]

Thanks Dod. I have begun to realise the benefits of IT's also. I was wondering how the OEICs I mentioned could by replicated by IT's bearing in mind that I already hold HFEL and MYI.

I am not the best person to advise you on that because I do not know the funds you mention, but I am sure others will be along to give you some advice.

Dod

[jonesa1]

Re: Artemis Global Income and M&G Global Dividend, both appear to be unconstrained global funds yielding around 3%. Have a look at Scottish (SCIN) from the AIC Global sector and any IT from the Global Equity Income sector. https://www.theaic.co.uk/aic/find-compa ... -companies
If the dividend isn't important, then there are a wider range of ITs in the Global sector.
Some suggestions to have a look at:
For general global coverage: Bankers (BNKR) or F&C IT (FCIT) could be good choices, not high yields but long record of increasing them
For higher yield and bias to the US, JPM Global Growth and Income (JPGI uses capital and income to pay 4% of NAV)
For higher yield (~4.3%) with a tilt to Asia and emerging markets, Murray International (MYI)
For high (historically at least) growth: Scottish Mortgage (SMT, high conviction portfolio with a lot of tech stocks), Edinburgh Worldwide (EWI, global smaller companies, tech bias)

[mc2fool]

I am considering switching the following to IT's principally to save on HL fees - Artemis Global Income, M&G Global Dividend and M&G Strategic Corporate Bond. I hold HEFL, MYI & MRCH at the moment. Is this worth doing and what ideas does anyone have?

If your primary aim is to save on HL's exorbitant fees for holding OEICs/UTs, and you like those funds anyway, another way would be to simply move them to another cheaper broker.

IWeb for example has no (zero) holding, annual, or inactivity fees at all, for anything (inc. OEICs/UTs). There's a one-off £25 account opening fee, and a £5 dealing fee for buying and selling (inc. OEICs/UTs), although you won't be paying that if you simply transfer them in, and I believe HL now has no transfer out charges.

https://www.iweb-sharedealing.co.uk

[Dod101]

Re: Artemis Global Income and M&G Global Dividend, both appear to be unconstrained global funds yielding around 3%. Have a look at Scottish (SCIN) from the AIC Global sector and any IT from the Global Equity Income sector. https://www.theaic.co.uk/aic/find-compa ... -companies
If the dividend isn't important, then there are a wider range of ITs in the Global sector.
Some suggestions to have a look at:
For general global coverage: Bankers (BNKR) or F&C IT (FCIT) could be good choices, not high yields but long record of increasing them
For higher yield and bias to the US, JPM Global Growth and Income (JPGI uses capital and income to pay 4% of NAV)
For higher yield (~4.3%) with a tilt to Asia and emerging markets, Murray International (MYI)
For high (historically at least) growth: Scottish Mortgage (SMT, high conviction portfolio with a lot of tech stocks), Edinburgh Worldwide (EWI, global smaller companies, tech bias)

I would add for general global coverage, Alliance. It too has an excellent record of increasing dividends for over 50 years and a decent growth record despite its problems in the last few years (which have now settled down) It has a good US coverage if that is of interest.

Dod

[scotia]

I am considering switching the following to IT's principally to save on HL fees - Artemis Global Income, M&G Global Dividend and M&G Strategic Corporate Bond. I hold HEFL, MYI & MRCH at the moment. Is this worth doing and what ideas does anyone have?

OK - I'm in the same boat with HL, and I have moved a fair proportion of my funds over to ITs and ETFs. But beware of throwing the baby out with the bathwater. On a five year basis you will be saving about 2 percent. My worst move was to replace some European Funds with TR European Growth IT in the summer of 2017 - when it was sitting around par - but has dropped to a discount of around 15%. And if the current world bull market turns sour, I would expect to see the discount of many other ITs increasing - even only by 2% - it negates the saving. Looking at your current ITs on a 5 year total return basis, the M&G Global Dividend comfortably out performs them on a 5 year basis - and the Artemis Global Income is only slightly bettered by the Henderson Far East Income. So I would not be rushing to top up your existing ITs. As others have said, if a high yield is not a criterion, then a Large Global IT with a wide spread of investments may be worth looking at - I have a substantial holding in Foreign and Colonial, which has performed significantly better than your current choices. Its discount over the past year has been around the 2% mark - but if you look at the 10 year performance you will see long periods of a 10% discount. Is it wishful thinking to believe that the discount has now been brought under control?
Your investment in the M&G Strategic Corporate Bond is quite different from your equity investments. I think you have to ask yourself whether or not you wish to maintain the possible security and lack of volatility this provides. Its not an area I'm much acquainted with.

[everhopeful]

There are ITs which invest in corporate debt and would perhaps be similar to your M&G Strategic bond fund. I hold Invesco Enhanced Income and Henderson Diversified. There are also ITs which hold fixed interest along with equities such as Shires Income. The AIC website will give information by looking at the sector called Debt- Loans and Bonds.

[OttawaCitizen]

Thanks for the detailed reply.

[mattman74]

Henderson Diversified income (HDIV) is currently below par and is one the ITs I use for fixed income. I really rate the managers. They are smart people and they called the recent interest rate cuts correctly.

Other ITs I use for fixed income are New City Yield Fund (NCYF) and City Merchants High Yield (CMHY)

Matt

[Dod101]

In today's Times, Patrick Hoskings is making much the same points as I did in my post of 5 November. It is good to have his endorsement!

This of course is arising from the problems with liquidity with the M & G Property Fund. He goes further and is seeking a complete overhaul of the open ended structure, concerning, inter alia, the reporting of major investors in the funds, independent governance, liquidity mismatch problems and, for property funds, the cosy relationship between the fund managers and their valuers.

For good measure he is quite gloomy about the future for the newly quoted M & G itself.

Dod