The Wise

[mc2fool]

Here's the list in no particular order but the five largest positions by current value are marked with an asterisk, each approx 9-11% of the total.

*Artemis US Select Class I (Acc)
ES AllianceBernstein Sustainable US Equity Fund I (Acc) Fidelity Emerging Markets Class W (Acc)
Fundsmith Equity Fund Class I (Acc)
GCP Infrastructure Investments Ltd (GCP)
HICL Infrastructure Company (HICL)
*JPMorgan Global Bond Opportunities C (Acc)
*LF Brook Continental European P I (Acc)
Liontrust UK Smaller Companies I (Acc)
*M&G Emerging Markets Bond Class I (Acc)
*Royal London Sustainable Leaders C (Acc)
SVM UK Opportunities Institutional Class B (Acc)

Well (shock!) look at that!

[CliffEdge]

I have to say GS my heart sunk for you when I read:

She had the ear of people in her church who steered her to the current outfit

A very close (religious) friend (just retired) was inveigled into a blatant Ponzi scheme by one of the 'elders' in her church (community based), who had been receiving wonderful guaranteed returns from his investment. My friend initially received some decent returns on her initial deposits. She then (under persuasion) mortgaged her home and invested the lot into the scheme. I pleaded with her not to and basically the friendship broke down. She ended up having to return to work and renting a small place. The whole community lost a shedload of money.

T7

Dangerous places churches. I never go near.

[scotia]

Here's the list in no particular order but the five largest positions by current value are marked with an asterisk, each approx 9-11% of the total.
*Artemis US Select Class I (Acc)
*JPMorgan Global Bond Opportunities C (Acc)
*LF Brook Continental European P I (Acc)
*M&G Emerging Markets Bond Class I (Acc)
*Royal London Sustainable Leaders C (Acc)
The platform seems to be something called Transact, which I also am not familiar with.
GS

The Total returns of the 5 largest (plus a Vanguard Developed World Tracker ETF for reference) are shown below

Data from Hargreaves Lansdown
I believe that LF Brook Continental Europe has now become WS Ardtur Continental Euro
For further information (and to check my figures) go to http://www.hl.co.uk and use the search button - type in the fund name, and go to the prompted info page
I know nothing about a platform named Transact

[XFool]

I know nothing about a platform named Transact

https://www.transact-online.co.uk/

[GoSeigen]

Here's the list in no particular order but the five largest positions by current value are marked with an asterisk, each approx 9-11% of the total.

*Artemis US Select Class I (Acc)
ES AllianceBernstein Sustainable US Equity Fund I (Acc) Fidelity Emerging Markets Class W (Acc)
Fundsmith Equity Fund Class I (Acc)
GCP Infrastructure Investments Ltd (GCP)
HICL Infrastructure Company (HICL)
*JPMorgan Global Bond Opportunities C (Acc)
*LF Brook Continental European P I (Acc)
Liontrust UK Smaller Companies I (Acc)
*M&G Emerging Markets Bond Class I (Acc)
*Royal London Sustainable Leaders C (Acc)
SVM UK Opportunities Institutional Class B (Acc)

Well (shock!) look at that!

That's a but cryptic for me but I assume you mean the portfolio performance is no surprise given the performance of the highlighted components?

The Total returns of the 5 largest (plus a Vanguard Developed World Tracker ETF for reference) are shown below

Thank you @scotia, that helped me figure out some initially incomprehensible tables in the report which have a number of columns labelled "Qrt" with numbers 1-4 which I initially assumed meant quarter but I now realise are quartiles.


2022 was certainly a difficult year for all assets and particularly for bonds, but IMO you should not have been holding bonds by 2022. It's hard to compare my portfolios' performance over the same period because my recording is rather lazy these days. I have an overall valuation at Nov 2021 (vs Aug 21 when my mother's capital was invested) and a figure for today, so that is also a two year period, but not quite overlapping; my portfolios show a gain over the two years of about 6%, with net drawdown totalling about 7%, so conservatively 6%pa growth.

6%pa is by no means impressive but is a rather better than 9%pa losses IMHO!

Also, I use cheap brokers so the frictional cost to me is close to zero, whereas the expensive, superior services my mother is using seem to be costing her some 1%pa whether the portfolio grows or not -- which is something of a headwind.


I'm not sure where I'm going with all this musing other than to wonder how much of this is done in her interest and how much is funding the fancy cars or boats. (We made do with a Skoda Fabia, a solid family vehicle .


GS

[GoSeigen]

Just for my clarification, GoSeigen, when you say II do you mean ii, i.e. Interactive Investor?

Yes. I'd never noticed they use ii exclusively and not II, my bad. I guess abrdn bought them to gain a few much-needed vowels?

[mc2fool]

Well (shock!) look at that!

That's a but cryptic for me but I assume you mean the portfolio performance is no surprise given the performance of the highlighted components?

No, the surprise is that those two are ITs! The rest are OEICs/UTs.

(Actually HICL is a UK domiciled investment trust whereas GCP is a Jersey domiciled investment company, but that's a distinction without any real difference...)

[Dod101]

From what GS has said, given his mother’s attitude, there is not much he can do about it. I am surprised that he seems to have all the details of his mother’s new investments. Clearly they remain in touch which in itself is a good thing but in my opinion if he pays too much attention he is going to become increasingly frustrated. If his mother is determined to plough an independent path he might as well leave her to it.

Dod

[Lootman]

From what GS has said, given his mother’s attitude, there is not much he can do about it. I am surprised that he seems to have all the details of his mother’s new investments. Clearly they remain in touch which in itself is a good thing but in my opinion if he pays too much attention he is going to become increasingly frustrated. If his mother is determined to plough an independent path he might as well leave her to it.

True, although if GS perceives this nest-egg as his inheritance then he might be right to be concerned to see it being eroded.

After my dad died I managed my mother's money for her. Initially through advice and later by taking over the funds directly or using my POA. I ensured that she always had enough, although people of a certain vintage tend not to want to spend a lot anyway - I told her to take a world cruise but she just saw that as too extravagant.

So in the end I was really managing (what I perceived to be) my own money.

[Dod101]

From what GS has said, given his mother’s attitude, there is not much he can do about it. I am surprised that he seems to have all the details of his mother’s new investments. Clearly they remain in touch which in itself is a good thing but in my opinion if he pays too much attention he is going to become increasingly frustrated. If his mother is determined to plough an independent path he might as well leave her to it.

True, although if GS perceives this nest-egg as his inheritance then he might be right to be concerned to see it being eroded.

After my dad died I managed my mother's money for her. Initially through advice and later by taking over the funds directly or using my POA. I ensured that she always had enough, although people of a certain vintage tend not to want to spend a lot anyway - I told her to take a world cruise but she just saw that as too extravagant.

So in the end I was really managing (what I perceived to be) my own money.

Well presumably if the mother of GS loses her marbles GS will be in a position via a POA to take control of her assets but sadly it might all be too late. Currently all he can do is respect the fact that it remains her money and she can handle it as she pleases.

Dod

[Alaric]

No, the surprise is that those two are ITs! The rest are OEICs/UTs.

There are areas of possible investment, infrastructure being an example, where the open ended nature of OEICs and for that matter ETFs doesn't work very well. Hence the use of ITs.

[scotia]

No, the surprise is that those two are ITs! The rest are OEICs/UTs.

There are areas of possible investment, infrastructure being an example, where the open ended nature of OEICs and for that matter ETFs doesn't work very well. Hence the use of ITs.

Yes - their KIDs include the text "cannot be encashed or redeemed". You are the mercy of the market.
I'm not au fait with such ITs, but both of them have NAVs which are fairly constant over the past year, and both started with a discount near zero, but the discount has plunged to around -17% (HICL) and -39% (GCP) - with the consequent fall in market price. So I'm curious - can anyone suggest why?

[mc2fool]

No, the surprise is that those two are ITs! The rest are OEICs/UTs.

There are areas of possible investment, infrastructure being an example, where the open ended nature of OEICs and for that matter ETFs doesn't work very well. Hence the use of ITs.

Indeed. An even more obvious example is directly held property, and in times of turmoil we've seen open ended direct property funds stopping redemptions for long periods. My surprise isn't that ITs are better suited for such assets, but that an IFA would go there! I guess there are some previously immutable things that really have changed since RDR ...

I'm not au fait with such ITs, but both of them have NAVs which are fairly constant over the past year, and both started with a discount near zero, but the discount has plunged to around -17% (HICL) and -39% (GCP) - with the consequent fall in market price. So I'm curious - can anyone suggest why?

Well, the mundane answer is that the market expects the NAV to drop in future, but the thing to understand about these is that, unlike the usual collection-of-shares type of ITs where you can go check what their holdings are worth in the market, the NAV for these is calculated by the managers on a discounted cash flow basis, considering a number of macroeconomic assumptions.

So, for example, if one of the holdings is a contract to do the building maintenance for a hospital for the next 30 years, for a payment of £n million per year, the "NAV" for that will be the present value of those discounted future cash flows -- and that will be affected by a bunch of factors, including interest rates. The higher interest rates are expected to be the lower the present value, etc.

Pages 46 - 52 (as numbered) of the HICL annual report explain the valuation methodology. For a tl;dr see just the graphic on page 50 for the valuation sensitivities of how each of the macroeconomic factors affects the valuation.

https://documentscdn.financialexpress.net/Literature/209AFB9E3632C128F1C7EBD5254C53C9/202744955.pdf

[Alaric]

An even more obvious example is directly held property, and in times of turmoil we've seen open ended direct property funds stopping redemptions for long periods. My surprise isn't that ITs are better suited for such assets, but that an IFA would go there!

There aren't any property funds or REITs in the portfolio. Perhaps IFAs are feeling bitten by the suspension of redemptions in the open ended funds. That wouldn't rule out REITs, but perhaps the major ones like British Land, Land Securities or SEGRO are rather more property trading and development outfits, rather than just holders of property.

[mc2fool]

An even more obvious example is directly held property, and in times of turmoil we've seen open ended direct property funds stopping redemptions for long periods. My surprise isn't that ITs are better suited for such assets, but that an IFA would go there!

There aren't any property funds or REITs in the portfolio. Perhaps IFAs are feeling bitten by the suspension of redemptions in the open ended funds. That wouldn't rule out REITs, but perhaps the major ones like British Land, Land Securities or SEGRO are rather more property trading and development outfits, rather than just holders of property.

Yes, I did notice the lack of property in the portfolio, my comment was a general one rather than specific to that portfolio. I suppose if the IFA wanted to include any property they could have done so with some of the direct property ITs ... but that would have added to the IFAs-doing-ITs surprise.

[GoSeigen]

There aren't any property funds or REITs in the portfolio. Perhaps IFAs are feeling bitten by the suspension of redemptions in the open ended funds. That wouldn't rule out REITs, but perhaps the major ones like British Land, Land Securities or SEGRO are rather more property trading and development outfits, rather than just holders of property.

Yes, I did notice the lack of property in the portfolio, my comment was a general one rather than specific to that portfolio. I suppose if the IFA wanted to include any property they could have done so with some of the direct property ITs ... but that would have added to the IFAs-doing-ITs surprise.

Maybe with 70% of her net wealth already being property...

GS

[GoSeigen]

That's a but cryptic for me but I assume you mean the portfolio performance is no surprise given the performance of the highlighted components?

No, the surprise is that those two are ITs! The rest are OEICs/UTs.

(Actually HICL is a UK domiciled investment trust whereas GCP is a Jersey domiciled investment company, but that's a distinction without any real difference...)

I wonder why it was considered a good idea to have 20% of the assets in UK infrastructure investment trusts last year? With hindsight it might not have been the greatest move, but I'm wondering if I was missing something about the infrastructure space? Was that a popular trade at the time?

EDIT: also five out of twelve holdings suffered more than 20% drawdown in the two year holding period. Is that usual for a medium risk portfolio?

GS

[mc2fool]

I wonder why it was considered a good idea to have 20% of the assets in UK infrastructure investment trusts last year? With hindsight it might not have been the greatest move, but I'm wondering if I was missing something about the infrastructure space? Was that a popular trade at the time?

EDIT: also five out of twelve holdings suffered more than 20% drawdown in the two year holding period. Is that usual for a medium risk portfolio?

Infrastructure trusts were considered a good income play as the revenue they receive from many of their contracts is tied to RPI or similar. However, looking at their dividend growth figures it doesn't seem to have worked out that way. Indeed, at least one, HICL, has frozen its dividends for a couple of years while it rejigs its portfolio*.

There is, of course, one view that the value of any investment is the discounted sum of the future cash flows from it (dividends), and while that's arguable for most stocks it's very relevant to infrastructure companies that, as explained above, directly value themselves on that basis. With the rise in interest rates these (supposedly) index linked bond like investments have suffered badly, and especially in the premiums/discounts which are, of course, much more about market expectations than actuals.

Yeah, 20% in infrastructure does, IMHO, look a bit much, especially in what otherwise, at least superficially, looks like a "tick box" IFA portfolio. Maybe he considered them to be quasi bonds and counted them as such towards a 60/40 mix?

I can't answer your final question....

* https://citywire.com/investment-trust-insider/news/hicl-dividend-to-stay-flat-to-2025-as-asset-mix-changes/a2417702