Investment Trusts Investing

I think it could be interesting to speak about Investment Trusts (ITs), an UK closed-end fund type (closed-ended investment company) to have more dynamism about the ITs in this community.

For example, talking about the good ITs, the bargains (ITs trading a discount for short-term investing), specialized ITs (that invest in alternative or unusual assets not found in other funds types).

The ITs sector also includes Venture Capital Funds (VCTs) and Real Estate Investment Trusts (REITs).

For those who don’t know what are Investment Trusts:

The Association of Investment Companies (AIC) that represents & provides investor data on closed-ended funds including investment trusts & venture capital trusts:

https://www.theaic.co.uk/

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In my case, I like the following ITs for medium/long term investing:

Under review I have these ITs:

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It may also be worth adding that a lot of Investment Management companies have a variety of strategies, in which they run in different wrappers available to investors to buy.

To give just one example of a strategy that retail investors can buy into in an Investment Trust / Mutual Fund(OEIC/ICVC/VCC) form:

Templeton Emerging Markets Investment Trust
Templeton Emerging Markets Fund A(acc)USD

  • Investment Objective wording is near identical


  • Both are managed by Chetan Sehgal and Andrew Ness.
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  • The Ongoing Charge for the Investment Trust is 0.98%, and 2% for the fund.
    image

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As you would expect with similar strategies in different wrappers from the same Investment Management team, the performance of both are very much aligned.

The Investment Trust performance is actually better, most likely because as above, its operational costs(Ongoing Charge), is 1% less per year.

To top it off - their performance in the Emerging Markets is not bad, in comparison to the Morningstar Benchmark:

And last of all, the icing on the cake, is that the Investment Trust is somehow trading in the market at a discount:

So if you were looking at the Templeton Emerging Markets Fund - why wouldn’t you buy their Investment Trust instead - cheaper fees, better performance, and it is trading at a 10% discount to its current NAV. The only concern with that may be that it has consistently traded at a discount to NAV, whereas the SICAV would trade at NAV.

That and 212 do not charge any platform fee for holding this trust!

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@Dougal1984 good case study of ITs vs OEICs. And also a good bargain hunting (trading with discount).

@RLX
It would also be good to get a list of CEFs missing on 212, but available to add and request them.

Similarly, I would suggest that 212 get added to this list:

https://www.theaic.co.uk/availability-on-platforms/costs-at-a-glance

It would be a good way to advertise 212 once they open up the platform to new users again.

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If you’re looking to buy these I’d maybe advise against doing so on T212. I’ve had market buy/sell orders open for a week so far.

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To be honest, given MNTN is available, I probably wouldn’t bother with MNTC unless that is near fully invested. That being said, you could potentially check the premiums/discounts on both to decide which is better to trade.

I hold MNTC as it was the first added to 212, but similarly I’ve friends that bought it on AJB and a couple others that had to wait a few days. The liquidity is really quite low, but that really doesn’t matter to me as its a long term hold.

MNTN

MNTC

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I initially picked up some MNTC here when it became available. I hold some MNTN with AJB and figured MNTN would be more liquid (your graphs would suggest the opposite!). I knew the traded volumes were low but had assumed that the slow fill on the order was down to T212 access.

I don’t fully appreciate the difference between the ordinary and C shares but as far as i can tell the money raised from C shares isn’t immediately invested but they should be converted to ordinary shares before the end of April 2024.

It’s a long term hold for me as well. Hoping as some of their bigger names get close to going public they get more exposure and more brokers allow access.

Some interesting reading: The Schiehallion Fund: Early And Patient – IT Investor

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Thats exactly it.

Your article explains it really well:

What are ‘C’ shares?

Currently, Schiehallion has two classes of share – its Ordinary shares and its C shares.

C shares (the C stands for conversion) are often used by trusts that raise large sums of money and that invest in relatively illiquid assets.

As it takes time to invest all the new cash raised, it can be ring-fenced in a separate class of shares for a while. This means existing investors don’t suffer a “cash drag” on the shares they already hold while the new money is put to work.

After certain conditions are met or a set length of time has passed, the two classes of shares are merged (the C shares usually become ordinary shares) and the trust continues on its merry way.

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I had a cursory look this morning, cross-referencing with the AIC website. T212 already has most of them listed. It’s only the more obscure/exotic ones that aren’t available and I suspect they’re probably not on IBKR anyway. I’d suggest there’s little point compiling a list because I doubt there’s much clamour for structured finance ITs etc, so it’s probably best done on a case-by-case basis.

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Just to update, my 212 order for MNTN went through this morning at market open.
I’m guessing as part of this transaction:

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This was an interesting read:

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