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.
    image

  • 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).

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@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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Thomas Lloyd Energy Impact Trust

This new Investment Trust looks rather interesting, especially with the UK government seeding 25m.

Targeting a 10-12% total return over the medium to long term and a 7% yield after capital being fully deployed post 2023.

I’m still trying to work out it’s fee structure and looks to be listing on the 14th December so hopefully we can get this added to the platform.

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Far exceeding the previous fundraising record, £14.8 billion of new money has been raised for investment companies in the year to date1, including £3.8 billion in 16 IPOs, most recently ThomasLloyd Energy Impact Trust whose shares were admitted to trading today.

The previous record was set in 2014 when £10.2 billion was raised.

Looks like Investment Trusts are becoming more popular. They can be a lucrative investment, and have their purpose.

The AIC survey of Investment Managers seem to view that the UK, Asia and clean energy will outperform in 2022. Unfortunately most of the IT’s in these sectors are trading at a premium to value. The only entrants I’m currently looking to enter are UKW, GSF and TLEP. I will monitor the premium/discounts early 2022 for a good entry point.

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Would anyone have a means to pull in the NAV and closing trade price for Investment Trusts into say Google Sheets automatically?

There are some interesting Trusts that I like, that I would like an easier way to monitor rather than check the AIC website on a daily basis. Plan being to make it easier to check the premium/discounts on a monthly basis.

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The following should work, just replace the link for a given IT.

Price (last close):

=INDEX(IMPORTHTML("https://www.theaic.co.uk/companydata/0P00008ZPP","table",1),2,2)

NAV:

=INDEX(IMPORTHTML("https://www.theaic.co.uk/companydata/0P00008ZPP","table",1),2,5)

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I discovered this IT, the 1st fund ever created:

Launched in 1868, the trust was the world’s oldest collective investment fund.

What is the community’s opinion about this IT?

(Oh IT master, @Dougal1984 , what is your vision about F&C Investment Trust (FCIT)? :wink: )

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I was about to say its probably total crap(thinking of their High Income Trust that has consistently underperformed its benchmark), but taking a look at it, this one seems decent.

I mean as at today, its NAV(Total Return) has returned 260.8% in 10 years, vs the popular Vanguard all world ETF of 247%. From the below it has consistently beaten the FTSE all world index by a small margin, has a relatively low fee of 0.52%, and is currently trading at a 5% discount.

@RLX Thanks for pointing this out. It looks a good alternative to a FTSE/MSCI all world tracker. In fact I might add this to my long term regular investing list. Need to look at it more, but basically keep buying this trust when its trading at a discount, and then sell if it ever trades at a premium again, and switch to an ETF tracker. That should squeeze out an extra 5% + return.

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I’m looking to add an investment trust to my portfolio and wondered if anyone had any suggestions. My pension’s in Vanguard Global All-cap, Baillie Gifford Long-term Global Growth and Fundsmith. I can lower my platform costs significantly by switching to exchange-traded securities, so I’m moving to VWRL and SMT but I’m uncertain what to replace Fundsmith with.

Ideally, I’d want a trust with a similar focus on quality or perhaps more value- or income-orientated. I toyed with the idea of replicating FS by buying the underlying holdings but I don’t want to complicate things. One of the main criteria is that I want a relatively high ‘active share’. I don’t see much point buying FCIT, as an example, when its top five is MSFT, AAPL, AMZN, GOOG and META as I could buy the same thing cheaper via a tracker.

I’m wracking my brain but struggling to think of many options. Unlike its OEIC equivalent, VWRL doesn’t include small-caps so SSON could be the way to go. Any advances on that @Dougal1984 or @RLX? Other options include LTI, BNKR, SAIN and perhaps MWY–but I’m not really sold on any of them just yet–am I missing any others? :thinking:

You want VWRP I think unless you like the income?

Also for FCIT, see post above.

SMT holds private companies so probably no need for another.

LTI could be an option?

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