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Diary of a dumb investor: me, myself and investment trusts

In response to reader suggestions I’ve been looking at investment trusts as a way to turn my little windfall into a fortune.

 
Diary of a dumb investor: me, myself and investment trusts

I’ve managed to get a bit of perspective since last week, when I was swinging between sickening fears of totally squandering a windfall and wild hopes of accruing great wealth.

For first-time readers: my great uncle has given me £10,000 to invest and, over the last couple of weeks, I’ve been trying to figure out the best way to do this.

I’ve done quite a lot of dithering, as I really don’t want to mess this up. But this week I can announce that I’ve reached my first concrete decision: I’m going to go with the Hargreaves Lansdown platform. There seems to be agreement that it’s the most user-friendly, and since I don’t plan on becoming a ‘day trader,’ I should be able to keep the costs to a minimum.

I’m grateful for the advice offered in response to my last diary entry – especially to Chris Marsden for explaining the meaning of that rather enigmatic northern phrase 'there's aye a soming'. I notice that the doubts as to my existence are persisting; I can only hope that these will ebb when you see some documentary proof.

What I found really helpful was the detailed discussion of investment trusts, in response to my apparent neglect of what could be really great money-making vehicles.

What I've learned about investment trusts

From some reading around the subject, I understand that these are listed companies which invest in the shares of other companies. I'm impressed with the idea that their charges are generally cheaper than unit trusts.

I also like what I hear about their 'closed ended' structure, which means they issue a limited number of shares to investors. This is different from unit trusts which are 'open ended' because they can create and delete units in response to investor demand. This is said to make investment trusts more resilient because if the stock market crashes, investment trusts do not have to sell their holdings to give money to investors looking to sell.

As a young (I'm not yet 30) investor I like the idea of choosing an area and sitting through the ups and downs in the hope that returns over the long term will be good.

However, I'm still getting my head around the issue of premiums and discounts.

Unlike units in open-ended funds, the share prices of investment trusts don't always reflect the investment return the trust is generating. So if the trust is popular, its share price can trade above the value of the trust's investments (that's the premium). More often than not, though, investment trust shares trade below the 'net asset value' of the portfolio (that's the discount).

Rather confusingly, I have been told that discounts can create opportunities to buy investment trust shares on the cheap. On the other hand, if you are a long-term investor, the issue of discounts or premiums is not so relevant? I will have to ponder that some more.

A punt on property?

Anyway, to business: I’ve read that according to IPD (Investment Property Databank) figures UK commercial property had a bumper 2010, generating a total (capital plus income) return of 15.2%. It appears that property has bounced back from the financial crisis as confidence in the UK economy has grown.

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88 comments so far. Why not have your say?

Peter Redhead

Feb 07, 2011 at 13:01

Dont get too hung up on the subject of charges.Whilst we would all like to see lower costs it is more important to focus on comparative total return ,after charges.

If a fund consistently beats it's index and it's peers then I consider it to be worth the cost. Whatever the 'Charges'.

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David Campbell (Citywire)

Feb 07, 2011 at 13:10

I was recently speaking to one of the smartest and most honest trust analysts I know and he was telling me he had recently run the figures and found there is pretty much no value in trying to trade discounts.

He had yet to deliver the research so didnt go into much detail, but as someone associated with a brokerage and therefore potentially doing himself out of a job I am inclined to trust him on that one! Buy and hold

Dave Campbell, Citywire investments team

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Timothy Skinner

Feb 07, 2011 at 13:17

Europe? no.... see comments on the euro.

Emerging Markets?..... start dripping into Templeton Emerging Markets IT.

Frontier Markets?...no, high charges and hyped prices.

Developed Markets?.... find an old fashioned investment trust that has high exposure to traditional stocks that searches for value overlook - maybe Glaxo and banks just now. Such as Bankers or a Scottish-something make a good, base investment to keep forever.

Anything with high charges?...avoid, they can't sell enough of poor products to cut their charges.

Anything thats fashionable?...avoid, its being "pushed" because of high fees and because fund managers don't want it.

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Paul

Feb 07, 2011 at 13:38

Isn't Chris Turner retiring?

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Rustie

Feb 07, 2011 at 13:48

Propery Investment Trusts.......hahahahahahah....don't make me laugh. I bought 3 years ago from those profligate and consummate liars at New Star and have lost my shirt........its faring no better since being acquired by Henderson. In 30 years of trading I can say one thing with absolute certainty - don't trust ANYONE.....repeat ANYONE, in finance in general and the City in particular.

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Anonymous 1 needed this 'off the record'

Feb 07, 2011 at 13:56

I wouldn't risk anything on Property Investment trusts that focus on UK or USA either, but I have been having a monthly dabble for the last year into 2 of First States property unit trusts, one being Asia and the other being a Global fund.

They have returned quite handsomely so far but I don't expect to hold them for more than another year or two

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Rustie

Feb 07, 2011 at 14:04

Good luck to you Anon 1.

In my judgement, however, you might just as well bet black on a roulette wheel.

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JEL G

Feb 07, 2011 at 14:04

I still say, keep total control of your own destiny and invest directly into the market and avoid the middle man altogether. I have been doing that since the 60's and have made enough to retire on.

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Roy C

Feb 07, 2011 at 14:26

Is this person really a dumb investor, reading into the reasoning put forward.

Just one comment as pointed out above, the charges don't really dictate where you invest, when the end result is satisfactory. Ok ITs are cheaper, but if that was one of your goals, remember Hargreaves will charge 1/2%/annum on this fund even it makes a loss. Jarvis will not charge this 1/2% if held in an ISA and at least 1/3 cheaper to purchase. You didn't mention if you used the ISA option nor the amount invested in the property fund.

You will always face a different point of view, on your choices. I wish you all the best. Hargreaves are excellent for UT's but IT's, Shares, VCT,Warrants,Etfs look at other platforms if you're really trying to save money on costs, in my opinion.

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Kevin S

Feb 07, 2011 at 14:36

Alliance trust is a reasonable alternative to Hargreaves for ISA SIPP or just a dealing account

Has all UK listed stocks including investment trusts , AIM stocks reasonable selection of ETF's & quite a large variety of unit trusts (lower cost than Hargreaves)

easy to deal on line & in ten years no complaint re service when you call them

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Tony Peterson

Feb 07, 2011 at 14:47

JEL G knows how to do it. I'll back up his view 100%.

The result for me, having done as he did, is that in retirement my dividend income stream alone is greater than any total income I enjoyed during my working life.

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Jezzer

Feb 07, 2011 at 14:47

I'm with Hargreaves too. I used to be with Fidelity and found their platform much more user-friendly and better for comparing funds, but at the time (not sure about now) they only did UTs and when they made such a hash of introducing a SIPP I decided to transfer to HL. No regrets, although Nirvana would be HL's breadth with Fidelity's user interface.

I completely agree with Peter's comment on looking for performance and don't worry too much about the charges. If you can find two funds that perform the same, sure - pick the one with the lowest charges, but it's unlikely you'll find two the same. I'm sick to death of the financial journalists trotting out the "you're better off on average with a cheap passive tracker fund" on the grounds that the fees are lower. No-one invests 'on average'. You look for the best performing funds of course. Show me a tracker that performs best in its sector.

Good luck.

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Jezzer

Feb 07, 2011 at 14:48

Tony - sounds great, but how much time do you spend doing research?

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Bagash

Feb 07, 2011 at 14:50

I bought Jupiter Euro Opp in May'10, I liked the performance and the fact that the Manager has a significant money of his own invested in the trust. I cant complain, its up 40%!

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Garlic Geoff

Feb 07, 2011 at 15:37

A sound rule is never to put all your eggs in one basket, and a generalist investment trust is a good way of spreading the risk.

The Alliance Trust, which someone has mentioned already, has a lot to recommend it. Alliance Trust shares stand at a substantial discount, that means that £100 of assets will cost you around £83; their management charges are very low, and Alliance run an ISA scheme with no annual charges. Dividends can be taken or reinvested, and could over the years add up to atidy sum.. You can invest in a very wide range of shares, so you don't have to stick to Alliance shares, (but you could do a lot worse,)

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Rustie

Feb 07, 2011 at 16:30

Many of these comments absolutely fascinate me. Its as if "investors" purport to know what they are doing. Laced with financial clever speak they spout their theories as if enshrined in eternal truth. Listen guys...you're gamblers with fancy vocabularly. If the financial world knew what it was doing we wouldn't be in global meltdown - with economic theories by the yard all getting it bizzarely and risibly wrong. I've heard exactly the same from punters in Ladbroke's....they're all winning, they're all ahead of the bookies.....they're all in total denial. Someone (Kipling?) once wrote - This above all, to thine own self be true. Do yourselves a favour chaps, get real and stop trying to sound so bloody clever.

Nick Leeson

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D G Stonebanks

Feb 07, 2011 at 17:01

Beware that if you have an ISA with Hargreave Lansdown, they will charge you 0.5%/year (max £250) + VAT for managing your fund - even when you make all the decisions yourself.

I have a Crest a/c with Fastrade. They are cheaper than HL and you get company reports - which I think is important if you want to know what's going on with your money.

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Jezzer

Feb 07, 2011 at 17:21

Rustie - good luck when it comes to drawing your pension.

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Hotrod

Feb 07, 2011 at 17:22

There are more ways than one to fold a fitted sheet. Of course if you can't be bothered you can always ask someone else to do it or you can just stuff the damn thing in the drawer in an untidy bundle. Personally I fold my own, for two reasons. (1) I don't like owing anyone favours and (2) I take pride in learning how to produce a professional result.

I adopt the same approach with my investments. I research individual companies and invest directly in them. I'm not saying that I know any better than anyone else. Some might even say that my way of doing things is idiosyncratic! but I re-assure myself in the knowledge that not all investors make rational decisions, therefore the path of any stockmarket cannot be assumed to be logical.

As I stated in your previous diary entry I would not be in any hurry to invest the whole lot straight away. Remember the old cliche. "Sell in May and go away, don't come back 'till St Ledger day" I don't think you should take this piece of advice literally, but there is an element of truth in it. Stockmarkets more often than not fall in the summer months. Volumes are always lower in July, People have more important things to do like holidays,cricket, horse racing, and of course Wimbledon. I like to come to the watering hole after the elephants have left and the crocodiles have had their fill.

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Rustie

Feb 07, 2011 at 17:32

Jezzer

Pension taken care of via mostly cash ISA's at 4% and 3.5%, hopefully rising when bank rate inevitably climbs. GUARANTEED and GUARANTEED money back........ plus rental income on a second house.

You will lose.....I promise you - YOU WILL LOSE.

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Manso

Feb 07, 2011 at 17:35

For 10 grand, it eludes me why you don't put £5000 into each of two international growth investment trusts, preferably within an ISA.

Two that spring to mind are RIT and Murray international.

As these grow in value, you might selectively sell and get more focus by reinvesting in eg Europe, BRIC, Emerging Markets - though you would have to be confident that these selections would be better than leaving it in the original two!

The only risk would be that if lack of diversification between managers.

This can be addressed by careful monitoring of their progress.

Regards

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Rustie

Feb 07, 2011 at 18:11

Gosh, Manso......you actually know!!!!!!

Quite extraordinary...and here's me thinking it was possible to lose occasionally....obviously not - Manso KNOWS how to do it.

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Theophanis Pantzaris

Feb 07, 2011 at 18:44

I have never heard such rubbish as that from the gullible fools above.

1) Hargreaves-Lansdown gives an opaque 1/16th%- 1/8th % discount to funds paying them trail commission, while Cavendish Online gives the whole 1/2%, (which is 4-8 times more) and no gushing over the top promotions.

2) There is no way of telling what will be a good IT or UT,. All we have is past performance which even idiots should by now know, is no predictor of. future performance. But high charges are certain and in 40 years can take 40% of your fund. Should be avoided more than the plague.

3) In case you still have the wool in front of your eyes, is an advertisement for H-L and the IT mentioned, as Citywire has profits to make and is not in business to give free lunches to all and sundry.

Have a nice day.

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gggggg hjhjkl;'

Feb 07, 2011 at 18:47

Rustie - great, recommend something that is LOSING MONEY every day, due to inflation. Very clever. I do mean everything, including a second house, just watch house prices plummet over the next few years and watch ot for those defaulting tenants.

In case you had not noticed, INFLATION is at 4.7% which guarentees a hiding to nothing!!

Very clever financial planning.

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The Colonel

Feb 07, 2011 at 18:59

No one looks after your money like you do yourself.

Do the research and buy your own shares. If you lose

a bit at least you have the satisfaction that you lost

it yourself and that you didnt pay some twenty year old

to lose it for you.

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Anthony Peel

Feb 07, 2011 at 19:20

Given the opportunity, would you invest in Fund A IF:-

It had turned £10,000 into £100,000 in 13 years ?

The manager is free to invest wherever he thinks best, ie no narrow rules as in Prperty, UK, developing areas etc.?

The manager has outperformed the famous Antony Bolton over last 10 years?

The manager has been voted best fund manager of the 21 St century (so far)?

Last year the fund returned over 60% ?

You didn' t have to worry about such as China from herein, or where the next

Great opportunities are?

You would?

then ask me, and I'll solve all your investment worries so you can concentrate on the good things in life !!!

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Anonymous 2 needed this 'off the record'

Feb 07, 2011 at 19:54

Put 2500 GBP in each of 4 UT.through a discount broker.

2 in UK income

2 in SE Asia income and

1 in UK property

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richard head

Feb 07, 2011 at 20:11

Dumb Investor needs to be more concise and get to the point more quickly. Also there is something wrong with your site. It jams a great deal. If this continues I shall unsubscribe.

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Roy C

Feb 07, 2011 at 20:12

Now there's a person to listen to. £10,000 to invest. £2500 in 4 UT,s 2+2+1=?

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Anonymous 3 needed this 'off the record'

Feb 07, 2011 at 20:20

Anthony,

are you the best 21st centuary manager or is it your friend?

What is the name of this fund?

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Brian Langdon

Feb 07, 2011 at 20:36

What a lot of hot air! Find a couple of, preferably, income-oriented ITs and, if you don't want the income immediately have it reinvested. The compounded effect of the reinvestment will build on any increase in share price. A number of ITs have share investment schemes and investing in them is remarkably cheap and with no set-up or annual charges. Bon chance!

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Hotrod

Feb 07, 2011 at 20:48

To Richard Head.

I'm experiencing the same problem. Blue band at the top goes pale, and I cannot scroll. I am glad someone else is having trouble because I was beginning to put the blame on my mouse.

As regards Dumb Investor's tactics; It looks like he is trying to pick our collective brains and is making an analysis of opinion. (No details of fundamental accountability). He seems to be trying to show the professional community in the best possible light.

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Anthony Peel

Feb 07, 2011 at 21:19

Anon3

I'm not the manager nor is he a friend. just a lucky punter who has made a lot of money sticking with the best without worrying about what to do next.

he is Giles Hargreaves (nothing to do with Hargeaves Lansdownes)

And the fund is Marlborough Special Situations Acc Unit Trust.

Who are Marlborough I hear you say. A small and very competent company that get on with looking after investors without mass advertising.

Google it yourself and let me know what you think.

PS What are you afraid of being Anon?

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david m rogers

Feb 07, 2011 at 22:03

I think some of the above advice re Alliance is confusing. Alliance Trust runs an extremely inexpensive platform for Isas including a reasonable selection of UTs with good discounts and Uk equities including as far as I am aware all UK listed Investment trusts. Its administration is not brilliant but from my experience improving. It is called Alliance Trust Savings. Alliance Trust itself is I believe the largest UK investment trust. I would not recommend it at all. In the sector in which it operates,Global Growth it has a very ordinary track record. It trades at a large discount largely because it does not operate a policy of trying to reduce its discount by buying in its own shares. If there was any significant sign of that policy changing it might indeed be worth buying. Until then stick to those with consistent performance such as British Empire , Scottish Mortgage, RIT etc.

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Tony Peterson

Feb 07, 2011 at 22:25

I seem to remember from childhood that the British Empire had a pretty consistent track record. Still going? Have I missed something?

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Vucko

Feb 07, 2011 at 23:02

10k can go all in ISA in one year, I hope you can invest full amount via ISA. Few reasons why:

http://www.lovemoney.com/news/savings-investments-pensions/pensions/2414/five-reasons-why-isas-are-better-than-pensions

My favourite article about amateur investing, big recommendation (although written in better days and not for the UK market):

http://seekingalpha.com/article/15136-etf-investing-guide-one-page-summary-of-the-entire-guide

See also this: http://citywire.co.uk/new-model-adviser/commission-is-halting-rise-of-etf-sector/a321121

You may find these interesting:

Shares: HSPX, XESX, XASX, LEME

Bonds: IGLT, INXG, IBTM, IBCI, SEMB (to diversify in currencies, however elusive)

Gold: PHAU

Buy up to 4-5 in total (to avoid excessive brokerage charges), check spreads before purchase, mix asset classes (25-30% bonds+gold, the rest in shares).

If you feel draw for actively managed funds, read this (from the article above) to cure your folly: http://seekingalpha.com/article/15158-etf-investing-guide-how-to-run-a-mutual-fund-company

Good luck!

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Chris Marsden

Feb 07, 2011 at 23:14

I am confused by Alliance Trust, a platform or an IT?

If it is

http://www.h-l.co.uk/shares/shares-search-results/a/alliance-trust-plc--ordinary-2.5p-shares/charts

The past performance does not see me clamoring for it in my portfolio, <5% over 5 years, about the same as the FTSE over the 5 years?

The Marlborough UK Micro Cap Growth, by the same manager has actually just pipped the Spec Sits at 85% over 5 yrs as opposed to 70%, and 45 - 48% last 12m, No certainty it will continue of course, but I would rather have them in a balanced portfolio, with no initial charge 1.55% TER minus 0.15% rebate. But with a 250 / 265p spread on buy / sell.

Anyone replicated the shares in a good performing UT as a *starting point* for selecting a portfolio?

Rustie - you're a troll

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Mary Hamilton (Citywire)

Feb 08, 2011 at 08:44

To Richard Head and Hotrod -

Thanks for letting us know about the problems you're having. We're aware we have some problems with the site at the moment, and we're working very hard on getting them sorted out.

The things you're experiencing sound a bit out of the ordinary - it would really help us out if you wouldn't mind emailing me a few details of what's happening when the site jams or when the pale bar changes. You can drop me a line at mhamilton@citywire.co.uk - or leave a comment here if you'd prefer.

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GRKS

Feb 08, 2011 at 09:55

Rustie, the quote 'to thine own self be true...' is by Polonius to Leartes in Hamlet.

Quite amusing reading your deliberations. You aren't the 'dumb investor' by any chance?

GRKS

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Maverick

Feb 08, 2011 at 11:01

Dumb Investor - Don't get hung up on "premiums" and "discounts" when looking at investment trusts. They are completely irrelevant, and are probably a hangover from IFAs looking at investment trusts as if they were unit trusts - which you have rightly established they are not.

Most quoted companies have a share price which bears no relationship at all to their net asset value. That doesn't stop them performing.

The only time net asset value is significant for an investment trust is when it winds up. This has happened to me twice in the four years I've been investing, and in those two cases I got back more than I was expecting.

Use Trustnet, and go for those investment trusts which have beaten the FTSE All-Share Index over one, three and five years. You have about 60 to choose from. Then check which of those 60 are still performing over the last three months - for example, smaller companies, natural resources and technology are doing well at present, Far East and Latin America less so.

This is exactly what I have done for my 23-year-old daughter's self-invested personal pension, except that I have been making monthly contributions. It's been going just over a year, and the "pot" is now worth 16.7% more than I have put in. If you compound that till she reaches 65 (or more likely 70 by then!) it makes a reasonable amount . . . . .

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Rustie

Feb 08, 2011 at 11:47

To GRKS.....nice googling - its clearly an extrapolation from their clarification as I've since googled the same quote...ie you had to look it up!

My deliberations - or musings - derive from the amusement I get from reading so many half baked theories delivered with such conceited articulacy....these people are absolutely convinced they know what they're talking about. All seem utterly detatched and sublimely unconcerned at the recent catastrophic failures of global financiers who, despite qualifications and experience in spades, still haven't a clue what the results of their convoluted and labrynthine financial manoevres are likely to be . Quite, quite exraordinary.

"There's many a slip, twixt cup and lip" Greek proverb

or "There are none so blind as those who will not see" John Heywood 1546

Choose your proverb of best fit!

Rustie

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Chris Marsden

Feb 08, 2011 at 19:40

Have you considered Alternative Investments?

No, not AIM Dumb, but:

8% pa typical.

Index Linked.

Tax Free (NOT using your ISA)

Guaranteed for 25 years?

Depending on your circumstances, that would buy you a nice little earner - solar pv on your roof. ie one of many suppliers:

http://www.nattech.co.uk/

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Chris Marsden

Feb 08, 2011 at 19:48

Rusty, U R trolling.

Not half baked theories, many different Investment ideas, that have provoked broader thinking on the different types of investment for different risk profiles, portfolio reasons, for differing sizes, hands-on involvement (or not), length of investment, liquidity, etc etc.

Many are very pleased with what they have achieved, If it has amused you, then that is good as well. You may be no wiser, but you ARE better informed.

So am I, thanks folks.

Chow.

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Tony Peterson

Feb 08, 2011 at 20:00

What ignorant and preposterous drivel one finds on sites like these.

Chris, "chow" is (in various Chinese languages) - food.

"Ciao" is Italian for goodbye, (or hello).

What is your last post supposed to mean?

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Chris Marsden

Feb 08, 2011 at 20:21

Yes lets deviate from the sensible discussions (mainly) to date.

Food for thought?

From a forum:-

"Such a simple question, yet someone can still turn it into a controversy :-)

Yes, if an American said "Chow" (properly spelled "ciao"), they meant goodbye.

Yes, "chow" is a kind of dog; but no American who just says "ciao" has any intention of calling you a dog. One of the more ridiculous claims I've seen here.

It is true that, in Italian, the pronunciation of "ciao" is different than "chow"...however, a large number of North Americans, when saying the word, will pronounce it simply as "chow"

Another meaning for "chow" is food...however, once again, in this context, the person obviously is not talking about food.

If they say "chow", they're saying goodbye.

If they say something like, "You vicious little chow", they could be calling you a dog.

If they say something like, "Do you want to grab some chow?", they are talking about food."

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Rustie

Feb 08, 2011 at 20:40

Chris....."methinks thou dost protest too much"

Stop digging, get your coat and slope off.

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Tony Peterson

Feb 08, 2011 at 20:45

Hit a raw nerve there didn't I ? (and on one who accuses others of trolling).

Chris, your learned dissertation shows that you haven't learned the elisive apostrophe yet either. (let's, presumably, for "let us" is what you meant. Also, in your previous post you might care to note that verbs are an essential part of sentences.

I'm giving up on this site. "Dumb investor" is simply an advertising creation for the dunderheads who circulate it.

Ciao.

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Ron G

Feb 09, 2011 at 11:52

can any body suggest investment trust for income?

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Jezzer

Feb 09, 2011 at 12:09

Check out the Edinburgh Investment Trust (ticker is EDIN) http://www.h-l.co.uk/shares/shares-search-results/e/edinburgh-investment-trust--ord-25p-share/charts

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Jezzer

Feb 09, 2011 at 12:14

Folks, if you want to slag each other off or criticise each other's English, I'm sure there is a Google group for it. Or even better, arrange to meet up and let's see if you're bold enough to carry on the same line.

Let's keep the discussion here to financial issues - and keep it constructive.

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Chris Marsden

Feb 09, 2011 at 12:57

Quite so Jezzer. The EDIN IT you mention is a similar performance to the ftse100, but has the nearly 5% dividend in addition to the gain/loss shown on the chart? Is there a 'good' method of comparing total return from ITs as there is for ALL or selected groups of Funds as HL and others provide?

ie league table for SLI:

http://www.h-l.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results?companyid=536&column=year1&order=desc&tab=performance

Clearly HL usefully allow a Fund to be compared to an IT for example, but the Acc funds has the TER deducted, and the income included, I assume the IT does not have the effects of any income shown?

ie

http://www.h-l.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/standard-life-inv-uk-smaller-companies-accumulation/charts

add in edin shows 55% for the SLI UK sc, and 17% for the EDIN, but that is not quite fair if a small additional dividend is paid on the edin.

I prefer Acc Funds, but am warming to ITs and equities, in part as a result of these discussions. With Acc you know you are comparing total return (except any initial cost/spread-which I generally avoid), and I would prefer to have growth and cash-in 10% each year for an income, rather than take 10% and suffer the gains/falls of the underlying value of the portfolio, but that is of course purely personal preference. Horses for courses.

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Jezzer

Feb 09, 2011 at 14:37

The body that used to be called the Association of Investment Trust Companies (since renamed by the looks of it) has a website which may give you the basic data. You might have to use Excel to graph it. Here's the link to their 'stats' site http://www.aicstats.co.uk/Index.asp

I haven't spent much time on it, but I did drill down and see some raw data on growth rates, dividend yields etc per IT.

Good luck.

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Roy C

Feb 09, 2011 at 15:13

Ok Chris now you're giving off positive vibes, warming to IT's and shares.

I also suggest nosing into ETF's. Take a punt on the banks shares. I suggest Lloyds or RBS. Both a long term punt, and the government hold certain dictatorship for now. But think how many people in the UK use the banks, and it will be long term, but a no brainer. Remember buy low sell high, and the divis will be a good supply further down the road. There will be adverse comments to this recommendation, to follow on this site. Note , the big Funds hold bank shares for the future, and they're cheap as chips at the moment.

Buy Buy so to speak.

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Chris Marsden

Feb 09, 2011 at 17:37

Ta. I am not anti shares, I did get some GHH at £2000 and now at £5138, and some Xcite at £6000 and now £26,900 this evening (up 7.09% today), but also some Hellfrauds at £4000 now at £3,420.

But CFDs give an interesting ride, Gold & Silver up and down £400 and that's only today!

It just seems far less work to pick a dozen or more Funds that I think have a good chance of returning 40% in the next year, as they have in last 12m for much less work.

I am sure banks will come good, as they will be encouraged by the Gov when they are about to sell our stake back to us. I have even shorted some for a few bob!

I also wonder if the FTSE at 6056 may be awaiting the next bad news story. I am shorting it at a loss - offset some of the losses on the equities held.

Stories like

"STOCKS rose again today in nominal terms. Dow added 71.9 to 12,233.53 and S&P500 rose 5.41 to 1,324.46. The Dow in Gold Dollars points to a drop in stocks coming soon, but let us take the longer view.

First, stocks are in a Primary Down Trend (Bear Market). A primary trend lasts 15 to 20 years once it begins, and stocks began this bear market in January 2000 (in August 1999 against gold). That means that stocks will be trending downward, never mind the zigs and zags inbetween, until 2015 or so. Down, not up.

Second, an answer for those who argue that stocks will benefit from inflation as a hard asset refuge (they represent bricks and mortar). Constantino Bresciani-Turroni conducted the classic study of the German hyperinflation 1920 - 1923. He reports that although stocks showed HUGE nominal gains, in real terms they in fact lost value.

Third, stocks are in a Primary Down Trend (Bear Market) against both silver and gold. Stocks have already lost 80% of peak value, and will lose another 80% before this bear market ends. Knowing that, why would I own stocks rather than silver or gold?"

http://silver-and-gold-prices.goldprice.org/2011/02/gold-price-is-without-question-rallying.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+SilverAndGoldPrices+%28Silver+and+Gold+Prices%29

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Jezzer

Feb 09, 2011 at 18:45

You could do both: Gold mining stocks. Gold still looks good in the medium term. I've seen predictions this morning of the price being around $1650 by the end of the year, following some more wobbles around the $1300 mark. I have about 7% of my portfolio in physical gold (through the ETF PHAU), but the same amount in gold stocks through the Blackrock Gold and General fund. When the gold price is over $1000 per ounce, gold miners make huge profits as their cost of extraction is around $300 per ounce (if I recall correctly). So in the longer term, even if the gold price falls back to $1100 or $1200, the miners will continue to make good profits and so their share prices should rise. Blackrock's fund is up 35% over the last year (was up 50% until the recent gold price wobble), versus 25% for the ETF. In the short term It's a magnified play (in both directions) on the gold price, but longer term you could lose money on physical gold (eg. buy in now around $1300 and then it falls to $1100) yet make money on the Blackrock fund, for the reasons mentioned above. It's an expensive fund to own, but I've had very good growth on this holding since I started buying in a couple of years back.

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Chris Marsden

Feb 09, 2011 at 20:08

Seems Gold is an important part of any diversified Portfolio, although I am overweight already, Investec Gold has done well until recently, but has suffered much more than the price of Gold, or other mainly Gold Funds, The hope is it will rebound now it looks like Gold is taking off again, the Chinese are buying the odd couple of hundred tons, and India just the odd couple of tons a day - oh what a buying chance for anyone not into it already now 1362, was 1311 on 27th Jan, down from 1400+ early Jan and heading back there before long. Several like Winnifrith saying $50 silver will soon be here.

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Rustie

Feb 10, 2011 at 11:14

To Jezzer and Chris: I am staggered at your authoritative erudition. Gosh, you chaps really know. It goes without saying, therefore, that you are both now rich beyond the dreams of avarice. How could it not be so, you are so certain of yourselves. Tell us mere mortals, how wealthy are each of you - to the nearest billion?

Rustie

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Jezzer

Feb 10, 2011 at 12:14

Rustie

Come back when you have something useful to contribute.

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Anthony Peel

Feb 10, 2011 at 13:20

If you decide to buy into gold miners you will be well advised to go for companies that have a high extraction cost overhead as they will benefit much more from a gold price rise.

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Chris Marsden

Feb 10, 2011 at 16:25

And one priced in GBP rather than US$ if you subscribe to this view:-

However they are Global :-(

http://seekingalpha.com/article/251375-derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks

(nothing like calling a spade a spade):

"Ben Bernanke is a stooge and a fraud, but he is at least partially honest in his explanations of why he wants to keep printing money. The reason is to try to keep interest rates low. Granted, he’s failing miserably at this, but at least he understands the goal.

Of course, Bernanke tells the public and Congress that the reason we need low interest rates is to support housing prices. He doesn’t mention that $188 TRILLION of the $223 TRILLION in notional value of derivatives sitting on the Big Banks’ balance sheets is related to interest rates.

Yes, $188 TRILLION. That’s thirteen times the US’ entire GDP, and nearly four times WORLD GDP.

Now, of course, not ALL of this money is “at risk,” since the same derivatives can be traded/spread out dozens of ways by different banks as a means of dispersing risk.

However, given the amount of money at stake, if even 4% of this money is “at risk” and 10% of that 4% goes wrong, you’ve wiped out ALL of the equity at the top five banks.

Put another way, Bank of America (BAC), JP Morgan (JPM), Goldman (GS), and Citibank (C) would CEASE to exist.

If you think that I’m making this up or that Bernanke doesn’t know about this, consider that his predecessor, Alan Greenspan, knew as early as 1999 that the derivative market, if forced into the open and through a public clearing house, would “implode” the market. This is DOCUMENTED. And you better believe Greenspan told Bernanke this.

In this light, all of Bernanke’s monetary policies and efforts are focused on doing one thing and one thing only: trying to shore up the overleveraged, derivative-riddled balance sheets of the Too Big to Fails, or Too Bloated to Exist, as I like to call them.

The fact that the bank executives taking this money and using it to pay themselves and their employees record bonuses only confirms that these folks have NO interest in taking care of shareholders or their businesses. They’re just going to take the money and run for as long as this scheme works.

I don’t know when this will come unraveled. But it WILL. At some point the $600+ TRILLION behemoth that is the derivatives market will implode again. When it does, no amount of money printing will save the Too Bloated To Exist banks’ balance sheets."

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Roy C

Feb 10, 2011 at 21:56

I think we are loosing the original thread folks, as the week passes by.

We are talking about a novice investor, aspirations?

I normally leave the heavy stuff to the Fools Site

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Tony Peterson

Feb 10, 2011 at 22:09

Roy C-

If you don't know the difference between "losing" and " loosing " you cannot expect any respect on an English language site.

And we are not talking about a novice investor. We are commenting on a straw man invented by the Citywire team. You are beneath contempt.

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Roy C

Feb 10, 2011 at 22:37

Sorry Tony, Yes I am beneath contempt, LOSING. Well spotted, sir. Must do better. I believe you are the observer of correct grammar. By the way "caio" Is normally, expressed only in Italy, between close friends and relatives. Considered to be disrespectful if used in any other manner, generally.

We never stop learning, do we? Straw man Mmm

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Anthony Peel

Feb 11, 2011 at 17:02

Tony,

Like you, I am well educated and, like you, apparently, I have an above average grasp of grammar. However, I have yet to come across an "ilisive apostrophe". Having checked through all my dictionaries and thesaurus it is proving to be most elusive!

Like most here, I am awaiting confirmation of your decision to leave this forum. I am sure we will all be delighted to see you go !!

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Rustie

Feb 11, 2011 at 17:12

Anthony, the plural of thesaurus is thesauri (or thesauruses if you prefer).

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Tony Peterson

Feb 11, 2011 at 18:04

Anthony - it might have helped if you had copied correctly what I wrote.

Elision is the act of leaving a letter or letters out, as happens in "let's" leaving out the "u' in "let us" . So the elisive apostrophe is that apostrophe you use to show that you have left a letter out. You need to get a better dictionary.

As well, apparently, as at least one more thesaurus. Aren't we all getting very pedantic?

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RippedOff

Feb 11, 2011 at 18:41

Avoid Hargreaves like the plague. They dont like yuo asking questions!

There are plenty of others that know how to respond to a client. AND provide similar discounts.

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Roy C

Feb 11, 2011 at 18:48

What other hobbies do you have Tony? Go on, get it off your chest.

Incidentally, the "dumb investor" has on no occasion, declared to be, male or female. Straw man, indeed.

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Chris Marsden

Feb 11, 2011 at 19:21

Dumbo, I doubt the last 8 posts have helped you much, but you have had on the whole quite a bit of advice, which I found useful, I hope you did.

Ripoff, sorry you found Hargreaves like that, I have not, nor have the overwhelming majority of others posting on Citywire. Phone and email response I have, with very few exceptions, been very helpful, by comparison with TD Waterhouse, HL are a million times better, so good luck with your search. You can't please all the people all the time.

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Tony Peterson

Feb 11, 2011 at 21:16

Roy C

- I felt a bit bad when I realised after your last post but one that English was not your first language.

I'm sorry for any unpleasantness. I've enjoyed so much from native Urdu, Punjabi, Hindi, speakers that it embarrasses me to be virtually monoglot.

But whether the "dumb investor" is male or female is irrelevant. I believe that Citywire is using him/her as an invention to try to drum up business, unless, of course, you can prove the contrary. Which is why I will do what Anthony wants and give up commenting on this site.

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Chris Marsden

Feb 12, 2011 at 01:06

TeHe

If I could dare to deviate from this pleasant banter, we have mentioned trading platforms earlier.

I have been called by Sino Trading, promoting the Glencore IPO.

£7 per share and MUST go to £13 when they start Trading........... (yawn)

BUT has anyone used THEM as a trading platform?

APPARENTLY there are NO DEALING CHARGES, ONLY the stamp, and 1.5% on a capital GAIN made on the trade. It has the benefit(?) of being an ADVISORY account.

Does that sound a good deal oh sages of this forum?

(The email I had said:

.... I am writing to clarify commissions and charges that would be applicable to you as a client of Sino Trade Europe.

Should you decide that our services are in line with your investment needs the account that you would entering into would be a Nominee Advisory Account.

The charges for operating this account is 0.5% stamp duty which is chargeable on entering into an equity position. In terms of commission charges payable to Sino Trade Europe you will be charged 1.5% of capital gains when exiting or selling out of a position. I would like to take this opportunity to clarify that there are no other charges applicable to opening or operating this account.

In order to view our terms and conditions please visit the following link:

http://www.sino-trade-europe.com/forms/terms.pdf ....)

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Roy C

Feb 12, 2011 at 09:48

I'm wellin up Tony, but you won't see this comment?

Chris I will look at the Sino site over the weekend, when I've chance. As you've mentioned it twice, I see

I can relax now I can speak, like wot I normally do.

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William Fowler

Feb 13, 2011 at 12:36

I don't understand the focus on property. Surely most people have a big enough investment in property in their home. Natural resources would seem to be a better bet (or gamble of course) as they are at least fairly finite.

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RippedOff

Feb 13, 2011 at 13:02

Chris M:

I am basing my view of Hargreaves on CORRESPONDENCE I have with the grand Mr H and comments by other x clients. He did in fact do me a big favour, because I am with an exicution only broker who provides me with a larger rebate AND responds to all queries. They even appreciate my custom!!

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Anonymous 3 needed this 'off the record'

Feb 13, 2011 at 13:20

Dear RippedOff,

Who is this exc only broker who is better then H&L?

With thanks.

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Broomtree

Feb 13, 2011 at 14:07

I am also with HL - ref above comment on charges, they only apply to share holdings and it works out at a max of £16.66 pcm depending on the amount of shares held - Not the cheapest but given the overall service level I would not move on account of that one issue - Holding funds costs nothing with most giving a full discount of intitial charges and annual rebates [not in a SIPP]

Regarding Europe - I would suggest taking a look at CF Ruffer European 'O' fund, technically it in the Balanced Managed sector but if you are looking longer term [5+yrs] there is simply nothing to beat it.

I have found many Jupiter funds tend to move in surges, ok if you like a roller coaster!

Property has to come good sometime but personally I think it is still too early

Investment trusts can be safe but again look around - I have been surprised that my Edinburgh IT is being beaten hands down again by my Ruffer IT in the last few months. I also like ASL and PCT

Happy hunting and remember time spent in prep is very seldom wasted!

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D G Stonebanks

Feb 13, 2011 at 14:07

One of the founder partners of HL retired recently and sold shares for around £56 million (from memory).

The value of the business is based on expected future earnings skimmed off their customers in commission, trail commission, and 'management fees' charged on ISAs if they don't include trail commission-paying funds.

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paul armstrong

Feb 13, 2011 at 18:11

Boy, there are some bitter have-nots here ! HL are alright but unit trusts are expensive. If you invest in equities you need to be sure you can stomach a sudden 10% drop. If you may need the money within the next 5 years equities are not for you. Alliance Trust is an investment trust which owns the Alliance Trust Savings Platform. Two separate things for whoever asked. Income IT include Temple Bar, Merchants, City of London (for whoever asked). Standard Life have a popular 'global absolute return/strategic' fund if you want a more cautious investment. Property Trusts ? NO! Gold NO! Why ? Because these are fashion statements not financial advice: you need diversification.

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satish mittal

Feb 13, 2011 at 18:17

Reading all this is so interesting that we should sit around the table to make our deliberations.

Will pundits tell me why should I put my money in investment trusts when in adverse conditionds I cannot withdraw my money ( equivalent to NAV) as opposed to Investments in Malbrough special sit, Malbrough Microcap, Standard Life UK Eq uncontrained, Liontrust special Sit., MSM Slater growth, Unicorn Uk Income, Legal & General UK Alpha Trust, M&G Optical Income Fund, Standard Life UK smaller co, Rensburg UK Mid-Cap growth.

I am a small invester, so d'not throw punches on me. Tell me if HSBC takes 41% in fees from pension fund (with profit) , and still outperform the lower charging funds, then are we being managed by idiots?

Satish mittal (rest assured, it is my name0

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Cambie

Feb 14, 2011 at 09:32

Someone mentioned Fastrade. Having a Personal Crest account with them solves many problems. Reasonable cost Execution Only, but when you need help with anything , their staff are excellent. Plus direct contact with companies. I have been gradually switching funds to Fastrade from Barclays Stock Brokers, as Fastrade are better - and Barclays refuse to do anything but nominee accounts.

Having said that, my ISA and SIPP (where you have to use nominee holding) are on the Alliance Trust Savings platform, and their execution only dealing platform is equally good for that purpose, and first class staff if you need to ring them. For an infrequent trader, they would be fine for general share trading where you don't mind a nominee account holding.

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john spenceley

Feb 14, 2011 at 12:56

Sino Trade

I also have received unsolicited promotion of the Glencore IPO. Seems difficult to do due diligence on this offer, feels like a boiler room job.

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Ines

Feb 14, 2011 at 13:17

Satish Mittal - re being able to withdraw funds from UT's at any time and not IT's.

As I understand it UT's have to liquidate shares when the market is poor to refund those investors who want to cash in, so people who are prepared to stay with the investment lose out because shares are being sold at a loss on account of market conditions.

With ITs the shares and the investment are separated - the shares may go down and people who want to cash in have to bear the loss, but the assets of the trust do not have to be liquidated so the investments are still there to gain value when (if?) the market improves.

You pay your money and you take your choice. It is worth noting that many IT's have reserves which they can dip into to keep the dividend going even if times are hard - worth it if you are looking for the income. Personally I have done quite well buying when the discount to NAV is low and selling when the IT share price is at a premium on a few trusts but I don't like buying tobacco shares so I don't buy the big income trusts.

With apologies to any grammarians out there for any mistakes!

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Anonymous 5 needed this 'off the record'

Feb 14, 2011 at 18:43

John

"Sino Trade

I also have received unsolicited promotion of the Glencore IPO. Seems difficult to do due diligence on this offer, feels like a boiler room job."

DANGER - THIS IS ALMOST CERTAINLY A SCAM.

Please contact the FSA 0845 606 1234 if you have been contacted for the Glencore IPO or by Sion Trade who are NOT authorised for investment business.

Also Glencore do not know about it either!

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john spenceley

Feb 14, 2011 at 19:20

Will do, thanks.

All the very best John

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Mum

Feb 18, 2011 at 12:45

As a dumb investor I don't think I'd mind paying fees for someone's GOOD advice.

But how to take the first step at investing ? Can I take an IT ISA with say, Hargreaves now, pay the £250+Vat pa, and then take it away from Hargreaves in a few years when I get some confidence, and then manage it myself?

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Chris Marsden

Feb 18, 2011 at 13:11

I would confirm the Sino Trade Europe Glencore IPO is without doubt a boiler room jobby.

The odd thing is they are asking for money to a UK Bank, give a UK address and Telephone number. I wonder how many people they have had this time?

They have even gone to the lengths of fabricating their own bogus past IPOs to con people, and use the FSA registration of a legitimate Co of same name.

Stick with names you know well!

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john spenceley

Feb 18, 2011 at 13:34

Checked with FSA and these Sino trade is licensed with FSA under passport from Austrian FMA. Austrian FMA says this company is not licensed!!

Thanks for the advice

John

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Chris Marsden

Feb 18, 2011 at 14:23

They are not licenced in the UK for share dealing.

"Sinotrade Si Keg is EEA authorised and regulated by the Financial Services Authority (¨FSA¨) with FSA registered number 443629"

They must be using this confusion to creep under the radar.

They claim to be in Holbon, easy enough to find I would have thought.

Beneficiary´s Account Name: MP Tradings

HSBC UK PLC

8 Canada Square

London

E14 5HQ

Account 5140-6965

SORT CODE: 40-18-51

Please send £10,000 today for some worthless "GLC" shares.

SINO TRADE EUROPE

3 Waterhouse Square

London

EC1N 2SW

+44 207 193 3188

www.sino-trade-europe.com : info@sino-trade-europe.com

I hope no investors here are that Dumb!

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