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Investment Trust Watch

  • 05-05-2021 8:22pm
    #1
    Posts: 0 [Deleted User]


    A general thread for all things investment trust. I'll start with a brief intro, mainly pulled from posts I made elsewhere, and some basic resources. Beyond that I will share news and interesting things I come across about various Investment Trusts. I invite you to do likewise, hopefully we can get some good discussion going about specific Trusts.

    **Not an Expert**

    The "safest" way for lay people to invest may be in funds/ETFs. These are basically instruments that track an index, or others in certain types of investments. So for example you might invest in one which tracks the S&P500 (The biggest American companies, as an EU citizen you can't really invest in this but anyway) so as the market goes up or down so does your ETF. You can just buy it and leave it to do its business, you don't need to keep an eye on things the way you would if you invested in a particular company. However there is a major problem with this strategy, namely the Irish tax laws, specifically "deemed disposal". Basically, every 8 years you have to pay a tax of 41% on any growth/profits and the same rate on exit.

    This tax rate is pretty crippling, and certainly damages compounding.

    Investment Trusts are the next best thing (and better in some ways). Basically, Investment Trusts are closed end funds, sort of holding companies that are actively managed by a board etc. and listed on the UK market. There are lots of different types with different priorities and philosophies. The manager, depending on the rules of the Trust, can invest in a whole range of things, from shareholdings in particular stocks to bonds, commodities, cash, real estate etc. Most will either use or have the option of using "gearing" (borrowing/leverage). These ITs often have a base index they aim to "beat", which many ITs have a great record of doing. If your IT manager is good/lucky you can make very good gains above what you might in a comparable index, obviously the opposite applies too. Many pay good dividends. The downside is that the company charge a higher fee (usually) from the assets under control than happens with open ended funds/ETFs, but this would seem to me to be a small quibble, especially as IT's are treated, tax wise, the exact same as regular stocks. That is, you pay income tax as normal on dividends and the normal Capital Gains Tax when you sell. This is a massive advantage in two ways: CGT is 33% (less than for an ETF) and if you make a loss you can carry it forward and offset it against any future Capital Gain you may have. You cannot do this if you make a loss on an ETF.

    I have checked the tax status of IT's in some detail. Revenue have never said that they should be treated the same as regular stocks. In practice they are. In theory, Revenue could change the rules and say they should be subject to deemed disposal, but this is very unlikely for two reasons: The first is that tax is being paid on an ongoing basis on any dividends. Secondly, is the way in which the IT's trade, they are subject to a premium or discount.

    Premium and Discount

    This is a very important factor to be aware of. IT's have a Net Asset Value (NAV) which is the real world value of their holdings. So lets say an IT owns only ten stocks, the entire value of which on the open market is £1,000,000. The value of the IT share that you buy on the stock market is not necessarily reflective of that value. Lets say it has ten shares, you would think that the value of the share would be £100,000. But not necessarily. The shares of the IT can trade at a premium or a discount to the NAV. So in our example the shares might trade at £90,000 or £110,000 giving it a discount/premium to NAV of -/+ 10%.

    This means there is a great opportunity to essentially pick up shares for less than they are worth now and money can be made if the discount to NAV narrows, even if the underlying value of the shares the IT holds stay the same. You could also "overpay" by buying at a premium. You might think this sounds straightforward, and you should just buy whatever has the biggest discount and don't buy anything at a premium. No, not so fast, you need to investigate. There are often very good reasons for there to be a discount or premium. The NAV is not static, and can go down as well as up.

    That said, sometimes discounts are caused by market panic over short term issues, so you can pick bargains up here.

    There is also great opportunity (which appeals to me) to pick up particularly good bargains by buying Value orientated IT's at a discount to NAV. In theory, if I buy one of these at a discount, I am buying a company that has made investments that it felt were at a "discount" to their real worth, so I am getting a "double discount" which could give me great returns.

    Some ITs try to make sure there is no or a very small premium or discount to NAV. They do this by issuing more shares when there is a premium, and buying shares back when there is a discount.

    Closed vs Open Ended

    This is a key distinction that is important to understand. Basically, with an open ended fund (Investment Trusts are not open ended) you pay your money into a fund and it is invested. If you sell, the fund manager will have to sell also to give you your money (simply put). This is why you can usually only buy into funds at a fixed end of day price, whereas closed end funds are traded like normal stocks. With a closed end Investment Trust, you are not "giving" your money to be invested, rather you are buying a share in a "holding company" of sorts which makes investments. The company raised money to invest by issuing shares, this is the "pot" which is used. The share price of the IT going up or down has zero impact on this pot.

    There are some advantages to this arrangement, one of them is that IT shares can easily be traded like any other stock, but another is that if there is a run and everyone panic sells their shares in the Trust, in theory the manager can sit there and do nothing, he does not have to go and sell stuff like he would with an open ended fund. So for example, he may have made some investments in undervalued assets which have not "come good" yet. If the shares of the Trust go down, he does not have to sell anything. In such an instance if the NAV has not been decimated, the share price would just go to a massive discount and recover when people stop panicking. In an open ended fund loads of stuff would have to be sold, which can kill the fund entirely. This was one of the reasons why Neil Woodfords fund collapsed, basically everyone wanted their money back, and he had a load of illiquid assets that could not be quickly sold, or sold at anything close to their normal price because they were desperate. He has claimed that if given more time prices would have recovered and the fund not gone bust. If it had been an investment trust, he would have been able to find out as he would not have had to try and sell everything (that said there are more reasons why it failed, he messed up big time, I'm just making a point).

    Investment Managers

    Investment Trusts are run by a board who are answerable to shareholders, like in any other company. They appoint an investment manager to run the trust, usually from an asset management company. They can sack and replace the manager if they wish, usually if the shareholders demand it after a period of underperformance by the trust. So, in theory, if a manager makes a bags of running a trust he can be sacked and someone else can give it a go. Remember, the trust still has the "pot" to work with (unless the previous manager literally lost everything). So what can happen is that a manager can be getting poor returns, be sacked, someone new come in, sell the previous managers investments and replace them with their own, and really reinvigorate things. The point to take here is that if a Trusts has underperformed and perhaps left you in the hole a little, a change in manager may certainly improve things.

    Recently it was announced that the investment manager of Scottish Mortgage, James Anderson, is retiring next year. With ITs it is vital to keep an eye on the manager, and who managed it in the past. IT managers can have their own style (and luck!) that can massively affect the performance of the trust. When you are looking at past performance of an IT, you have to account for the manager - if a new one was appointed last year, the IT performance 3 years ago is of limited use. But if the manager has been in charge, and successful, for a long time then past performance is useful. Of course, past performance does not guarantee anything, but if a manager consistently beats his index it does mean something.

    That said, a change in manager might not result in a significant change in philosophy and performance, particularly if an assistant from the same firm is taking over. This is the case with SMT, Baille Gifford remain in charge, and an experienced deputy is taking over. The same is happening with Monks. This is the ideal form of transfer, if the manager has been successful. A change in manager can also be a massive shot in the arm for an under-performing trust, case in point is Temple Bar.

    Trust investment managers differ wildly: James Anderson is a dedicated (and wildly successful) Growth style investor. Peter Spiller, manager of CGT for coming up on 40 years is a far more conservative, Value style investor (also extremely successful). Some managers are also "active" managers. Take Christopher Mills of North Atlantic Smaller Companies, he specializes in getting positions in companies, then actually going in and forcing changes, forcing out and replacing company managers etc. He has been fantastically successful for decades and has a "value" style philosophy. It is important to know who the manager is, and what their style is. If you picked a Trust because it has a Value style, and the manager is replaced by a Growth manager, you might look at closing your position as maybe you specifically had this Trust in your portfolio because of the style.

    Investment Trust Resources

    All ITs are listed here, and you can filter to find the type you want: https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false

    When you find one you are interested in, on the AIC website it gives you direct access to Monthly Factsheets, as well as Annual Reports. This is the best "one stop shop" for IT info. But obviously Google around and read all you can.

    There is also a dedicated Investment Trust Podcast, giving a weekly roundup on IT news and action: https://www.theaic.co.uk/insights/podcasts

    Books:

    There are a couple. The Investment Trusts 2021 Handbook appears to be currently free on Kindle. I bought this and found it very interesting. However, its not exactly a critical guide, more an advertisement for the industry, but as a free introduction you can't really argue.

    The Financial Times have a guide, an older version of which I have read: https://www.amazon.co.uk/Financial-Times-Guide-Investment-Trusts/dp/1292001569/ref=sr_1_5?dchild=1&keywords=Investment+Trust&qid=1620240659&sr=8-5 This was ok, but nothing more.

    The best book (it would want to be for £40) seems to be this one, Investment Trusts a Complete Guide, just published in February by a noted long time observer/expert: https://www.amazon.co.uk/Investment-Trusts-Complete-Andrew-McHattie/dp/1527281752/ref=sr_1_3?dchild=1&keywords=Investment+Trust&qid=1620240074&sr=8-3 I have not read this yet myself, but will probably pick it up soon.

    tl;dr
    If you do not think you can consistently buy and sell great stocks in companies that will give you (hopefully) great returns, and would rather have an 'expert' do this for you, IT's are great. You can buy a selection of them and get exposure to loads of great investments. They are better than funds/etfs in Ireland mainly because you will pay less tax.


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Comments



  • Very interesting interview with one of the Managers of Scottish Mortgage (SMT) the biggest Investment Trust. Explains all about the approach of the trust:
    Tom Slater of Scottish Mortgage: growth, the pandemic, and the importance of optimism
    Merryn talks to Tom Slater of the Scottish Mortgage Investment Trust about investing in growth, the pandemic and its aftermath, why optimism will always bring better returns than pessimism, and why nothing compares to Tesla.

    https://moneyweek.com/investments/investment-strategy/603184/tom-slater-of-scottish-mortgage-trust

    Personally I do not like the 'twin dangers' SMT has, of a large amount of unlisted investments that we know little about, and the high concentration % wise of the holdings in their top ten positions. Personally I went with the stablemate Monks investment trust. It is much more diversified, and doesnt have the unlisted investments 'issue'.

    That said, if SMT have their investments picked properly, and their unlisted investments go great, then they will do really well. Bit too risky for my taste. I don't like TESLA.


  • Registered Users Posts: 689 ✭✭✭ jams100


    Good thread, thanks!
    Question: if an investment trust buys apple shares for example how are the dividends accounted for? How are these dividends taxed? Does anyone know roughly what tax these investment trusts pay on dividends?




  • jams100 wrote: »
    Good thread, thanks!
    Question: if an investment trust buys apple shares for example how are the dividends accounted for? How are these dividends taxed? Does anyone know roughly what tax these investment trusts pay on dividends?

    It depends. My understanding is that usually three things happen:

    1. Usually the ongoing charges and fees for running the IT and paying the manager are taken out of the income generated by the investments the IT has made.
    2. Up to 15% of investment income/dividends can be saved by the IT. Usually this is to build a reserve to enable the IT to pay a consistent dividend to shareholders even if one year doesn't go that well.
    3. The remainder is paid out to shareholders as a dividend from the IT. (lots of ITs have great records for increasing their dividends every year, so-called 'dividend heroes' although Covid stopped that for some: https://www.theaic.co.uk/income-finder/dividend-heroes)

    Tax wise, for the IT share holder you just pay tax as normal on the dividend you receive from the IT. As to what tax the IT itself pays on the dividends it gets from its investments, I do not know.




  • Some commentary from the manager of Temple Bar Investment Trust (Which I hold).

    https://www.morningstar.co.uk/uk/news/211358/value-rally-has-further-to-go.aspx

    https://www.morningstar.co.uk/uk/news/211359/3-value-stock-picks.aspx

    They are big on Royal Mail, who are publishing their earnings on the 20th May, which will hopefully be good and give Temple Bar a nice bump
    Black: So, you're going to talk us through three stocks in the portfolio at the moment. Where should we start?

    Lance: I'm going to start with the biggest holding on the Temple Bar portfolio which is Royal Mail (RMG) which is about 8.5% of the fund at the moment. And the reason I think it's interesting is it's a good example of what we think is a really misunderstood stock, and I think they'd probably help themselves if they change their name from Royal Mail. Because what that meant was that last year as we went into lockdown, I think people focused on the letter side of the business, thought that that was going to be really hit by lockdown, and it was. But what people completely ignored was the fact that Royal Mail have 50% market share of the parcels business in the U.K. And of course, as we were all at home last year shopping online, parcel volumes went through the roof. So, last year parcel volumes in the U.K. for Royal Mail were about plus 30% and so were parcel revenues. And they also own the European business called GLS, which again is a pure parcels business. And similar sort of effect there. So, volumes and turnover growing about 30%. And so, just after lockdown the share price of Royal Mail bottomed at about £1.20. And it was only as we went through the year that people began to realize that actually lockdown was a positive for Royal Mail as these parcel volumes soared and the share price today is well over £5. So, their share price is up a long, long way.

    Dividend (interim) declaration of 9.75p: https://uk.finance.yahoo.com/news/temple-bar-investment-trust-plc-152300172.html


  • Registered Users Posts: 105 ✭✭ HillCloudHop


    About half my portfolio are in investment trusts, mainly Monks and some Scottish Mortgage. Also have Allianz Tech and Edinburgh Worldwide. Want to buy into Pacific Horizon, but waiting for its premium to drop. I'm aiming for growth and want to minimise dividends.


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  • About half my portfolio are in investment trusts, mainly Monks and some Scottish Mortgage. Also have Allianz Tech and Edinburgh Worldwide. Want to buy into Pacific Horizon, but waiting for its premium to drop. I'm aiming for growth and want to minimise dividends.

    Lots of Ballie Gifford there, are you a bit worried that there might be some group think? (That said they have done great so far).

    I have tried to avoid multiple trusts ran by the same firm.


  • Registered Users Posts: 105 ✭✭ HillCloudHop


    Lots of Ballie Gifford there, are you a bit worried that there might be some group think? (That said they have done great so far).

    I have tried to avoid multiple trusts ran by the same firm.

    I do agree that I'm too heavily weighted on BG at the moment. I like their relatively low fees and dividends. There's no guarantee that they'll outperform the market this decade though. I still have some cash to invest. I'm looking at some other trusts including FCIT and JP Morgan American Investment Trust.


  • Registered Users Posts: 3,659 ✭✭✭ Robson99


    About half my portfolio are in investment trusts, mainly Monks and some Scottish Mortgage. Also have Allianz Tech and Edinburgh Worldwide. Want to buy into Pacific Horizon, but waiting for its premium to drop. I'm aiming for growth and want to minimise dividends.

    Something similar here. Main ones I have are Monks, SMT and Allianz. Smaller amounts in Capital Gearing and Schroder Asian. Thinking of adding Temple bar as well. Investing into all these each month and try to time a dip




  • I do agree that I'm too heavily weighted on BG at the moment. I like their relatively low fees and dividends. There's no guarantee that they'll outperform the market this decade though. I still have some cash to invest. I'm looking at some other trusts including FCIT and JP Morgan American Investment Trust.

    I think Japan will be a good place over the next while. Lots of cash rich companies there that are somewhat inefficiently run and organised. This trend is changing (inefficiency) which should result in better returns for shareholders.

    A write up here, but obviously do your own research, there are lots saying the same thing basically: https://www.gmo.com/americas/research-library/japan-value_an-island-of-potential-in-a-sea-of-expensive-assets/

    I have some decent exposure to Japan through AVI Global (AGT, formally British Empire) as about 14% of its portfolio is in what they call Japanese Special Situations and about 25% altogether of the portfolio is based in Japan.

    Regarding Ballie Gifford, they are amazing growth investors, but if the current tilt to value is not just a blip, they may underperform going forwards. My personal preference is towards value investing (probably because I can clearly grasp and understand it on an intellectual basis) but I have some growth in my modest portfolio, Monks Investment Trust, JPMorgan Emerging Markets and Polar Capital Technology.

    Regarding America, currently I invest in Berkshire, but they have shot up in value recently, which could mean that expected future returns are lower now then when I first picked them (only 2 months ago!). I had expected them to go up maybe 10% over the rest of the year, but they have eclipsed that already, so I have to decide if dripping more money into them is worth it, i.e. if I think it can go up by another sizable amount and still be fairly valued. If I think it may only go up by a little, then I think my money might be better placed into an America orientated trust. (This is the trouble with equities, have to think about these things but with trusts 'experts' make these calls!) I will see what the situation is in the Autumn and make a decision then.

    If I decide my money is better off somewhere else, I will pick JP Morgan American. I like their approach, they basically have their trust divided into three, growth, core and value. Different managers pick the growth and value. It's a good set up I think. This would give me two JP Morgan operated trusts, but at least the investments will not in any way overlap as they are firmly divided by region. (USA and emerging markets).




  • Robson99 wrote: »
    Something similar here. Main ones I have are Monks, SMT and Allianz. Smaller amounts in Capital Gearing and Schroder Asian. Thinking of adding Temple bar as well. Investing into all these each month and try to time a dip

    Personally I have 9 holdings and invest every four weeks exactly on a specific rotation of 3 at a time. Takes the thinking and trying to time the market out of it!

    Keep your eye on the discount, and when that's at a nice level pull the trigger for your first investment in it then, rather than looking at the trading share price would be my suggestion.


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  • Registered Users Posts: 5 allrightya


    What platform /broker do people use for investing in investment trusts?


  • Registered Users Posts: 105 ✭✭ HillCloudHop


    Personally I have 9 holdings and invest every four weeks exactly on a specific rotation of 3 at a time. Takes the thinking and trying to time the market out of it!

    Keep your eye on the discount, and when that's at a nice level pull the trigger for your first investment in it then, rather than looking at the trading share price would be my suggestion.

    Which broker are you using? I was with Degiro, but they've stopped allowing me to buy any of the investment trusts. Now with IBKR, which has access to most of them.


  • Registered Users Posts: 14,543 ✭✭✭✭ Supercell


    Which broker are you using? I was with Degiro, but they've stopped allowing me to buy any of the investment trusts. Now with IBKR, which has access to most of them.

    There is an easy test to take to be allowed to buy them, everyone can still buy on Degiro just in case someone is reading this and thinks that wasnt the case.
    Degiro's IT coverage is pretty woeful that said, I find T212 far better however my account there is denominated in dollars so i am loosing out on two exchange fees when buying UK Trusts but i digress.

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



  • Registered Users Posts: 105 ✭✭ HillCloudHop


    Supercell wrote: »
    There is an easy test to take to be allowed to buy them, everyone can still buy on Degiro just in case someone is reading this and thinks that wasnt the case.
    Degiro's IT coverage is pretty woeful that said, I find T212 far better however my account there is denominated in dollars so i am loosing out on two exchange fees when buying UK Trusts but i digress.

    What test is that? I already have the 'complex shares' permission on in my settings.

    Can you buy ITs on Degiro as of today? I contacted Degiro a few months back and they said that no one had access to buy them, only sell. They couldn't confirm that it would change.

    I'm staying with IBKR regardless, as they've got more access to other sectors (uranium mainly) I'm interested in. It's a publicly traded company with offices worldwide. Degiro is private company in the Netherlands with 300 employees.


  • Registered Users Posts: 14,543 ✭✭✭✭ Supercell


    What test is that? I already have the 'complex shares' permission on in my settings.

    Can you buy ITs on Degiro as of today? I contacted Degiro a few months back and they said that no one had access to buy them, only sell. They couldn't confirm that it would change.

    I'm staying with IBKR regardless, as they've got more access to other sectors (uranium mainly) I'm interested in. It's a publicly traded company with offices worldwide. Degiro is private company in the Netherlands with 300 employees.

    I stand corrected, my apologies HillCloudHop, i wrongly assumed it was their test thing stopping you. I just did a search for a few ones I've held previously and they are all gone now, very weird.
    I'm going to stop adding to my Degiro account from here on as I do want to own more IT's going forward.

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/





  • Which broker are you using? I was with Degiro, but they've stopped allowing me to buy any of the investment trusts. Now with IBKR, which has access to most of them.
    What test is that? I already have the 'complex shares' permission on in my settings.

    Can you buy ITs on Degiro as of today? I contacted Degiro a few months back and they said that no one had access to buy them, only sell. They couldn't confirm that it would change.

    I'm staying with IBKR regardless, as they've got more access to other sectors (uranium mainly) I'm interested in. It's a publicly traded company with offices worldwide. Degiro is private company in the Netherlands with 300 employees.
    If you are in Ireland and want to buy Investment Trusts there really are only two options (unless you go for an expensive broker and are loaded).

    They are Trading212 and IBKR. Trading212 are not accepting new members, and have some other issues that you get with "free" brokers, so that leaves IBKR as the default, the cheapest, and the best currently available. Even if DeGiro listed ITs, their fees are more expensive for UK stocks than IBKR if you are making regular purchases. But they don't list ITs so that's the end of that anyway, so IBKR it is.




  • AICs Monthly Newsletter for May: https://theaic.turtl.co/story/compass-may-2021/

    Interesting bits on UK hospitality (in particular) and office vs warehouse property




  • Interesting from AVI Global (AGT), and as a holder of AGT its good to see this type of activism
    Asset Value Investors (AVI), manager of the £1bn AVI Global (AGT) investment trust, has launched a campaign to oust the board of Symphony International (SIHL), a poorly-performing London-listed Asia private equity fund in which it has a 15% stake.

    AVI, an activist investor in undervalued investment companies and holding companies, wants to gather the support of another 15% of shareholders to call an extraordinary general meeting (EGM) to replace Symphony’s directors who it says have failed to hold fund manager Anil Thadani to account.

    AVI, led by AGT fund manager Joe Bauernfreund, usually prefers to work quietly behind the scenes to get the changes it wants at companies, but after nine years of what it calls ‘abject’ performance from Symphony, has decided to go on the attack....

    ....Launching the campaign, Tom Treanor, AVI’s executive director, said: ‘The poor performance of Symphony International Holdings Ltd has gone on long enough. We have two key aims and we need the support of our fellow shareholders to make them a reality.’

    The aims are to highlight what AVI claims are conflicts of interest and poor stewardship by Symphony’s board, as well as call the EGM.

    Thadani, founder of Symphony and leader of its investment team, hit back yesterday telling shareholders ‘many of AVI’s allegations are inaccurate and misleading’ and that its intention was to seize control of Symphony and liquidate its assets...

    ...At the end of March, AVI Global held 2.1% of its £1.1bn portfolio in Symphony.
    https://citywire.co.uk/investment-trust-insider/news/asset-value-investors-attacks-abject-symphony-board/a1505107?ref=investment-trust-insider-latest-news-list








  • Interesting podcast, a pretty bullish outlook on earnings from Tom Buckingham:

    Richard is joined by Tom Buckingham, the portfolio manager of the JP Morgan European Income Investment Trust to discuss the aims and objectives of the trust, top holdings and coping with the volatility of a global pandemic.

    https://soundcloud.com/interactive-investor/tom-buckingham-the-richard-hunter-interview

    My own portfolio, while it has some dividend yield, is not geared towards that goal. Many people invest in ITs however with income a primary consideration.


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  • Investment Trust Annual Reports are always worth reading, as over multiple years they can give great insight into the IT. Even if you don't dig into the numbers and just read the various reports, you will learn loads.

    Even if you don't own them or imminently plan on investing, the commentary from the chairman and investment managers can be really useful and educational as they often comment and give their opinion on the economy and the wider market.

    North Atlantic Smaller Companies (which I hold) just published their annual report for the year ended 31 Jan 2021. It can be read in full here: https://www.londonstockexchange.com/news-article/NAS/annual-financial-report/14970788

    Christopher Mills runs NAS and has done so forever, and has been extremely successful. His comments from the Annual Report are worth reading:
    investment manager's report
    quoted portfolio UK
    The year was very much a game of two halves. Substantial losses in the period to 31 July 2020, followed by a substantial recovery through to 31 January 2021. The Company was badly impacted through its exposure to leisure related stocks and in particular the fall in Ten Entertainment and Stobart Group resulted in a net loss to the Company of approximately £30 million, as key parts of their business were forced to close.

    Fortunately, this was more than offset by the relatively high weighting in Life Sciences with Ergomed (prior to sale), EKF, Renalytix and Verici DX all performing notably well and collectively adding nearly £90 million to the NAV. Augean and Polar Capital rose modestly but the gain was offset by a fall in MJ Gleeson.

    Smaller holdings such as AssetCo, Sureserve and Signature Aviation performed well and other holdings such as Frenkel Topping, Bigblu Broadband, Tribal and Benchmark made modest progress.

    Finally, it is pleasing to note that both Oryx International ("Oryx"), our largest holding, and Odyssean Investment Trust, outperformed their benchmarks, in Oryx's case by a significant amount.

    quoted portfolio USA
    The portfolio remains relatively modest and had no major impact on the net asset value of the Company.

    unquoted portfolio UK
    Source Bioscience (previously Sherwood Holdings) went public during the period and with accrued interest is estimated to have added in total approximately £9 million to the net asset value. Hamsard was also written up but the impact was offset by the need to write down Specialist Components due to weak orders resulting from the COVID Pandemic. Viking was also written up modestly with further gains expected in the current year as the business hopefully enters a liquidity event.

    Finally, it was necessary to write down Jaguar Holdings Group an inflight catering business as demands for its services collapsed due to COVID impact on the airline industry.

    unquoted portfolio USA
    The standout performer of the year was the IPO of Telos in the fourth quarter. In January 2021, the ordinary shares were valued at little over £1 million. With sales following the IPO of over £20 million and with the balance of the publicly listed shares worth over £5 million the investment made an outstanding contribution to the Company's performance in the year to 31 January 2021.

    Performance Chemicals suffered due to the weak oil price but remained EBITDA profitable. Coventbridge and Utitec made modest progress again impeded by COVID issues. We do however expect liquidity events from both the investments in the current financial year which will boost both cash reserves and the net asset value.

    liquidity
    Cash and US treasury bills started the year at £82 million and fell initially as opportunity was taken to invest in companies where we believed there had been an overreaction in the share price compared to the intrinsic value of the business. Most recently however, the IPO of Source, the partial sale of Assetco, the partial sale of Signature following multiple ongoing bids and the sale of most of the Telos position has resulted in cash and US treasury bills at the end of January 2021 nearing £89 million. This is expected to increase still further as the balance of the Telos and Signature Aviation positions are realised.

    Your Managers are constantly reviewing potential investment opportunities but markets have had a major recovery and in our opinion are running ahead of fundamentals even assuming a full vaccine roll out over the course of the coming year.

    Christopher Mills
    Chief Executive & Investment Manager

    10 May 2021

    Mills sounding a warning bell, the general consensus seems to be that the "covid recovery" has a long way to run, in the UK in particular, but he is not having it. I suppose it explains what he is holding such a large amount of the portfolio in cash/cash equivalents.




  • Capital Gearing Trust quarterly report also worth reading, lots on inflation and the road ahead: https://www.capitalgearingtrust.com/sites/cgt/files/literature/Factsheets/CGT_Quarterly_Report_Mar_2021.pdf




  • Ruffer Investment Company (RICA.L) April report published today, more again on inflation: https://www.ruffer.co.uk/-/media/Ruffer-Website/Files/Fund-reports/RIC/2021/2021-04-RIC-fund-report-Apr2021.pdf
    During April, the Company’s net asset value appreciated by 0.9% and the share price rose by 0.5%.
    This compared with a rise of 4.3% in the FTSE All-Share total return index.
    After one of the worst quarters for US bonds this century, and the steepest fall in the Barclays Long
    Treasury Index in 40 years, it was inevitable there would be some form of pause. Having peaked on 31
    March at 1.74%, the US 10 year bond yield finished the month at 1.63%. This move lower boosted the
    performance of the Company’s positions in gold and inflation-linked bonds. Earlier this year, gold had
    been doubly punished by the combination of rising yields and a rallying US dollar, but two recent
    tactical changes in the portfolio’s asset allocation have helped performance. First, we added to bullion
    and selected gold mining equities during March and April, having reduced gold exposure last summer
    in anticipation of a reflationary shift in markets ahead of the vaccine announcements in November.
    Gold-related investments contributed 50bps to performance during the month. Secondly, we took
    profits in some of the interest rate options that protected the portfolio so effectively as bond yields rose
    during the first quarter of 2021, thereby allowing us to capture some of the rebound in inflation-linked
    bonds. This combination of index-linked bonds, gold and interest rate protections, having been
    essentially neutral during the first quarter, contributed positively as US bond yields receded.
    So, where next? Was April a pause for breath before a further move higher in yields and
    consequent move lower in bond prices? We think so but there will be an important shift in emphasis –
    we have probably seen the end of US reflation in isolation. The next leg down for conventional bonds
    will probably be driven by positive growth surprises from Europe, as the continent sees a sustained
    pickup in vaccination rates and starts to exit from lockdown. At the same time there appears to be
    growing political support for meaningful fiscal policy deployment in the coming months. This is a
    playbook we have already seen, except the baton is being passed from the US to continental Europe. It
    was instructive that the German 10 year bund yield rose 9bps over the month, in stark contrast to the
    moves seen in the US.
    The Company’s index-linked bonds, which we reduced slightly through sales of US TIPS during
    April, are shielded by interest rate options so they retain their inflation protection, but are buttressed
    against the powerful economic rebound we expect to see through 2021. Our equities remain
    concentrated in economically sensitive and cyclical companies. This equity bias, combined with
    protection against rising nominal bond yields, means the Company is positioned for reflation, but still
    protected from inflation. In a world where fiscal policy dominates, inflation is the risk all investors
    should be guarding against. But conventional portfolios, hamstrung by the fallacy of benchmarks, are
    pointing in the wrong direction. They back-test well in the disinflationary world of the last 40 years,
    but are institutionally wired to the assets that performed well in the last market regime rather than to
    those opportunities which exist in the new one.


  • Registered Users Posts: 3,659 ✭✭✭ Robson99


    How often do Investment Trusts change there discount / premium values and is there any handy place to follow same ?


  • Registered Users Posts: 689 ✭✭✭ jams100


    Bought MPU today, my first REIT. (Don't know a whole lot about REITs but I've been following this one for a while and I like the sector they are in, its a sector that should be relatively recession proof and a 5% dividend. (Very much a long term hold).

    Medical Properties Trust, is a real estate investment trust (REIT). The Company focuses on investing in and owning net-leased healthcare facilities across the United States and selectively in foreign jurisdictions. The Company's segment is its investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in its tenants. The Company acquires and develops healthcare facilities, and leases the facilities to healthcare operating companies under long-term net leases. The Company makes mortgage loans to healthcare operators collateralized by their real estate assets. The Company owns hospitals with approximately 390 facilities and approximately 42,000 licensed beds in eight countries, across three continents.




  • Robson99 wrote: »
    How often do Investment Trusts change there discount / premium values and is there any handy place to follow same ?

    Well the share price just trades and changes on the market as normal. The NAV is updated/released by the IT. Some ITs release this daily. The premium/discount listed on websites can be an estimate pending confirmation of the NAV.

    The best place I have found is the AIC website. You can view the premium/discount on the ITs page, or, if you sign up there and create a watchlist you can view the premium/discount of the ones you are following in the one table.

    You can also see and sort all ITs from discount/premium low to high or high to low on the page below: https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false


  • Registered Users Posts: 850 ✭✭✭ bcklschaps


    Am I right in observing that Scottish Investment Trust (SMT. L) is down about 16% in the last 2 weeks?




  • bcklschaps wrote: »
    Am I right in observing that Scottish Investment Trust (SMT. L) is down about 16% in the last 2 weeks?

    Yes you are I'm afraid. Since its high in February it is down about 22%.

    Monks is down about half that.

    https://www.proactiveinvestors.co.uk/companies/news/949106/scottish-mortgage-suffers-a-few-slings-and-arrows-949106.html


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  • Registered Users Posts: 8,749 ✭✭✭ Shedite27


    Has anyone done any research on the free ETF's with Degiro?

    The Vanguard S&P500 tracker for example, has a 0.07% AMC (annual management charge) and Degiro offering them free means there's no transaction charges or no stamp duty.

    The downside is that they're liable to 41% CGT rather than 33%

    I suspect the stamp duty and transaction costs probably balance out. Could someone with access to a Scottish Mortgage see how much it would cost to invest €1000in SMT, what stamp duty, commission etc would be added to that.


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