| Investment Trust- Thoughts (February 2025)

1st Feb by Charles Mitchell

183 comments 6421 reads

Investment Trust- Thoughts (February 2025)

Links to older monthly thoughts-reader request.

January 2025 December. November October September August

July June May April March February

Investment trusts realising assets spreadsheet

For more information on Investment trusts visit:

Association of Investment Companies.

https://www.theaic.co.uk/
Free to sign up. On the site you can create portfolios, screen and compare Investment Trusts by Geographic region, Sector , Yield and more. A few Trusts who are not AIC members have limited data.

Jonathan Davies's website https://money-makers.co/.

You can also sign up(Paid membership) for insights on Investment Trusts from him and others. Weekly email and podcast .

Citywire do a daily Investment trust email. Free, does have sponsored content but keeps you up to-date with Investment Trust news.

https://citywire.com/investment-trust-insider

Trustnet have an Investment trust section. https://www.trustnet.com/

Plenty of performance data on that site.

Edison cover Investment Companies and do a monthly Investment trust round up. You can sign up for free.

https://www.edisongroup.com/equities/investment-companies/.

You can sign up for newsletters/fact sheets from most of the Investment Trusts on their websites.

For ETF's I use https://www.justetf.com/uk/. You can screen buy region, sector and see performance comparisons.

January 2025 Investment Trust monthly performance.

Top 10 Equity only

Sure Ventures (LON:SURE) +18.9%

SVM UK Emerging Fund (LON:SVM) +18.7

Scottish Mortgage Investment Trust (LON:SMT) +13.7%

Baillie Gifford European Growth Trust (LON:BGEU) +12.1%

Blackrock Latin American Investment Trust (LON:BRLA) +11.2%

Montanaro European Smaller Companies Trust (LON:MTE) +10.3%

Blackrock Greater Europe Investment Trust (LON:BRGE) +10.3%

Baillie Gifford UK Growth Trust (LON:BGUK) +10.1%

European Opportunities Trust (LON:EOT) +10.1%

JPMorgan European Growth & Income (LON:JEGI) +9.8%

Bottom 10 Equity

India Capital Growth Fund (LON:IGC) -11.2%

Rights and Issues Investment Trust (LON:RIII) -10.1%

Augmentum Fintech (LON:AUGM) -9.2%

Oryx International Growth Fund (LON:OIG) -8.8%

Worsley Investors (LON:WINV) -8.5%

British and American Investment Trust (LON:BAF) -8.3%

Downing Strategic Micro-Cap Investment Trust (LON:DSM) -7.8%

Chelverton UK Dividend Trust (LON:SDV) -7.6%

International Public Partnerships (LON:INPP) -6.9%

Cordiant Digital Infrastructure (LON:CORD) -6.7%

All Trusts Top 5

Ground Rents Income Fund (LON:GRIO) +46.4%

…

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About the Author

Charles Mitchell

Premium Member

Worked in the City of London 1976-1988- blue button on the floor, Fund manager assistant at a large Investment Firm, then moved into institutional Investment Trust sales,spent a Year in New York for a UK stockbroker. Set up a small corporate finance firm - managed a small Investment fund. Left broking and worked in various businesses before setting up an online B2B business in 2012. more »

183 comments

Pat W

25th Feb

Perfect! Lots of interesting information to get stuck into. Thank you!

sevenccc

25th Feb

Absolutely with you on that timarr. Renewables Infrastructure (LON:TRIG) announce today that they are trebling their unsuccessful share buyback. Why? Surely when you're in a hole stop digging?

Sp now 76p, dropped from over 100p in last few months. NAV 116p. In this time they have bought 36m shares for £33m so far. Average 90p or so? Well done the managing company! Response? Treble the BB from £50m to £150m. That should work then. Oh and all funded by debt. Brilliant.

ken mitchell

25th Feb

Trump tariff worries are partly behind recent commodity price weakness. This link is a must for help with our timing for Mining Trust top ups or initial buys:-

https://tradingeconomics.com/c...

That link was for the spot copper price along with commentary explaining the latest copper price news, and why the price has fallen back after its good run. . To the right are the headings for all the other commodities with similar useful comment.

Short term further weakness ahead for the big Mining shares and BlackRock World Mining Trust (LON:BRWM) ?

As for the BlackRock World Mining Trust (LON:BRWM) it looks as though I was too optimistic about the larger final and it might not be much above the standard 5.5p for the other 3 quarterly dividends. Rio Tinto (LON:RIO) dividend was surprisingly good, but other major holdings cut more than hoped. Albertos’s dividend forecast looks right.

Posts here (mine too) have all focused on BlackRock World Mining Trust (LON:BRWM) as the best one for exposure to the major Miners, but unfortunately they’ve underperformed the producing smaller Miners and hence so has BlackRock World Mining Trust (LON:BRWM) .

I’ve held BlackRock World Mining Trust (LON:BRWM) CQS Natural Resources Growth and Income (LON:CYN) and Blackrock Energy and Resources Income Trust (LON:BERI) long term and the weakest performer by some way is BlackRock World Mining Trust (LON:BRWM) .

BlackRock World Mining Trust (LON:BRWM) is down 1% over 1 year and up just 52% over 5 years.

CQS Natural Resources Growth and Income (LON:CYN) is up 26% over 1 year and 169% over 5 years. Their focus is a range of smaller miners.

Blackrock Energy and Resources Income Trust (LON:BERI) is up 13% over 1 year and up 111% over 5 years. They include big Miners in their top 10.

A case for BlackRock World Mining Trust (LON:BRWM) at the current low price is it’s time it caught up with the other two! But it needs better China news and supply shortages instead of (as is the case for some commodities) oversupply, to get NAV, dividend and share price moving up. Good chance that 470p low will be hit again. Hope it doesn’t drop below that for the first time since the covid falls.

raggedtp

25th Feb

As a determined holder of Gore Street Energy Storage Fund (LON:GSF) ,NextEnergy Solar Fund (LON:NESF) ,SDCL Energy Efficiency Income Trust (LON:SEIT) and Foresight Environmental Infrastructure (LON:FGEN) , all now at 10+% divs, I am frustrated that Octopus Renewables Infrastructure Trust (LON:ORIT) has now fallen to my buy trigger of <65p, but I have to wait for those divs before I have any cash spare.

OK, ONLY 9.5% forward div, but:

"In line with the Company's progressive dividend policy, the Board of Octopus Renewables Infrastructure Trust plc is pleased to announce an increase in the target dividend to 6.17p* per ordinary share for the financial year from 1 January 2025 to 31 December 2025 ("FY 2025").

This increase of 2.5% over FY 2024's dividend target is in line with the increase to the Consumer Price Index (CPI) for the 12 months to 31 December 2024 and marks the fourth consecutive year the Company has increased its dividend target in line with inflation. The FY 2025 dividend target is expected to be fully covered by cash flow generated from the Company's operating portfolios."

ORIT "seeks to achieve its investment objective through investment in renewable energy assets in Europe and Australia, comprising predominantly assets which generate electricity from renewable energy sources, with a particular focus on onshore and offshore wind farms and photovoltaic solar parks, and non-generation renewable energy related assets and businesses (Renewable Energy Assets)."

Well diversified within the sector, https://cdn.prod.website-files...

39% discount to NAV and essentially ungeared.

The craziness is that there are bargains, but nearly all our portfolios are in deep value territory, so I don't want to sell anything either!

af20001

25th Feb

Jpmorgan Global Growth & Income (LON:JGGI) has a very good track record, and comparatively low charges. Shame I only discovered it a month or so ago! It's one I intend to keep adding to over time.

donald pond

25th Feb

I would also hesitate before fixating too much on fees. You have to consider what an investment trust is doing and what their return is after fees. For example, over time, the Private Equity sector has tended to outperform the Listed Equity sector, even after fees. Fees for private Equity funds or funds of funds like Oakley Capital Investments (LON:OCI) HgCapital Trust (LON:HGT) Harbourvest Global Private Equity (LON:HVPE) etc can look high, as they tend to start at around 2% and often have a performance element. But private equity isn't cheap: it ultimately involves teams of people going into businesses and helping to implement a new strategy. If you are comparing it to a few people sitting at desks, reading annual reports and phoning a broker with buy and sell orders then the entire sector can look expensive.
I'd also mention Pershing Square Holdings (LON:PSH) here, which a lot of people shy away from because of the fees, which can be pretty eye watering. Yet over the last 7 years it has returned over 22%pa after fees, and it employs some of the very best analysts in the world and engages deeply with the management of the companies it holds.
I'm not saying fees aren't important. However, I would sooner build a portfolio of very cheap trackers augmented by the best trusts (regardless of fees) rather then focus too much on identifying cheaper trusts.
There are some trusts (Scottish Mortgage Investment Trust (LON:SMT) and Jpmorgan Global Growth & Income (LON:JGGI) spring to mind) that have used their very large size to reduce fees. That is something to be applauded.

JSchoffer

26th Feb

Interesting article in MoneyWeek this weekend on investment in Africa. The author suggested Xtrackers MSCI Africa Top 50 Swap UCITS ETF 1C (LON:XMAF) and iShares MSCI South Africa UCITS ETF USD (Acc) (LON:SRSA) as investment ideas.

I've not seen much mention in this thread about Africa, and my understanding is that in all of the emerging market trusts there isnt much (if any) allocation to Africa either?

Keen to hear people's thoughts on whether there is an opportunity here or good reason for the lack of coverage

Charles Mitchell

26th Feb

Last time I looked at Africa , which was 12 months ago, I came to the conclusion the risks were too high. Miners can be OK but other sectors looked tricky.

ken mitchell

26th Feb

3 bits of information.

1. As Charles had expected, the new Achilles Investment Trust has started trading at a premium. It’s 104p to buy and after launch costs NAV is probably about 97p. For now one to watch, and to see what they are buying. Achilles is not yet on the Stockopedia database.

2. Vietnam.

The Vietnam index has at last (just) broken out of its 1200-1300 trading range. Finished at 1303 today. Will be interesting to see what tomorrow brings.

3. Investment Trust buybacks and whether or not they are a waste of money.

It seems Phil Ackman who runs the very successful Pershing Square Holdings (LON:PSH) has at last (after wasting over $1 billion on buybacks only to see the Pershing Square Holdings (LON:PSH) discount still stubbornly wide) has reached the conclusion that they are!

This is from the end of a Citywire article today:-

“One investment decision Ackman is not so sure about is buying back the trust’s shares. In his opinion, ‘it is proven that buybacks are not a discount closing mechanism’, evidenced by the trust’s stubbornly wide discount.

‘I think of share repurchases as a capital allocation decision. It is the chief executive’s job to allocate capital to the next Uber…I will make more money for people finding the next Uber rather than buying back our shares.’”

That’s exactly what I’ve thought and posted for multiple years, nearly always to be greeted by posts saying why I’ve got it hopelessly wrong. But at long last the message is getting through.

Ackman has a superb record (aside from the odd inevitable blip) with Pershing Square Holdings (LON:PSH) by far the best sector performer over 5 years:-

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

Had he (as imo he should have) invested that $1 billion successfully instead of wasting it on buybacks, both NAV and share price might well have been even higher now. As it is despite the huge buybacks the discount is still 32%!

bsharman

27th Feb

Achilles is interesting - they are focusing on companies in the property, infrastructure, and renewables sector and will be managed by Harwood / Christopher Mills. Harwood already own Real Estate Investors (LON:RLE) (a 10% holding) - which I hold. It is trading on a large discount - would this be moved to the new Achilles fund? It's a bit confusing tbh! I will seek out their prospectus, but anyone here have any insights?

JSchoffer

28th Feb

Fantastic results from Tritax Big Box REIT (LON:BBOX) today with operating profit up 37% and EPS up 15%, LTV down 2.8%.

Is there a reason investor's here have avoided? Don't remember much coverage about them

ken mitchell

28th Feb

Agree that Tritax Big Box REIT (LON:BBOX) Results at first glance look exceptionally good. Note though that the figures are influenced by their UK Commercial Property REIT (LON:UKCM^E24) acquisition. Also agree that it hasn’t been covered much here. My reason for that is arguably too much focus on the very big dividend payers.

Tritax Big Box REIT (LON:BBOX) is not one I’ve followed closely. Hope anyone who holds and knows a lot more about Tritax Big Box REIT (LON:BBOX) will post their thoughts after what look to be their excellent Results today.

timarr

28th Feb

I did comment on Tritax Big Box REIT (LON:BBOX) on last month's thread - mainly to point out their recent deal on data centres.

Today's detail is interesting - they spent £1.2b on UKCM. So far they've sold £180m worth of non-core assets with about £270m more to go - at a premium to BV (and from memory they got UKCM at a 10% discount to NAV). Terrific deal for BBOX.

Overall a lot of moving parts, will take a bit of digging, but nothing obviously negative here. Looks like plenty of future growth in the tank, and sitting on a near 20% discount.

The UK market is littered with people offering £10 notes for £8, I'm surprised we haven't seen more bid activity than we already have.

timarr

Charles Mitchell

28th Feb

Supermarket Income REIT (LON:SUPR) (I hold)

SUPERMARKET INCOME REIT PLC will be holding a Interim Results meeting on 13th Mar 2025 at 3:00pm GMT.

ShoeShineBoy

1st Mar

On a quiet day on Investment Trust Board, I thought I would share the notes I wrote for myself 3 or 4 years ago on the excellent John Baron book. Please bear in mind my notes are not an alternative to buying the book itself! I hope I'm not breaking any copyright laws here.

https://tinyurl.com/fduk8593

Ch 1 What are investment trusts ?
P4 - share price of an investment trust is not dictated by the NAV but rather by the extent to which investors wish to own the shares of the trust itself
P4 - trading in the shares does not affect the value of the NAV
P4 - investment trusts are closed-ended
P4 - discounts reflect the fact that institutions have been sellers & may also reflect the fact that IT may be more volatile than open ended funds ie investors may be seeking a margin of comfort for holding
P4 - discounts are not necessarily an opportunity; large discounts may reflect low confidence in the manager or a dislike of the sector / region or a lack of communication with shareholders ie - uncertainty around the investment strategy
P5 - opposite may be true for ITs trading at a premium

Ch 2 Better performance & cheaper fees
P9 - compare IT versus similar investment trusts, the appropriate benchmarks or unit trusts (mirror funds) to understand performance
P12 - ITs have generally outperformed open ended funds
P15 - unit trusts have generally charged higher fees; this eats into long-term returns
P18 - evidence from America confirm that low-cost products usually outperform high-cost ones; this may be due to funds becoming index trackers but it is certainly true that part of this effect is due to higher fees
P20 - TER (total expense ratio) sometimes do not include all the costs of running a fund
P22 - Fidelity has proposed a total cost of ownership figure instead of TER
P23 - some managers charge performance fees on top of annual management charges
P24 - conclusion on fees: read the detail carefully

Ch 3 The opportunities & risks of discounts
P27 - there are opportunities & risks associated with discounts - price is influenced by investor demand, NAV reflects the value of the underlying portfolio
P28 - a discount that narrows or a premium that expands helps shareholders because the share price has risen faster (or fallen less) than the NAV
P28 - a widening discount or contracting premium is unhelpful as the share price falls further behind its NAV
P28 - because of fluctuations in the discount, an investor does not know how much others will pay for their shares even though the NAV is known
P29 - factors affecting discounts....
1.) ignorance - ITs are less well understood than unit trusts, some investors view them as risky & best avoided; if better understood, extra investor demand would push up prices & narrow discounts
2.) performance - investors don't want to own trusts that are not performing well; more sellers than buyers pushes the price down and widens the discount
3.) sentiment - usually in relation to future prospects of a sector or region can move discounts regardless of past performance ie - discounts can narrow when investors get excited about future prospects & buy the shares, and widen when they fear the worst & sell
4.) safe yield - can result in a premium, especially given a low interest rate environment
5.) communication - between a trust and shareholders; shareholders who understand and believe in the strategy, and know the trust well, will tend to hold and not sell their shares when times are tricky
6.) shareholders - funds with lots of private as opposed to institutional shareholders tend to have narrower discounts as private shareholders tend to be long-term holders
7.) change in manager or strategy - part of the job of the independent board is to review strategy and introduce change
8.) gearing - can be adjusted by managers with higher debt levels being perceived as more risky
9.) market volatility - unlike unit trusts, investment trusts can be traded at any point during the day; on bad days, some investors will sell if the price goes down regardless of what happens to the NAV
P29 - note that those managers who have consistently good long-term track records tend to be rewarded by the market with discounts close to NAV, or even with premiums
P31 - it is the fact that discounts exist which presents opportunities to investors
P31 - investors should always be seeking discount value when monitoring investment trust portfolios, asking whether current holdings look expensive relative to potential alternatives
P31 - compare trusts within the same sector or geographic region
P32 - do not base investment decisions purely on the extent of a trust's discount as there is usually a good reason for differences to the sector average
P32 - but the market does get discounts wrong
P32 - one of the best strategies is to buy a good fund manager who is temporarily out of favour because of a difficult patch in performance, preferably in a sector that is also out of favour and then tuck this away for the long term
P32 - seeking value is also about comparing discounts and premiums relative to performance
P33 - long-term investment decisions should focus on performance first and foremost; pick a good fund manager
P33 - risks of investment trusts - discounts widen when the share price falls further behind the NAV, especially in a falling market
P33 - discounts widen when markets are volatile; when investors get scared they sell without knowing how the underlying portfolio is performing; and market makers take advantage by marking prices down and/or limiting share availability
P34 - average discount in 2013 was 8%
P34 - some trusts operate a policy of limiting discounts by buying back shares using surplus cash which increases the NAV per share
P37 - downside with discount control mechanisms is they can raise the TER as fixed costs are spread over fewer shares

Ch 4 Other pros & cons of investment trusts
P39 - other pros & cons of investment trusts -
1.) better understood - will the RDR have a profound effect upon investors understanding & perception of ITs ?
2.) gearing - ITs are allowed to borrow; there are restrictions on how much they can borrow, agreed by the independent board of directors; note trusts are not usually geared by more than 15%
3.) independent board of directors / shareholder meetings
4.) investment trusts are usually longer term than unit trusts as they don't have to think about redemptions, they can focus on good long term decisions
5.) size - as ITs are generally smaller than unit trusts, they focus on their objectives
6.) dividends - an attractive feature is the ability to retain up to 15% of dividends in any one year in a revenue reserve which allows more consistent future payment of dividends

Ch 5 Useful investing miscellany
P53 - directors & managers shareholdings – re-assuring for investors to see that those closest to an IT have a stake in the company; look in the report & accounts where directors shareholdings are listed to understand whether directors stakes have increased or decreased over the year
P53 - trusts where managers have decent stakes tend to perform well e.g. - Alex Darwell at Jupiter European Opportunities
P54 - ITs distribute annual reports plus monthly factsheets
P54 - publications remind investors of the benchmark & investment objective/policy
P55 - make sure you understand the list of best & worst performers plus the current top 10 or 20 holdings (often broken down by geography & sector)
P55 - fund manager will also give a view into what he thinks is going to happen in the future
P56 - split capital investment trusts
P58 - ETFs key attraction is they have much lower TERs compared with managed funds
P59 - but John Baron thinks there is no shortage of good, active fund managers who outperform the their benchmarks
P59 - ETFs tend to underperform their benchmark
P60 - ETFs do not usually trade at wide discounts to NAV
P60 – ETFs can be physical or swap based
P62 - investors should be aware of the extent to which fund managers are 'turning over' the underlying portfolio
P62 - fund managers with high portfolio turnover underperform those who do not change their holdings as frequently because they end up paying more in fees
P63 - FE Trustnet states the average period for holding a stock is around 9 months whereas 50 years ago it was 8 years
P64 - important for investors to understand the different investing styles of managers e.g. - if seeking a decent & growing income, investors will be drawn to a portfolio of good quality blue chip companies (defensives) but if growth is sought then investors will want more cyclical companies
P65 - appreciating the investment style of a manager can help investors through difficult periods e.g. - Anthony Bolton in China or Neil Woodford's liking for blue chips; even though they don't perform well when the economy is doing well

Ch 6 Deciding investment objectives
P67 - how should a portfolio be constructed & managed ?
P67 - saving & investing - ensure you take care of life's expenses before investing
P68 - be aware of the effects of inflation - assuming inflation of 2%, £10,000 today will be worth only £8,000 in 10 years time
P69 - be aware of risk v return
P69 - 2 factors should influence your risk tolerance -
# time horizons - only invest if you have a decent time horizon; equities with dividends reinvested beat bonds & cash because good companies grow profits faster than prevailing interest rates
# volatility - i.e. how sensitive you are to market volatility; if it keeps you up at night, don't get into the stock market. Reducing investment risk can be done by increasing the proportion of bonds v equities or just reducing the size of the portfolio itself
P71 - take currencies into consideration by hedging the risk that non-GBP investments move against you
P73 - another factor to take into account when clarifying your investment objectives is whether you have an income requirement
P74 - need to understand which benchmarks to choose in order to understand whether your portfolio has been successful or not; John Baron uses the growth & income indices of the Association of Private Client Investment Managers & Stockbrokers (APCIMS) as benchmarks
P76 - need to keep assessing the relevance of benchmarks when portfolios are up & running
P76 - never allow a benchmark to dictate how a portfolio is constructed; the objective is to beat a benchmark not mimic it so the portfolio has to deviate from the benchmark

Ch 7 Successful investing
P83 – example assumes an investor who is sitting on cash
P84 - invest gradually over a period, usually 6-12 months, try to buy on bad days
P84 - if a market correction, then a more aggressive stance can be taken, if a strong run in the market then more caution is required in the short term at least
P84 - above approach ensures pound cost averaging; this is an insurance against excessive risk
P86 - it is important to stay invested; the impact of missing the 10 best trading days can be returns reduced by 50%
P87 - typically, investors fail to take advantage of price falls & do the opposite of what they should
P89 - the aim of diversification is to reduce portfolio risk by investing in uncorrelated assets
P90 - research suggests 30-40 holdings achieve the most diversification benefits; but don't have too many holdings as this increases dealing costs
P90 - need to understand that diversification is achieved across geographies & asset classes
P91 - don't over diversify, keep it simple
P91 - Buffett: 'wide diversification is only used when investors don't understand what they are doing'
P92 - over the longer term, it is dividends & not capital gains that produce the vast majority of market returns; finding & re-investing dividends is the key to healthy returns
P93 - re-investing dividends is the best way to grow wealth over time, and is less risky than trying to make short-term trades in the hope of crystallising capital gains
P93 - history suggests investors should regularly re-balance their portfolios
P94 - concept of re-balancing is straightforward - sell off any assets that have done well & re-balance back to the original percentage e.g. – 60% equities, 40% bonds
P94 - typically, re-balancing will involve selling equities & buying bonds as the former have historically performed better
P95 - as you approach the end of the life of a portfolio, it is best to liquidate over a period of time, again to reduce risk & the effects of a possible market downturn

Ch 8 Other investment secrets
P97 - John Baron's secret to successful investing is to know when sentiment & fundamentals part company, and then to have the courage to act
P97 - when market sentiment runs too far ahead relative to the asset's fundamentals (ie - investors are pushing up the price beyond it's worth), the time has come to sell
P97 - when sentiment trails fundamentals (ie - the market is ignoring & so undervaluing the asset's prospects), then that is the time to buy
P97 - not easy to identify when the market has got it wrong & the price is not reflecting reality
P98 - Sir John Templeton: 'it is impossible to produce superior performance unless you do something different from the majority'
P98 - contrarian investors generally need to be value investors
P98 - small investor disadvantages - poor access to market information is being addressed by funds wanting to have better communications with shareholders
P99 - small investor advantages - longer time horizons than professional fund managers who are under pressure to meet targets (patience is an asset)
P100 - ITs help the small investor as positive or negative sentiment towards an underlying trust very often shows itself through the extent of the discount ie - look for good quality trusts trading on a wider-than-normal discount
P100 - the ideal purchase is when a trust, with a manager who has a good long-term track record & who is still in place, stands at a wider than average discount, usually because the sector or manager is out of favour in the short-term or the market is wobbly; many investors place too much emphasis on 'flavour of the month' investment themes and short-term performance, often investing just as performance peaks
P100 - keep it simple & cheap; complexity adds cost, risks confusion & usually hinders performance
P101 - avoid hedge funds, absolute return funds, structured products, multi-manager funds & other investment vehicles that have high costs & poor transparency
P102 - beware the additional costs of multi-manager funds, hedge funds & structured products
P108 - ignore forecasts as they are rarely correct, especially those of the wider economy
P109 - Sir John Templeton observation that 'this time is different' are the 4 most dangerous words in investing
P109 - Einstein allegedly said compound interest is the eighth wonder of the world; this is only achieved by re-investing dividends over time

Ch 9 Investors Chronicle Portfolios
P111 - growth & income portfolios
P112 - benchmarks are the FTSE APCIMS private investor indices (set up by the FTSE Association of Private Client Investment Managers & Stockbrokers (APCIMS) to help private investors benchmark their investment performance)
P114 - both portfolios adhere to the basics of successful investing ie - simple & cheap
P114 - both portfolios avoid expensive products eg - hedge funds
P114 - both portfolios are re-balanced once a year ie - equities v bonds
P114 - growth portfolio tends to have a higher turnover rate as the universe of stocks is wider
P115 - income portfolio tends to be anchored in those trusts with a decent yield (with the growth in income being an important factor)
P115 - both portfolios are well diversified with exposure to 4 asset classes - bonds, equities, commercial property & cash
P115 - both portfolios reinvest their dividends
P115 - John does not allow market forecasts to guide his investment decisions; instead, he keeps an eye on which parts of the world are growing faster than others
P115 - John separates the fundamentals of an asset from the sentiment shown it by the market; this, above all should guide you in your investment choices (if you are to beat the market, you need to do something different to the market)
P116 - John's mantra has long been 'go high, go deep, go east'
P116 - 'go high' - high yielding equities & corporate bonds because interest rates will stay low for some time
P119 - 'go deep' - smaller companies are likely to do well relative to the wider markets as they have stronger balance sheets & yield as much as larger companies; 15 to 20% discounts on many good-performing smaller company trusts may prove to be good long-term investments
P120 - 'go east' - John likes the emerging markets story in general as these should provide better growth than western markets in the longer term due to lower debt, improving corporate governance, more political stability & highly populated countries; Asian countries in particular have young populations & high saving ratios but this may change due to more consumerism
P121 - need to balance competing factors - i) geography v themes - John gives greater weight to geography ii) capital growth v income - bonds no longer provide the only source of income
P124 - risk v reward - history is on the side of equity markets in that they reward long-term investment including the all-important dividend re-investment

My summary of the book below....

Summary
- IT are closed ended
- NAV & SP are separate
- NAV reflects the underlying investments
- SP reflects investor sentiment
- discounts are not always buying opportunities
- don't buy an IT that is charging high fees, very few managers beat the market
- read the detail on fees carefully
- understand why a fund is trading at a discount
- understand the history of a fund's discount / premium
- compare trusts within the same sector & geographic region / also use APCIMS benchmarks
- do not base decisions purely on discounts
- long-term investment decisions should focus on performance; buy good fund managers
- one of the best strategies is to buy a manager who is temporarily out of favour
- average 2013 discount was 8%
- buy trusts where managers also own shares
- think about time horizons & be prepared to accept some volatility when investing for the long-term
- when sentiment trails fundamentals >>> BUY
- when sentiment is ahead of fundamentals >>> SELL
- take advantage of pound cost averaging
- take advantage of price falls
- take advantage of dividend payments (ie - compounding) & portfolio re-balancing
- don't over-diversify as this is the same as buying an ETF market tracker
- remember that in order to beat the market, I need to do something different from the market

And the buying criteria that I try (but sometimes fail) to keep to....

Buying criteria
- trading at a larger discount to NAV than usual - sentiment v fundamentals
- good reason for the larger than usual discount eg - manager or sector out of favour
- low fees
- decent yield
- good comparison against other trusts in the same sector
- beats the benchmark
- good/reliable manager (good long-term buys should focus on performance more than discount)
- manager owns shares in the trust
- remember that good long-term buys should focus more on performance than discount
- good reasons for buying in the first place
- understand top 10 holdings & what percentage of the trust these make up ie - is the trust made up of conviction buys
- understand Morning Star rating & Trustnet risk score
- understand if gearing is allowed & what the current level of gearing is

Rusty2

17th Mar

l see Gresham House Energy Storage Fund (LON:GRID) is suddenly up 12% on no news, any ideas?

OldSchool05

17th Mar

It will be a reaction to the bid received today for Harmony Energy Income Trust (LON:HEIT) from Foresight. Gore Street Energy Storage Fund (LON:GSF) is also up.

bsharman

17th Mar

Was the bid at at near NAV - this should have a great read across to other Battery storage companies!

bsharman

17th Mar

The bid for Harmony Energy Income Trust (LON:HEIT) is at 84p and the NAV is 92.38p - a 9.5% discount

Lincs

14th Apr

INPP gets a mention above as it's been a big faller - I've taken a position today. I like this sector as a fairly safe income stream - mostly inflation linked assets / returns. I consider today's price represents a good opportunity. I'm already holding HICL, GGP and until recently BBGI. INPP recently announced a progressive dividend policy and changing to quarterly dividends (from 6 monthly). NED bought £220k worth on the 2/4/25. Also recently fully repaid cash drawings under a CFD to both reduce interest rate payable and reduce the level of the CFD. Worth a look for income seekers.

Investment Trust- Thoughts (February 2025)

Investment Trust- Thoughts (February 2025)

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Charles Mitchell

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