Uk investment trusts

[Kwkiwi]

Hi I'm new to share investing. I previously gave it a go in the property market with mixed results and am giving that away. I read martin Hawes latest retirement book and realised I should have more of my planned portfolio in global equities. I decided I'll invest with funds. I saw on the asb share trading website you can buy into Uk investment trusts. I thought that might be a good way to get overseas exposure. I have $200k and thought I'd average in over 6-7 uk trusts over the next 18 months. Can someone advise me if that would be a good way to get diversification out of the nz sharemarket. Any advise would be appreciated especially if you gave had experience with uk investment trusts. I think the U.S. is where there might be an upswing. But you read all sorts of things! Read another article saying Buffett thought Europe was a good proposition. Who knows!!

[BlackPeter]

Hi I'm new to share investing. I previously gave it a go in the property market with mixed results and am giving that away. I read martin Hawes latest retirement book and realised I should have more of my planned portfolio in global equities. I decided I'll invest with funds. I saw on the asb share trading website you can buy into Uk investment trusts. I thought that might be a good way to get overseas exposure. I have $200k and thought I'd average in over 6-7 uk trusts over the next 18 months. Can someone advise me if that would be a good way to get diversification out of the nz sharemarket. Any advise would be appreciated especially if you gave had experience with uk investment trusts. I think the U.S. is where there might be an upswing. But you read all sorts of things! Read another article saying Buffett thought Europe was a good proposition. Who knows!!

Hi Kwkiwi, welcome to the forum.

First - you shouldn't expect "financial advise" on this forum. In New Zealand only "authorised financial advisors" are allowed to give that, and only after looking into and analysing your personal financial situation.

What you can hope for is that others share their investment experience with you - and it is up to you to decide whether these experiences / analysis and conclusions are relevant for your personal situation. Obviously - some people might have an agenda as well (like ramping up the shares they hold, or ramping down some shares they want to buy - or just stirring for "fun"), and even the better posters here are (as any human being) not infallible.

Having said that - I do hold a small percentage of my portfolio in TEM (Templeton Emerging Markets) in order to have some hedge against a falling NZD - and to benefit from the in my view likely better performance and growth of the emerging markets compared to the first world markets.

Over the long time they had a quite good growth rate, though my personal timing to buy in was not that flash. After 3 to 4 years of holding (and some subsequent "averaging down") did I just manage to break even. Lucky me not my best investment instrument!

Otherwise - it appears to be a professionally managed fund - and I am still holding (and expecting better growth in future - lower oil price in my view should help).

Haven't looked at the other Templeton funds, but assume they are quite professional as well. Just depends which markets you think will do well in future.

Just one other thought - if your plan is to get some exposure to European growth ... one other method might be to invest into (NZ or Australian) companies which are exposed to the European markets?

[Kwkiwi]

Hi Kwkiwi, welcome to the forum.

First - you shouldn't expect "financial advise" on this forum. In New Zealand only "authorised financial advisors" are allowed to give that, and only after looking into and analysing your personal financial situation.

What you can hope for is that others share their investment experience with you - and it is up to you to decide whether these experiences / analysis and conclusions are relevant for your personal situation. Obviously - some people might have an agenda as well (like ramping up the shares they hold, or ramping down some shares they want to buy - or just stirring for "fun"), and even the better posters here are (as any human being) not infallible.

Having said that - I do hold a small percentage of my portfolio in TEM (Templeton Emerging Markets) in order to have some hedge against a falling NZD - and to benefit from the in my view likely better performance and growth of the emerging markets compared to the first world markets.

Over the long time they had a quite good growth rate, though my personal timing to buy in was not that flash. After 3 to 4 years of holding (and some subsequent "averaging down") did I just manage to break even. Lucky me not my best investment instrument!

Otherwise - it appears to be a professionally managed fund - and I am still holding (and expecting better growth in future - lower oil price in my view should help).

Haven't looked at the other Templeton funds, but assume they are quite professional as well. Just depends which markets you think will do well in future.

Just one other thought - if your plan is to get some exposure to European growth ... one other method might be to invest into (NZ or Australian) companies which are exposed to the European markets?
Thanks for your thoughts and sharing your experience. Much appreciated.

[Snow Leopard]

Have a read of the ASX ETF info (http://www.asx.com.au/products/etf-and-other-etp.htm).

Best Wishes & welcome to the mad house that is ShareTrader
Paper Tiger

[OldRider]

kwKiwi
I have held British Investment Trusts over many years, they have proved to be a good investment for me.

Before you make a move I would suggest you research iShares and Vanguard funds listed on the ASX,
for administration i find them more easily managed, check out how you are going to own any investment and the costs involved.
I find it easier owning shares I can buy and sell through local broker on internet

[Harvey Specter]

Any investor should ask "What would Warren (Buffet) do?"

He recommends his family puts 90% of their money into index funds and the rest into bonds.

I think he recommends Vanguard which are US based but also have EFT on the ASX: https://www.vanguardinvestments.com.au/retail/ret/investments/etfs.jsp#etfstab

iShares are another option: http://au.ishares.com/fund/performance.do

[Kwkiwi]

kwKiwi
I have held British Investment Trusts over many years, they have proved to be a good investment for me.

Before you make a move I would suggest you research iShares and Vanguard funds listed on the ASX,
for administration i find them more easily managed, check out how you are going to own any investment and the costs involved.
I find it easier owning shares I can buy and sell through local broker on internet
Thanks just wondering which Uk trusts do you have?. I've been looking at the Trustnet website which has a lot of facts and figures! I have set up a buying programme that is at intervals but my husband said to stay cashed up until the equity markets correct as he feels they are over heated due to the low interest rates around the world.

[dingoNZ]

I wouldn't put all your eggs into one basket, so to speak (being you investing you entire investment in UK based funds), mix it around a few geographical funds, such as some UK, US, European and Emerging market based ETF's (Exchange traded funds).

ETF are basically what you would call an index fund, they aim to emulate a market or index, for example the SPRD (pronounced Spider) S&P500 holds a basket of assets that aims to actively mimic the S&P500.

The reason I would recommend diversifying into a range of different geographical funds is to both expose your investment to a broader market and to reduce risk. Say you had invested your 200k into UK funds and then a economic event effects the UK happens such as something in the Greek debt crisis happens the market wasn't expecting and Euro/UK equity and debt markets sharply retract, you entire investment will be exposed to these effects, more so than if you held a range of ETF's across different markets.

This is not advise this is simply an external observation on my part.

[Kwkiwi]

Any investor should ask "What would Warren (Buffet) do?"

He recommends his family puts 90% of their money into index funds and the rest into bonds.

I think he recommends Vanguard which are US based but also have EFT on the ASX: https://www.vanguardinvestments.com.au/retail/ret/investments/etfs.jsp#etfstab

iShares are another option: http://au.ishares.com/fund/performance.do
Will look at the Vanguard funds thanks! I also saw the Magellan fund is available in Oz too.

[OldRider]

Kwkiwi
Hold four at the moment - IRR over quite a few years since purchase
RCP Rit Capital partners 3%
WWH Worldwide Healthcare Trust 24%
PCT Polar Capital technology Trust 17%
CDN Caledonia 3%
Have not added to holdings for some time and considering reducing.
More recently have been purchasing Vanguard & iShares on ASX

[Joshuatree]

Whats the yearly average return OR? cheers JT

[OldRider]

Joshuatree:
I am not sure what you want? the figures (IRR) I quoted are the average yearly return for each trust.
As a group I don't know, initially I purchased about the same value of each trust but the two highest gowth trusts are of course worth
much more now than the lower two, I figure this will distort the groups return?

[Joshuatree]

Thanks for clarifying. I used to have some of those but i bailed along time ago ,when an investor with private asset management(Brent sheather). You look like a great example of "Its the sitting that makes the returns" ;for 2 out of four anyways. Cheers JT

[Kwkiwi]

Many thanks for all the advice, lots to ponder. I think I won't put so much into the uk investment trusts. How do you invest in ishares? Some of the uk trusts still appeal but I'll lower the amount. Do you simply buy ishares on the asb securities website like normal shares. Also am I then exposed to the aud/nzd exchange rate movements? Thanks also old rider for sharing your picks with the uk investment trusts. I guess it depends a bit on when you bought n as to the returns you are achieving. I'm thinking of averaging in over the next 18 months.

[Valuegrowth]

I would like to add few more things. At different times different fund mangers will outperform others in the market depend on how they allocate their fund across various asset classes. Now funds like Templeton, Milford and Aberdeen etc are more excited about frontier markets as they see more prospects there now. I believe index funds are better than ETFs. Identifying correct fund is the key.http://citywire.co.uk/best-investment-funds

Citywire's ideas for top investment funds and fund managersOur quick guide: every fund featured in Citywire Selection or run by a Citywire rated manager

[voltage]

A few points. You need to decide if you want passive or active investments. ETFs are passive and investment trusts are active. I use both. Investment trusts are excellent for active investment as they are transparent and have lower fees than unit trusts. I stick with mainly global investment trusts and use ones with low fees. Scottish Mortgage has a max fee of 0.5% which has returned 168% for 5 years compared with the global index of 67% according to trustnet.com. There is no guarantee this will indicate future performance. I have sold a number that have under performed. Some are listed on the NZX.
Keep things simple. Perhaps use a couple of etfs for the core of your portfolio and a few investment trusts for active management. I do like an Etf that reflects the US market which represents 50% of the global share market. Few funds outperform the sp500 long term.
I purchase etfs on the asx. Using an asx online broker, fees are only 0.1% for purchase.
I do believe the NZX will have a global etf by the end of the year.

[Harvey Specter]

I do believe the NZX will have a global etf by the end of the year.Rumour or speculation? By NZX/Smartshares? Seems obvious but they added 2 new Australian funds instead.

Lets hope with the purchase of superlife, they can get the smartshares upto scale and the fees % down.

[voltage]

i know, silly, who wants those dividend funds when you pay nz tax on the net dividends and unable to access franking credits.

[Kwkiwi]

Hi again, thanks for all the useful feedback on investment trusts. I was just wondering is it possible to open a UK online account. there is a only a few UK investment trusts on offer with ASB securities.

[BeeBop]

Interesting reading this thread with the benefit of hindsight and my now much more informed status. Someone directed KwKiwi innocently with misleading information, someone was holding WWH and showed their then returns which was pre-boom...I hope they held! And for what is worth, if you don’t hold WWH now, take a look at BBH as the new alternative which is still barely above NAV.

For my portfolio listed UK Invesment Trusts have been a major positive way forwards. Buying in the UK, I have had great returns, through very very careful selection, great global exposure and am so thankful that I generally do my own research and do not take someone else’s advice. I will however, take anyone’s pointers as that is how I initially got into them in 2010 via the NZX (HFL, TCL and BIT at that time).