Steady Eddie

Strange, I can have the windows cleaned and Bertie can have a haircut but I will have to wait until 12th April to visit Geo. F Trumper in Curzon Street.

But I digress. Derek asked for advice on investing in the stock market and I showed him the FT page listing prices for Investment Trusts. I mentioned I’d started investing when I was fifteen and had made many mistakes. Now I am mostly in Investment Trusts. He wanted to know everything about ITs and we were soon bogged down in the companies they invest in, fund managers, discounts, yields and charges.

A recent failure was Edinburgh IT. I bought in 2016 and sold two years later at a small loss. The Board eventually took the same view and replaced the manager last year. The new manager changed about 75% of the fund’s holdings and, early days, but it might perform better. I will not be going back, though, because it looks too much like a tracker fund – I forgot to warn Derek about that.

In 2003 I paid £7.88 for Caledonia IT; it’s now worth £26.35, after eighteen years. I did better with RIT; £3.71 in 2003. RIT is coming up fast on the rails, closing the gap with Caledonia. Today it’s £23.90. A much better return. I have more than once mentioned how well Monks IT has done since a change of manager. Now Charlie Plowden is retiring but I expect his team to continue his investment philosophy. Another retiree will be James Anderson at Scottish Mortgage next year and likewise I expect continuity. As both Plowden and Anderson have significant holdings in their funds (the latter about £160 million) they will probably keep an eye on things in retirement.

An aspect of owning ITs, sometimes overlooked, is their remarkable record at paying rising dividends. Last year might have been an exception but, by dipping into reserves, they paid a record £1.88 billion, up 4.2% from 2019. I forgot to tell Derek that too.

What did I tell Derek? “ITs are a bit tricky for a learner. What you need is a one-stop shop that’s a steady Eddie. Capital growth of about 7% over the long term and a small yield (1.5%). The name on the tin is the McInroy & Wood Balanced Fund.”