investors chronicle

investors chronicle (sic) is a magazine for private investors published by the Financial Times. Each edition has a bewildering array of share tips and this blizzard arrives weekly.

This is information over-load when you are sitting on the Bridge of SS Portfolio, have set your course and are checking the horizon for political and economic squalls. I hardly ever tweak the wheel although three Vietnam investment trusts are recent acquisitions. But I buy investors chronicle once a year when it has a supplement devoted to investment trusts. They opine:

“We have always said at Investors Chronicle (sic) that investment trusts are for the discerning investor, and you now have to be very discerning. Investment trusts have always required more due diligence and background research than open-ended funds. For example, they typically trade at discounts or premiums to NAV, which could have an influence on when you buy and sell their shares. And they can gear – take on debt to invest more in markets than their assets amount to. This can boost their returns in rising markets, but compound their losses in falling markets, so you need to know if a trust has gearing, how much it is and have a high enough risk tolerance to take on this added liability.”

I agree with every word, although they might have added that investment trusts typically have lower charges than Unit Trusts. Before the transparency delivered by the internet I suppose a private client would have relied on research done by their broker. Now it is simplicity itself to look at the trust’s own website and a brokerage platform such as Hargreaves Lansdown.

The biggest snag is that there are so many investment trusts. In the first ten months of this year fifteen new trusts were launched, raising £2,612 million. A good way to weed out the dross is to consult the list published in FTWeekend. All the ones I hold (except for two of the Vietnam stable) are there. Anyway, here is the performance (and charges) of the eight most recommended trusts in the investors chronicle survey.

I own Scottish Mortgage, Worldwide Healthcare and RIT. I’d like to own Baillie Gifford Japan but it trades at a premium of more than 3% to NAV. If you are a new entrant you might like to look before you leap into RIT. It trades at a premium of 8% which really is a bit steep. I’m surprised that Monks, my biggest investment trust holding, doesn’t make it into the Eight but along with Personal Assets it is in a longer (23) list of most recommended trusts.

I bang on a bit about investment trusts and I probably have too many (18) but it means that I have eighteen managers investing my money over a wide range of asset classes. It’s a far cry from the days when a homely broker would advise buying something to eat, something to drink, something to smoke, something at the chemist and maybe something to wear. Funnily enough you’d not have done badly in Tesco, Greene King, BAT, Glaxo and M&S in the last century.