Investment Trusts-some thoughts
I am just about over the terrible deal the board of Arix Bioscience (LON:ARIX) did with RTW Biotech Opportunities (LON:RTW) . Shareholders were not given a great deal- one shareholder got cash and all because it was an asset sale not a takeover. To be fair despite being less than happy about the outcome of the strategic review I see the Chairman of Arix has been buying shares- 100,000 over the last couple of days. If you want to invest in Biotech, buying Arix is a cheap way in to RTW Bio. And I read corporate broker Peel Hunt has stated the deal is not great for Arix shareholders maybe there could be ...
Lesson is beware an activist fund who bought from a distressed seller and was not really interested in biotech.
India Capital Growth Fund (LON:IGC) had a good week. Had a great performance and although India seems to look expensive, it always does. Huge market and as a holder fairly sure it will continue do well. they have underpinned this with a share buy back up until the end of the year so the discount should remain tight.
VietNam Holding (LON:VNH) in contrast has had a tough week or so. I dis sell a few as signs were the market was going to have a correction, but still one of my larger holdings. Once the status of the stock market changes to enable more investment firms to buy shares in Vietnamese companies - it hopes to be in the emerging market classification in 2025 (currently frontier) I am hoping to see a significant re-rating. As it is the economy is growing- it is just one of those markets where the index will swing around as there is a largish retail investor base. There are issues with governance and control in the economy, but signs are these are being sorted.
TR Property Investment Trust (LON:TRY) . I have known about this fund for 40 years. Started buying for my wife's Isa on a monthly investment plan. The managers know what they are doing and in my opinion a relatively risk free way to get exposure to a broad range of property assets in the Uk and abroad.
Watched a presentation byMerchants Trust (LON:MRCH) . Another fund been around for a long time. In my opinion as safe an investment as they come. Good yield and managers who reckon many shares offer excellent value- i would agree with that.
I hold all of the above. I find using certain funds gives me an exposure to markets and sectors I would not invest direct in. Private Equity is another area I use funds to get exposure to.
Footnote: many years ago in the 1980's I was a stockbroker specialising in Investment Trusts, so I am maybe happier holding than others. But the 1980's was a long time ago-when discounts of 25-30% were common and most trusts struggled to have a identity. Things have changed for the better on the whole in this sector.
I have tagged all Trusts mentioned in this thread. You should be able to find them by using the Find feature in your browser.
Disclaimer
This is not financial advice. Our content is intended to be used and must be used for information and education purposes only. Please read our disclaimer and terms and conditions to understand our obligations.
299 comments
New Discussion Feb 2024 just published https://www.stockopedia.com/co...
Includes Top 10 / Bottom 10 performances and Links to certain sites. Any errors/Ideas please let me know.
unbelievable helpful post and links. Thanks Charles
New article from the manager of BlackRock Frontiers Investment Trust (LON:BRFI) https://www.blackrock.com/uk/s...
Linking this thread up with the SCVR, there's something interesting happening I think at Oryx International Growth Fund (LON:OIG. If my facts are right, it's the IT with the best 10 year total return record in the UK smaller company space - yet, it trades at one of the biggest discounts close to 30%. Spread is horrible, and I'm not a diehard fan of Christopher Mills when it comes to the governance of some of Harwood's ITs (they seem to be run for him rather than the shareholder group as a whole). There seem to be some big sell trades going through. What I can't figure is why the price isn't falling further, so my hunch is a position is being filled for a buyer - possibly North Atlantic Smaller Companies Investment Trust (LON:NAS). Who knows. When the selling stops, if it stops, I think it could rerate because the discounts on other UK small cap IT's seem to have narrowed somewhat. Interested in others thoughts.
M48 Not really looked at it- Harwood own 52% . I see NAS is on a pretty large discount. Why do you think NAS are buying ?
Partly because as you say North Atlantic Smaller Companies Investment Trust (LON:NAS) already hold a chunk, they know best what they are buying (there's a small amount of unlisted stuff in there), and they're supposedly getting the underlying assets at discount. Partly because I can't think who else would want a biggish position in something controlled by someone else. And partly because I think Christopher Mills himself manages both trusts, one is smaller than the other, they seem to do similar stuff (a fair bit of life science) so maybe there's a natural fit. All conjecture on my part, I'm just trying to figure why the price is not dropping further with all the apparent selling.
Could be, neither trusts interest me though.
I did a bit of work across Rockwood Strategic (LON:RKW) Strategic Equity Capital (LON:SEC) Odyssean Investment Trust (LON:OIT) & North Atlantic Smaller Companies Investment Trust (LON:NAS) over the weekend looking to see if any of them were a potential buy or top-up into a more meaningful holding.
They are all from the Harwood stable (with the exception of SEC) and all seem to follow a pretty concentrated approach, with direct action/influence with the boards of the companies they hold - often taking board positions to influence the companies recovery/direction.
Interestingly there is little (if any) crossover between holdings, and all have very concentrated PF with 88%/73%/59%/62% of the PF in the top-10 holdings.
Their discounts/premiums are also similar although North Atlantic Smaller Companies Investment Trust (LON:NAS) is on a 30% discount vs +1%/-6%/+1% for the others.
North Atlantic Smaller Companies Investment Trust (LON:NAS) also has holdings in Oryx International Growth Fund (LON:OIG) and Odyssean Investment Trust (LON:OIT) which is interesting and is obviously a play across the Harwood stable. Also 15% of it is in US Treasury Bills (largest holding) and also a holding in Harwood Capital itself.
Rockwood Strategic (LON:RKW) has had an excellent 12mths with a number of offers for its key holdings which has helped its performance, so now might not be the time to buy into it as it looks to start some newer holdings - but equally it might have further offers across its PF. There are though a couple of holdings that continue to produce poor results and are showing little signs off turnaround.
Odyssean Investment Trust (LON:OIT) had a great couple of years through until early-2023 and if I remember correctly may have been one of the top performing IT's recently.
I need to do some more work to understand why North Atlantic Smaller Companies Investment Trust (LON:NAS) discount is so out of kilter with the others, but this could prove to be a good time to buy. There are some community favourites in there; EKF Diagnostics Holdings (LON:EKF) Hargreaves Services (LON:HSP) Polar Capital Holdings (LON:POLR) MJ GLEESON (LON:GLE) etc.
I would welcome other peoples thoughts & views.
For completeness I already hold very small positions in Strategic Equity Capital (LON:SEC) Odyssean Investment Trust (LON:OIT) North Atlantic Smaller Companies Investment Trust (LON:NAS)
This weekends Money Makers had an interview with the Rockwood Strategic (LON:RKW) Manager, Richard Staveley which I wasn't aware of until after I had ben looking at all of the above.
I think one reason for the North Atlantic Smaller Companies Investment Trust (LON:NAS) discount is it has some unlisted private equity type holdings and even much bigger ITs with unlisted’s been hit in the recent past. Although if you listen to Christopher Mills on interviews, he’s argued they are not in high valuation high tech companies, they are in more boring defensive businesses - I’ve never followed through to prove what he’s said mind. In past interviews (I recollect one with PIWorld 18 months or so ago) he also said he thought the discount was not helped by long term holders selling to take some gains off the table. Worth a google search for recent interviews to see what you think maybe.
The variation in the premium/discount in the small cap IT space is quite stark. Beyond the Harwood crowd, you also have the Downing, River & Mercantile and Miton ones and I’ve watched those discounts move a lot over the last couple of years. Have to tread carefully I think.
The longer I do this, the more I realise that the only thing that really matters is supply and demand. For whatever reason, there is and never has been (since I've been watching at least) any "buzz" about North Atlantic Smaller Companies Investment Trust (LON:NAS) . The combination of a huge discount, a drop of 30% since peak, a notionally very wide spread and a lack of liquidity really puts off a large sector of the investing market. A number of the investments it has held, such as EKF Diagnostics Holdings (LON:EKF) and Renalytix (LON:RENX) have also proved to be poor, and when you run a concentrated fund something like RENX that is down 99% from its peak can cause a lot of damage, to both NAV and reputation. Also, holding a big chunk of Oryx International Growth Fund (LON:OIG) isn't a great look, it does create a risk of double fees for brand Mills. All of which must drive away a lot of institutions or IFAs, who would prefer a simple, no questions asked smaller company fund run by an established house.
Agree 100%. But to get something from an established house, you’re probably more looking to the mid cap space, or something that straddles the small/mid cap I think.
Very true, and many "small cap" funds are focussed on stuff that feels more "mid cap" to me. Henderson Smaller Companies Investment Trust (LON:HSL) for example is mainly in stocks in the £1-5bn area. Presumably that is driven by liquidity requirements, but if you are focussed on UK companies I'm not sure Bellway (LON:BWY) or Balfour Beatty (LON:BBY) are likely to offer the sort of high growth potential people hope to be getting from small cap exposure
Might be an interesting discussion of Private Equity hosted by Edison. Hamish Mair of CT Private Equity Trust (LON:CTPE) is one of the panel https://www.edisongroup.com/ev...
Very pleased overall with the Chrysalis Investments (LON:CHRY) update today and over 8p/6.5% increase in NAV to 143p since September. With the share price at 82p (I’ve added to my holding today) that’s a huge discount to NAV.
I’m less pleased that a “reward to shareholders” is via a share buyback rather than real cash, but at least the buyback increases NAV a bit further.
Can’t thank Donald Pond enough for his article and posts on Chrysalis Investments (LON:CHRY). It looks (unless I’m missing something) a stunning bargain Investment Trust buy.
So good too to see Investment Trusts getting more coverage here …just when there are bargains galore at unusually wide discounts.
https://www.stockopedia.com/sh...
Any thoughts on this separate Chrysalis Investments (LON:CHRY) update today Donald Pond and anyone else? The buyback news might appeal (if not to me!) but what to make of the reference to realisations of their investments at cost rather than NAV?
https://www.stockopedia.com/sh...
Do you mean this:
"The further commitment relating to the implementation of the CAP, should the
Continuation Resolution be approved, is to continue to return at least 25% of
net realised gains on the Company's investments, with such gains being
measured as net realised gains against historical cost price (and not NAV)."
If so, it seems pretty sensible to use actual profits to repurchase shares. If its something else I can't spot it!
It wasn’t about using profits to repurchase shares but the measuring of net realised gains against historical cost price and not NAV. I’m probably being a bit dim but can’t work out whether “against the cost price rather than NAV” is advantageous for shareholders or not.
The buybacks are a separate point I wasn’t asking about.
I think it is advantageous. Because in most cases the current NAV is ahead of the initial purchase price. So if they bought for 100, now value it at 150 and sell for 170, there is a net realised gain of 70, rather than 20, available for returning to shareholders. Whether buybacks is the best way to do it is another thing.
CHRY vs Revolution Beauty - legal challenge to recoup some of 90% loss, muddying the waters a little
http://tinyurl.com/muf348wr
Charles -I have lurked here for a while - thank you for this. Over the years I have learnt that I’m not very good at watching my stocks decline, so have moved more & more to IT’s with good track records (although I appreciate past performance means nothing) such as PSH, OCI, 3I, PCGH, JGGI. With all this talk of Russian threats etc I have loaded up since last October on the new defence ETF Future of Defence UCITS ETF USD Acc (LON:NATP) which has done well - I’m thinking of increasing to 20% of my PF & would be interested in others thoughts - no discussions tagged yet on Future of Defence UCITS ETF USD Acc (LON:NATP) . It’s 50% global NATO defence stocks & 50% AI/ Cyber, so you get the tech boost too.
Trader Jack, I have not looked at NATP- but I would not invest for personal reasons- I avoid defence stocks (amongst other things). Costs my performance I am sure but ...
I am quite focussed on emerging markets at the moment. Latin America , although since I bought the Blackrock Latin American Investment Trust (LON:BRLA) is down 10%. Bought a Mexico ETF recently as well. SimplyWall released a article on Mexico to-day- https://simplywall.st/article/... I just get articles from them rather than use the tools.
India, Vietnam and Japan look really interesting as well-you probably saw the mentions in this thread- which will start afresh on 1/2/204- It will be called Investment Trusts (Feb 2024).
Charles - Thank you for all your work to promote an IT chat group- will look out for the new thread. Yep, have been in NAVF for a while,- will look at the others too, but that means selling something & currently v overweight US which just seem to keep on going..,,
Bluefield Solar Income Fund (LON:BSIF) (I hold).
Yields 7.89%
Company profile "
The Company primarily targets utility scale solar assets and portfolios on greenfield, industrial and/or commercial sites.
In addition, the Company has the ability to invest a minority of its capital into onshore wind, hydro and storage technologies. To date, the Company is the highest performing fund of its kind and has delivered the highest dividend in the sector every full financial year since IPO."
Bluefield Solar (LON: BSIF), the London listed UK income fund focused
primarily on acquiring and managing solar energy assets, is pleased to
announce the Company's first interim dividend for the financial year ending 30
June 2024 (the 'First Interim Dividend').
The First Interim Dividend of 2.20 pence per Ordinary Share (January 2023:
2.10 pence per Ordinary Share) will be payable to Shareholders on the register
as at 9 February 2024, with an associated ex-dividend date of 8 February 2024
and a payment date on or around 9 March 2024.
The Board is pleased to reaffirm its guidance of a full year dividend of not
less than 8.80 pence per Ordinary Share for the financial year ending 30 June
2024 (2023: 8.60 pence). This is expected to be covered by earnings and to be
post debt amortisation.
Bluefield Solar Income Fund (LON:BSIF) appears expertly run and is being pro-active, in the muted markets that we have seen in the last 2 years, to access new opportunities and new capital. Being unable to issue shares at such a high level of discount (currently > 18.5%), it is instead turning to other types of partnership. This IT has just entered into an interesting venture with a large pension authority investment scheme (GLIL), that will see GLIL invest alongside BSIF.
It also looks reasonably valued right now, and I have taken a small position.
I did a post on November 3rd covering sectors and Trusts in them as a means of investing all round the World and in different sectors like Commercial Property.
I’ve pasted it again below as it might still be of interest and use to newer readers/Investment Trust fans who didn’t see it then. The choices were my picks and often the Trusts I hold, but now nearly 3 months later, there might well be better alternatives in those sectors.And anyway it’s always worth checking out all the Trusts in each sector to decide for ourselves which one/s look the best option.
Ahead of the paste of that post in November, here are the gains (or lack of them) since then. I stupidly didn’t include the share price in that post but this performance update does:-
Pacific Horizon Investment Trust (LON:PHI) Now 535p and unchanged since 533p Nov 3 price.
International Biotechnology Trust (LON:IBT) Now 657p and up 15% from 574p on Nov3rd, reflecting sector recovery from oversold, imo, since then.
BlackRock World Mining Trust (LON:BRWM) unchanged at 540p. China woes continue to be a negative for the sector.
VinaCapital Vietnam Opportunity Fund (LON:VOF) almost unchanged and WAY worse performance than VNH, only partly explained by wider 20% discount but only 7% for VNH.
VietNam Holding (LON:VNH) Up 15% from 287p to 334p.
Fidelity European Trust (LON:FEV) up 10% to 355p from Nov 425p.
Monks Investment Trust (LON:MNKS) up 10% from 945p to 1042p.
Scottish Mortgage Investment Trust (LON:SMT) up 12% from 687p to 780p.
Aew UK Reit (LON:AEWU) little changed at 95p. Have just updated. It was overall positive.Others in the sector on bigger discounts might appeal more. I hold several in UK and Europe Commercial Property sectors.
Supermarket Income REIT (LON:SUPR) unchanged at 80p.
Tritax EuroBox (LON:EBOX) unchanged at 51p. NOTE! Some brokers (e.g ii) have problem with online trades but do phone deals at online rates. Also note that it’s Tritax EuroBox (LON:EBOX) that is traded in £sterling. Tritax EuroBox (LON:BOXE) is the alternative that is traded in euros.
Polar Capital Technology Trust (LON:PCT) Up 15%from £22.60 to £27.
Allianz Technology Trust (LON:ATT) up 25%!! from 260p to 327p. Is US tech sector in near bubble territory now??
City of London Investment Trust (LON:CTY) up just 4% from 386p to 402p.
Merchants Trust (LON:MRCH) up 6% from 507p to 540p.
NOTE. The gains above exclude dividends.
Here’s that November 3rd post:-
“Using Investment Trusts to invest all round the World, as well as UK.
This is very brief on detail and just as a starting point.
I use Investment Trusts to invest all round the World and to cash in on far better performing markets and not only lousy for too long UK.
Stockopedia figures for Investment Trusts are mostly irrelevant/inappropriate for Trusts and only of use for shares. And Stocko figures exclude must knows like NAV and discounts to NAV etc.
The MUST place for info is the official Investment Trust website aic. Trustnet is also very good.
This link link is the aic link for UK Commercial Property Trusts where there are some exceptional bargains on big discounts and paying big dividends.
https://www.theaic.co.uk/aic/f...
Just click on each individual Trust for a wealth of information. And from the above link it’s easy to access all the aic sectors.
These are Trusts I like (and hold all except 2) in each of the following sectors. Best obviously to check each Trust in the sector for yourselves.
ASIA PACIFIC Pacific Horizon Investment Trust (LON:PHI)
BIOTECH International Biotechnology Trust (LON:IBT)
COMMODITIES BlackRock World Mining Trust (LON:BRWM)
COUNTRY SPECIALIST. VietNam Holding (LON:VNH) and VinaCapital Vietnam Opportunity Fund (LON:VOF) . Great longer term opportunity for rapidly growing Country. Current discounts likely to go to premiums when Vietnam becomes more widely understood and is upgraded to full Emerging Market status and not just current frontier market. Make sure you read the very good Monthly Manager updates!
EUROPE Fidelity European Trust (LON:FEV)
GLOBAL Monks Investment Trust (LON:MNKS) and Scottish Mortgage Investment Trust (LON:SMT)
JAPAN Fidelity Japan Trust (LON:FJV)
PROPERTY UK COMMERCIAL.
Loads to look at. Aew UK Reit (LON:AEWU) has a great record. Supermarket Income REIT (LON:SUPR) was ludicrously undervalued until big jump at end of last week.Now just very cheap instead of bonkers too cheap!
PROPERTY EUROPE COMMERCIAL
Tritax EuroBox (LON:EBOX) stands out. It rose 12% on Thursday and Friday as was way oversold. Still very cheap.
TECHNOLOGY
Polar Capital Technology Trust (LON:PCT) and Allianz Technology Trust(LON:ATT)
UK.
There are SO many to choose from in the 4 UK sectors. Check out the Top 10 holdings for each Trust. I prefer those holding shares I like too (especially so if holding small companies covered in daily Small Company updates here) and also Trusts with conviction portfolios with a high percentage in their Top 10.
The cautious might want to check out the aic “dividend heroes.” These are Trusts increasing their dividends for multiple years. e.g City of London Investment Trust (LON:CTY) with increase for 57 years in a row! And Merchants Trust (LON:MRCH)
Happy hunting! Remember Investment Trusts are currently on the highest discounts to NAV for many years. I.e There are a lot of bargains right now.”
Lovely stuff, Ken, thanks for posting. I hope the planned monthly discussions keep this kind of thing alive.
Ken, Thanks from me as well. I have been playing with individual UK shares for a long time, but now I need something less risky as I am starting junior ISA's for my children. I currently don't know a lot about investment trust so will follow your AIC link with great interest.
c038644
For you or anyone else unfamiliar with Investment Trusts here’s a bit of info and suggestions which might help get you started.
1. The AIC website (it’s the trade body for Investment Trusts) is excellent. This link takes you to a very useful page there:-
https://www.theaic.co.uk/aic/f...
Click on the arrow on the “AIC sectors” heading to bring up every sector in alphabetical order.
New investors could perhaps start with a small portfolio of, say, 5 Investment Trusts from these 5 easy to get to grips with sectors:-
1. COUNTRY SPECIALIST.
https://www.theaic.co.uk/aic/f...This link takes you to the Country Specialist Trusts.
Either VinaCapital Vietnam Opportunity Fund (LON:VOF) on 19% discount to NAV at 455p compared with NAV of 562p or VietNam Holding (LON:VNH) 337p on a smaller 7% discount. I prefer VinaCapital Vietnam Opportunity Fund (LON:VOF) despite recent underperformance compared with VietNam Holding (LON:VNH) but hold both.
Look no further than the monthly reports from the Managers like this one from VinaCapital Vietnam Opportunity Fund (LON:VOF) on 17th Jan for why and others are so keen on Vietnam. Here it is:-
https://www.theaic.co.uk/compa...this link brings up this latest monthly report.
2. GLOBAL.
https://www.theaic.co.uk/aic/f...for all the GLOBAL Trusts.
Perhaps Monks Investment Trust (LON:MNKS) £10.58 and 12% discount or Scottish Mortgage Investment Trust (LON:SMT) £7.84 and 10% discount. It used to trade at a big premium to NAV.
When selecting choices check out performance figures and Results statements ,any research comment etc and also top 10 holdings.. I prefer Trusts with more concentrated portfolios.
3. GLOBAL EMERGING MARKETS.
https://www.theaic.co.uk/aic/f...for all the Global Emerging Trusts.
Emerging Markets have had a long spell of underperformance. That could change soon.
e.g BlackRock Frontiers Investment Trust (LON:BRFI) £1.46 and 6% discount or JPmorgan Emerging Markets Investment Trust (LON:JMG) £1.07 and 10% discount or Utilico Emerging Markets Trust (LON:UEM) £2.29 and 14% discount. UEM invest mainly in utilities and infrastructure.
4. UK ALL COMPANIES.
https://www.theaic.co.uk/aic/f...plenty in this sector too!
e.g JPMorgan Mid Cap Investment Trust (LON:JMF) £9.40 and 13% discount. Plenty of alternatives!
5. UK EQUITY INCOME.
https://www.theaic.co.uk/aic/f...Plenty in this sector too. Ditto UK SMALLER COMPANIES SECTOR if that tempts or as an alternative to EQUITY INCOME.
e.g BlackRock Frontiers Investment Trust (LON:BRFI) £1.86 and 12% discount ….and again plenty of alternatives too.
TR Property Investment Trust (LON:TRY) (I hold) Interview with the Manager (Also withPantheon International (LON:PIN) https://www.trproperty.com/wee...
Chrysalis Investments (LON:CHRY) was 65p last week when I started a three on it. Now it is over 80. Over a 20% return in under a week. Wish they were all like that.
However, it highlights the value that exists in the sector. In terms of risk v reward I believe investment trusts offer some of the best opportunities out there. So let's keep hunting for them truffles!
Yes; that was a good call on Chrysalis Investments (LON:CHRY) Donald. Your very good article on a new CHRY thread persuaded me to have a good look and I bought just at the start of the bounce. So many thanks for that article and please keep them coming. Chrysalis Investments (LON:CHRY) at 78pis still at a big (44% or so) discount to NAV even after the recent share price gain. It’s well worth anyone reading this who didn’t see Donald Pond’s article and good follow up posts on Chrysalis having a look now as it still looks very tempting.
Thanks Donald - like Ken I also re-reviewed my thoughts following your article.
Whilst I was still not happy with past issues, I felt that the potential for further gains after the 10% bounce was worth the risk so as with Ken I took a medium sized position earlier in the week.
I may consider further top-ups as more news comes out and/or if there re any pullbacks.
Thanks Donald.
Good to hear, we are all here to help each other. To be honest, I think the sector is full of companies that are possibly materially undervalued due to "past issues". As someone who invested in Burford Capital (LON:BUR) through the Muddy Waters episode, where the share price fell from £16/17 to under £3, before recovering to £12 now, I'm fully aware that buying at peak fear can pay dividends. I know Oakley Capital Investments (LON:OCI) did a cheap share placing many years ago that still puts some people off, despite its stellar performance since.
Most investors take years to accept that the risk profile has changed, and prices can be irrationally depressed during that time. One obvious trust to fit into that category now is Digital 9 Infrastructure (LON:DGI9) which is around 20% of its peak value, and was only ever supposed to be a relatively safe income play. I'm struggling not to use a swear word to describe the manager's competence there. The current share price is around 25p, the last NAV was £1, and there has been a major strategic review going on. I suspect it has become an embarrassment for some holders and easier to sell than explain to clients/spouses. They've appointed a new director to head up a new valuation committee. But investors in general have lost all faith in the management, and the current gap between market cap and NAV provides a huge space for any acquirer to buy at a huge discount and any investor to make a big profit.
I'm not convinced there is any urgency to buy this one (I thought Chrysalis Investments (LON:CHRY) would rerate once Jupiter left and/or Klarna IPO was announced). But I'm thinking of buying and also watching closely for the catalyst that changes perceptions around. It could be one of those where the recovery is slow but substantial once the board shows it has a grip.
If you don't know it, there is useful substack run by theoakbloke which has a run through of how he sees the valuation of DGI9. Fair to say that opaque doesn't begin to cover it. But hopefully the valuation committee can start to shed light on it.
I could, I now realise, have written almost a verbatim piece about Hipgnosis Songs Fund (LON:SONG) too. That one is just too complex for me though.
Totally agree Donald.
As I was reading through this Hipgnosis Songs Fund (LON:SONG) was reverberating around my head, having made the error of being invested in that, but luckily getting out when it bounced more recently.
I was attracted originally by its discount, robust dividends and what appeared to be a good business model - how wrong I was on all three.
It just goes to show that many of these "alternative" investment areas are not as safe as originally anticipated and we all need to keep on our toes and dig a lot deeper. I include in this infrastructure, wind & solar power, battery storage, music and all of the others.
The rise in interest rates has caught many a solid business case out, and I for one am not convinced that there will be a smooth path back to 2%.
A good post which highlights the dangers of valuing illiquid assets within an IT and assessing whether the discount is realistic or purely mythical.
The complete car crash which is Home Reit (no position) is an excellent example where the asset valuations and robustness of income stream were completely at odds to what was being reported to shareholders..
City AM have been quite brutal in their reporting...
https://www.msn.com/en-gb/mone...
Any thoughts on to-days announcement on Digital 9 Infrastructure (LON:DGI9) Donald? I read it quickly and could not make head or tail of it .
Hi Donald,
I've been trying to research where to find the look through proportion that Chrysalis Investments (LON:CHRY) owns in each of the investments. E.g. it now carries Klarna at £93.2 million on its books, but do we know what proportion of Klarna it owns? I assume that's the sort of guesswork that we have to do ourselves as each shareholder will be taking their own view (short of a disclosed fund raising round or IPO etc)?
You would need to do some sums. When the valuation of Klarna was reduced to $15bn it was said by CityWire it would reduce NAV by 9.5%
"Chrysalis Investments (CHRY) faces another 9.5% knock to its asset value and further calls to reform its excessive performance fee after reports that Klarna, the Swedish credit company that is its second biggest holding, was raising money at a third of the valuation of its previous funding round a year ago."
I must be one of the few who is not totally convinced by Klarna.
I think Affirm Holdings (NSQ:AFRM) is the closest comparison to Klarna and it has been doing very well in the US recently. But I'd like to see Klarna off the books while the markets are buoyant.
Interesting article on single Worldwide ETF's. Looking at the returns over 1 year I am going to look into further. You may need to sign up to JustETF to read, https://www.justetf.com/uk/aca...
School night so I will be quick. Like the idea of a monthly placeholder. Not sure what is meant by a 'template'. Maybe a good idea would be to have a copy/paste of the best and worst performing trusts year to date ? AIC clearly does this via the screener functionality but the physical screenshot would almost certainly be too large to paste into a relatively narrow Stockopedia box. Will give it some more thought but maybe that along with some basic rules of when to buy and sell plus links (as others have said: Money Makers web site + AIC web site etc) may help to attract some more interest from others on this board. Having said that, there are already some clued up posters already here! Thoughts ?
SSB
I can sort the prior months top 5 fallers and Risers along with a template with relevant links ShoeShineBoy
Useful article on Interactive Investor about Trusts earning more than 5%. Possibly useful as an introduction for those new to Trust investing.
https://www.ii.co.uk/analysis-...
fwiw, I was digging through some emails just now and I noticed the following from QuotedData. Very high level but interesting all the same.
http://tinyurl.com/3yyeb382
SSB
Hi KevinS1,
I had your earlier post in mind when I was typing out my note below to Ken. I don't own TR Property Investment Trust (LON:TRY) but it's the type of trust that I like because the risk is spread across a number of underlying holdings and as Ken said, I would be getting paid a dividend to hold whilst hopefully/maybe the SP closes up to the NAV. It's just not as obvious as say Schroder Real Estate Investment Trust (LON:SREI) where the discount is plain for all to see because the properties are privately owned. I own the latter but not the former. As I said, I could be tempted to buy into TR Property Investment Trust (LON:TRY) over the next few months.
SSB
Hi Ken,
re TR Property Investment Trust (LON:TRY), you need to bear in mind the trust invests in property companies directly, most of which are currently trading at discounts to NAV. So the real discount on TR Property Investment Trust (LON:TRY) is the discount to NAV on the trust multiplied by the weighted discount of each of the underlying property companies. Similar exercise to calculating the real discount on Migo Opportunities Trust (LON:MIGO). I think we did that on the old MW board a year or so ago.
The trust manager, Marcus Phayre-Mudge stated in last year's MM podcast (May or June 2023) that the underlying discounts were as large as they had ever been at the time. If we look at the underlying holdings (HL site not as reliable as the AIC site I know but it's very user friendly):
http://tinyurl.com/t4xdambj
Land Securities (LON:LAND) is one of the top 10 holdings. The StockReport for Land Securities (LON:LAND) says it's trading at a price to book value of 0.72 so there's a 28% discount to NAV using the last balance sheet date. Using the 'print' functionality we can see the price to book was 0.59 last June and 0.65 in December 2020 (ie: pre-Covid).
If we could do that with all of the holdings then we could calculate the real discount. Unfortunately, some of the holdings are not listed on the LSE and my Stockopedia access doesn't cover other markets. I will look at the weekend but maybe the real discount is hinted at in the last annual or interim report ?
The revenue reserves are decent as well with the current dividend covered 1.5 times:
http://tinyurl.com/mjacnr3z
The manager was on the most recent MM podcast again. What he says about the different sectors (office v retail v warehouse) is very enlightening - listen from 20 minutes. I know the world doesn't revolve around London :-) but the amount of office space available in the West End (approx 3%) versus Canary Wharf ("you can have as much space as you want") is stark. I guess this reminds us why we want SMEs to run the trusts we invest in.
http://tinyurl.com/jzn7x6k3
TR Property Investment Trust (LON:TRY) has a 5% yield which in an ISA may seem like a good move in a couple of years time if BoE rates come down as the market expects. A mkt cap of almost 1bn should mean that wealth mgt companies are interested in owning it as well, keeps the liquidity ticking over. I have some cash coming out of TN24 at the end of January and I'm tempted by TR Property Investment Trust (LON:TRY). The dividend is not as much as Schroder Real Estate Investment Trust (LON:SREI) but good to have a portfolio spread over several trusts, even if the same sector of the market. Thoughts ?
SSB
Thanks SSB............your input is excellent and pretty much follows what I had picked up form various commentators through the Money Makers website & podcast.
I had heard the discount on the individual holdings was significantly more than the Trust itself TR Property Investment Trust (LON:TRY) and if I am not mistaken this is called the "look-through discount". It was called out on either TRY or MIGO recently, but cannot remember which.
Thanks also to Ken's response to my initial mail on TR Property Investment Trust (LON:TRY) yesterday. I agree, regards their overall cheapness, but I am just not convinced that they may not go lower first and/or their recovery could take longer. But, as I am definitely underweight property at the moment and will take a long-term view I think I might make a small investment somewhere this week, with a view to topping it up if there is another sell-off.
Hi KevinS1,
I think you are correct in saying that the IT TR Property Investment Trust (LON:TRY) has been on a discount itself, and that the underlying listed equities which it invests in, are also on a discount. TRY predominantly invests in the equity of property companies, as opposed to the properties themselves.
Thanks ShoeShineBoy for adding a lot more on TR Property Investment Trust (LON:TRY) . It’s not a Trust I had followed closely and I hadn’t taken in to account the weighted discount of their underlying property companies. So similar to Migo Opportunities Trust (LON:MIGO) a Trust holding other Trusts a big discounts. Looks as though TR Property Investment Trust (LON:TRY) is far more tempting than I had suggested ….in a sector where we are spoilt for choice with quality Trusts trading at big discounts!
Article in Times business to-day on why to invest in Japan https://www.thetimes.co.uk/art... I hold Nippon Active Value Fund (LON:NAVF)
What do people think to a monthly 'placeholder' post as a base for Investment Trust related comments and threads to keep the threads to a navigable and manageable scale? Starting with February?
Excellent idea
Hi Apozniak, Sounds a good idea. Happy to start a new one if Feb. ext unless some-one else wants to.
Hi Charles, yes please do! Maybe just call it Investment Trusts (Feb 24) and the next Investment Trusts (Mar 24) etc. to be consistent with the SCVR posting titles. I can't add much value to the trusts analysis but I'm a nerd for content :).
Will do and keep the TABS updated through the Month.
Great
Many thanks Charles for taking up apozniak’s. excellent suggestion.
It is no hassle. Probably kick off Feb with explaining I was a bit early on Latin America !! Down 8% already in Blackrock Latin American Investment Trust (LON:BRLA) . There was a dividend but even so bad timing...
Charles, I look forward to reading these.
If you thought it was a good idea, you could include a short cut-and-paste section repeated each time at the start with useful info for newbies, eg the AIC website.
Will do Indie- Ken Mitchell might have a template-do you Ken ?
Charles
I haven’t got a template and my limited computer skills mean I’m probably not the right person to do one. Will try if no-one else offers but would post it here first for people to correct/improve/add more links etc.
Not sure what should be included but are links to aic home page and aic “compare companies” pages musts, along with a good link for Hargreaves Lansdown. ShoeShineBoy uses H/L more and more effectively than I do so might suggest the best way to access Investment Trusts on H/L. Perhaps don’t post a Trustnet link as their Investment Trust info is mixed with a lot more on open ended funds and might confuse Investment Trust newbies.
A case for including a few obvious plus points for Investment Trusts over open ended Funds? e.g easier to trade and the same way as shares and virtually no risk of being locked in as happens with Unit Trusts (e.g Woodford and Property Funds) and unlike open ended funds the chance to buy at big discounts to NAV.
Or is most of the above inappropriate? IF it is I’m definitely not the one to do a template!
Def agree with all of the above - especially where big discounts close so you make a return on both the closing of the discount and an increasing NAV.
I would also point out their ability to take on debt which adds the opportunity to increase returns - but could also increases as it could go wrong!! But I guess that is why we pay professional Investment Managers.
Risk of getting stuck in a closed fund (Woodford & various property ones) is also important. Whilst the SP may drop a lot and you could lose out you should still be able to get out - whereas in a closed Unit Trust you are stuck.....
Information should also be a key point - as an investment company they need to follow reporting regulations - many UT's produce limited literature so often you are blind to what is going on.
Sites like Money Makers, here and the AIC make info gathering a lot simpler and should lead to better investment decisions..........possibly!!!
Thanks Ken, I will sort something and the Top 5 risers and Fallers over the previous month as Shoeshine Boy suggested.
Excellent presentation by Nick Montgomery & Bradley Biggins of Schroder discussing SREI and it's differentiater values. Basically witnessing higher rental values by implementing 'Green' philosophy to sites. Initial cost outlays around a 10% premium but rental values more than compensating. I know Ken is a fan. I've just taken a position.
http://tinyurl.com/yn6nb9rd
Yes Lincs. I hold Schroder Real Estate Investment Trust (LON:SREI) and thought the presentation was good too, especially so as the full text was given. So much better than a very long video. They tried significant buybacks to try and deal with the wide discount, but it widened a lot more instead. Here’s their latest comment on buybacks:-
Share buybacks
GL: That’s a good point. This trust is the tip of a big real estate iceberg. Jonathan Benstead wants to talk about the discount and whether you have plans to buy your own shares, which, of course, would actually counteract your plans to get bigger. But the discount at 28% is large and there are no share buybacks.
NM: We have bought shares back. We are one of relatively few in our peer group to have done it about three years ago. I think it gets back to the availability of capital and also borrowings because, the capital we have is allocated to projects that we think are going to drive good, long term returns. So the developments we’ve spoken about, for example. Also, obviously the other consequence of buybacks is you do increase your net loans to value and we have a strategic range. We don’t want to go out, materially outside of that, which is why, at the moment at least, we’ve chosen not to do the buybacks.
I’ve got a REIT portfolio as part of my overall portfolio. Sector recovery seems inevitable in time and last year probably saw the bottom with those extreme lows and huge discounts to NAV. However long we’ll have to wait, there are those big dividends to compensate if we have to wait a while.
Note too that already sector consolidation is happening, albeit the latest one between abrdn Property Income Trust (LON:API) and Custodian Property Income Reit (LON:CREI) is underwhelming for CREI shareholders, and not that good an outcome for API shareholders either. So it might well get voted down.
Anyway I hold the following UK REITS except Regional REIT (LON:RGL) . Some were bought after the covid falls.
Alternative Income REIT (LON:AIRE) 68p. Discount 19% and recently increased dividend gives 8.6% yield. It’s too small….so a likely target?
Aew UK Reit (LON:AEWU) 94p.Discount 9%. Dividend 8.5%
The small discount reflects it being the best sector performer in difficult times and AEWU was the only one that did not cut the dividend after the covid falls. Hence the small discount.
Supermarket Income REIT (LON:SUPR) 97p.Discount 18% and 7.6% discount. SUPR used to be an investor favourite (when I wasn’t remotely tempted because then it was at a big premium). I bought after it went to a big discount and after the big share price fall as it went from that big premium to a discount.
Regional REIT (LON:RGL) 30p. 62% discount and improbable 17.6% dividend and that’s after they cut the dividend! Share price has been hammered. Like most of these REITS it started life at £1. It’s almost entirely Offices ….a big negative with work from home becoming popular and persisting after covid restrictions ended. BUT there are signs of more pressure to return to Offices. Big negative is the 52% LTV. They say disposals coming to reduce it to below 40%. But at what price?? Dividend announcement and portfolio valuation due on 22nd Feb. They are targeting 5.25p dividend but that looks unrealistic unless update on Feb 22nd suggests otherwise. RGL is way riskier than the otherREITs but I’m tempted to go for it as a punt ahead of that update. A lot of bad news looks priced in whereas any pleasant surprise could see big sudden share price rise.
Newriver Reit (LON:NRR) 78p. Discount 35% and 8.6% dividend. Recent update was good and with comment like “best shape for 5 years.” Looks cheap.
These 2 REITS in the Commercial Property Europe sector also look well worth checking out.
Schroder European Real Estate Investment Trust (LON:SERE) 69p 38% discount and 8.4% dividend. It’s small and might well get targeted.
Tritax EuroBox (LON:EBOX) 61p. Discount 39% and dividend 8.2%. Like Supermarket Income REIT (LON:SUPR) a key reason for the big share price fall was the switch from trading at a big premium to the current big discount.
I find property extremely difficult to fathom out. I am also slightly concerned that the challenges of economy (potential downturn in retail) & office occupation uncertainties may mean that the UK could have some further turbulence.
Because of this uncertainty and not wanting to back a single company/portfolio, I like to keep it a bit simpler and my small property holding is in TR Property Investment Trust (LON:TRY)
It yields just under 5% and holds about 25% of its PF in UK property co's with the rest spread across Europe.
Would love to hear others thoughts.
Hi KevinS1.
Aren’t your Property concerns already reflected by those big discounts to NAV? Also sector performance has been dire long term and imo sentiment is now near rock bottom….which time and again turns out to be a good time to buy as eventually the negatives get priced in and recovery doesn’t.
How quickly the share prices bounce depends on the direction of interest rates and a negative is that interest rate cuts now look likely to happen later than was hoped, not least bcause of the worrying inflation effects of the Red Sea violence. But it could well mean the Commercial Property share prices just bumping along around where they are now rather than significant sector falls.
AND more sector consolidation is very likely too. Add those big dividends while we wait for sector recovery and there’s a compelling sector buy case.
As for TR Property Investment Trust (LON:TRY) I wouldn’t try to dissuade you or anyone from holding but the discount is only 6% and the dividend a tad under 5%. So the Trusts I hold and have posted about appeal far more on discounts way wider and dividends nearly double TRY’s. Depending on the size of the TR Property Investment Trust (LON:TRY) stake and how much investors can afford or want to invest in the sector, there’s a strong case for holding more than one and perhaps reducing the TR Property Investment Trust (LON:TRY) stake if it’s sizeable. The risk with getting out of TR Property altogether is the s*ds law news that sends the share price soaring immediately we’ve sold!
This post might prompt better replies especially so if anyone else holds and follows TR Property Investment Trust (LON:TRY more closely than I have.
If you ant exposure to AI this ETF privices it WisdomTree Artificial Intell UCITS ETF USD Acc (LON:INTL) (I hold).
The WisdomTree Artificial Intelligence UCITS ETF (the “Fund”) seeks to track the price and yield
performance, before fees and expenses, of the NASDAQ CTA Artificial Intelligence Index (the
“Index”).
Index Description
The Nasdaq CTA Artificial Intelligence Index was designed in collaboration between WisdomTree
and technology market experts NASDAQ and the Consumer Technology Association (“CTA”). The
index excludes companies which do not meet WisdomTree’s ESG (environmental, social and
governance) criteria. Companies in the eligible universe are classified into three groups based on
each company’s position in the Artificial Intelligence (“AI”) value chain and its estimated revenue
exposure to AI:
• Enhancers: Companies who are a prominent force within AI, but whose relevant product
or service within AI is not currently a core part of their revenue
• Enablers: Companies who are key players in the AI space, with some of their core
products and services enabling the continued development of AI
• Engagers: Companies whose main focus is in providing AI-powered products and services
Within each group, an AI intensity score is assigned to each company based on factors including:
• The estimated portion of a company’s revenues which are attributable to AI products and
services
• How core AI is to the company’s product offering and positioning
• The market prominence of a company’s AI solutionS
Then, the companies with the top AI Intensity Score in each group are selected for inclusion. The
groups’ total weight is set to 10% for Enhancers, 40% for Enablers and 50% for Engagers. Finally,
individual companies within each group are equally weighted
GCP Asset Backed Income Fund (LON:GABI) is starting to really wind me up. I know Ken of this parish owns them and I know Gravis very well. It is an asset backed debt fund trading at a very big discount to NAV. On 18 December it announced that it had received the early repayment of a loan and commented:
So why on earth have there been no buybacks since then? I'm going to write to the manager to ask about this, but I find it so frustrating when companies don't do what they say they are going to do. The last NAV was over 93p, it may be higher following that early prepayment of a loan and the extinguishment of the RCF, so if they have cash and the shares are 65p, and they have said they are going to use cash to repurchase shares then BUY BUY BUY. Sorry, had to get that off my chest.
HI Donald, After Arix Bioscience (LON:ARIX) and thier strategic review I have rather lost confidence in Director's doing the best thing for shareholders. Were they not considering a bid at 68p which was withdrawn ?
Yes, though annoyingly that has triggered a daily slew of RNSs that make it much harder to track if anything meaningful is happening. I know Gravis very well (I was on the board of GCP Infrastructure Investments (LON:GCP) ) and I know the Chairman of GABI too (though he recently came into a huge windfall, selling a business to private equity, so I can't imagine he's that bothered by this role). I think it needs to either merge with another fund, be taken over or go into managed wind down. But it annoys me when they are sitting on cash, have announced they will prioritise buy backs, and then fail to do so.
I have tagged all Trusts mentioned in this thread. You should be able to find them by using the Find feature in your browser.
Thank you for this. It has brought it home how popular an Investment Trust thread has proved to be. My only concern would be that the thread becomes a bit unwieldy to manage at some stage.?
Now that popularity has been proved, is there some justification of say giving REITS their own thread.
On the main board yesterday I wrote a standalone thread on Chrysalis Investments (LON:CHRY) , an interesting investment trust focussed on pre-IPO growth companies. It's had no comments and only a handful of thumbs up. Which is fine, but I'd like to know whether a) nobody saw it or b) nobody is interested and if people are interested but weren't aware of it, whether it is better to keep investment trust topics on this thread, which to be honest I find hard to navigate for the reasons we've discussed.
Interested thanks but wouldn't have seen it without you flagging-it up here. There is a lot of good content on these boards I believe which many of us miss due to the lack of a proper search functionality that is not pegged to an individual company.
Interesting Donald. Again wouldn't have been particularly interested on the main board as there is so much to read through there most days. So this seems like the best location.
Regarding the particular investment I'd be more interested once they start to show progress in sp or have a couple of successful exits. Sounds like there is one in the pipeline but a more active IPO market might be beneficial. Additionally not a fan of share buybacks as the money doesn't go to those that continue to hold the shares - by definition it goes to those selling. So I get no immediate reward for continuing to hold and need to wait and see if it moves the sp. Hmm. That's a definite maybe.
Chrysalis Investments (LON:CHRY) seem to be one of the few companies not doing buybacks, though if they do realise a load of cash it will be interesting to see what they do with it. It would be helpful if posts could be tagged “investment trusts” so they could stand out and be searched for.
Thanks for the VERY interesting posts on Chrysalis Investments (LON:CHRY. I had never looked at it until reading your post on the “main board, “ by which I assumed you meant the most popular by far small company bb. I scrolled through over 100 posts there to try and find it and only when failing, realised it was on your own new Chrysalis thread!
At first glance Chrysalis looks VERY tempting on that huge discount, and the more so if at last the UK market for small caps sees significant IPOs this year. As for buybacks, surely, and regardless of whether or not buybacks work, they would be a mistake for Chrysalis. Why waste valuable cash on buybacks IF IF they are good at spotting early stage Companies with great promise that could end up as a very profitable IPO. Far better to invest in the portfolio imo.
Hi sevencc, you wrote:
"Additionally not a fan of share buybacks as the money doesn't go to those that continue to hold the shares - by definition it goes to those selling. So I get no immediate reward for continuing to hold and need to wait and see if it moves the sp."
If buybacks are done when an IT's share price is at a significant discount to its Net Asset Value, those selling the IT's shares receive a price that's significantly less than the underlying assets of the share they've sold. This means that those continuing to hold now own a greater percentage of the total assets of the IT than they did previously, so the buyback is of benefit to them.
This means that those continuing to hold now own a greater percentage of the total assets of the IT than they did previously, so the buyback is of benefit to them.
Not to mention that the taxman doesn’t take a slice as they would with a dividend.
Re Buybacks.
Although shareholders may own a greater share of the residual asset the asset itself has just been reduced by the amount of cash spent on buying back the shares - so of no immediate benefit to the remaining shareholders. Any profit / cash the company makes it owes to it's shareholders. If they are returning cash to shareholders I for one would rather decide myself what to do with my money. I would rather receive a dividend and decide for myself whether or not I want to buy more shares in that company or not - I do not want the BOD to make that decision on my behalf.
pka.
That’s the theory but the reality too often with Investment Trusts buying back is either little effect at narrowing the discount, and sometimes it widens a lot despite the buybacks. That’s happened to Trusts like SREI in the REITS sector.
And as for BnB’s point about at least it means the taxman doesn’t take a slice as it does with dividends. First for the many of us who have all our investments in ISAs the taxman doesn’t take any tax on dividends or on capital gains.
And too often when Trusts and Companies have supposedly rewarded me with buybacks the share price has gone down and stayed down so not only was there no profit to tax but the overall outcome was an increased loss!
sevenccc is right in that buybacks don’t reward those who hold on. They reward those who stay. Isn’t far too much emphasis placed on the theory by those who are so keen on them and far too little on what actually happens after them?
Pka
Theoretically I agree with you on the value of buybacks for ITs where the NAV is substantially ahead of the sp. Don't agree on shares in general as I see it as BoD manipulation to hit their LTIPs. And so often doesn't shift the sp regardless. Better to pay divis and as Ken says many of us hold all investments in ISA or SIPP.
So no tax to pay.
And then we can decide what we want to do with the cash.
My comments on the benefits of share buybacks (when an IT's shares are at a significant discount to its NAV) were meant to apply to conventional ITs that invest in a portfolio of publicly quoted stocks and are not highly geared.
I accept that buybacks may be problematic or not beneficial when an IT invests in unquoted assets, such as venture capital, private equity, property or infrastructure, or assets that might need extra cash investments made periodically, or if an IT is highly geared.
I asked Lawrence again if they could dedicate a section for investment trusts but answer no plans. They were looking at the tagging issue, so all @ would be tagged, but nothing happened yet.
That’s disappointing but not a surprise Charles. We’ll have to make the best of it. It’s good that posts here are now frequent enough to keep this Investment Trust thread regularly near the top of the list. That might attract a few more readers and posters.
And it’s worth (at least occasionally) putting a post we do on an Investment Trust thread on to the small company value thread as well where it gets far higher readership, as that’s advertising them and threads like this one.
Quite a useful article in the Telegraph today about Scottish Mortgage Investment Trust (LON:SMT) It might be behind a paywall for some.
The company acknowledges that it was slow to react to Chinese situation. Also hoping that the 30% non quoted part of the portfolio might benefit from flotations ( eg Northvolt).
Also suggests that the 10% gearing is at a sustainable interest rate.
Difficult to fully evaluate - but I am watching closely at these levels
Hi All, some great posts in here. I had a quick question regarding Arix Bioscience (LON:ARIX) . Are others voting against the shareholder resolution?
I have voted against- but I suspect it will go through. At least I am now back at break even having averaged down when the board announced considering options- the choice was not what I expected. !! But the managers will change anyway as I understand it. which seems wrong- but the whole deal was not in shareholders best interests.
Chile is reforming 37 laws to make inward investment easier https://blog.investchile.gob.c.... The only Latin America Investment trust Blackrock Latin American Investment Trust (LON:BRLA) has approx 5.8% of the fund invested there. (I hold BRLA)
A surprisingly good update from Newriver Reit (LON:NRR) today, including their claim to be in the best shape for 5 years. Also good to see retailers trading well like B&M, Marks, Boots, Superdrug and Sainsbury’s all among their top 10 retailers too.
I hold but was waiting for the next update to decide whether or not to sell. Easy decision. It’s gone from the REIT I hold with least conviction to a definite hold now. Dividend is over 8%.
REIT share prices have weakened recently as expectations of interest cuts might not come as soon as hoped following latest inflation figure and inflationary effects of shipping diverted around South Africa. This looks a good top up opportunity but with no need to rush as the sector share price dip might not have ended yet.
Here’s the comment part of that Newriver Reit (LON:NRR) update and the link for the figures after it:-
https://www.stockopedia.com/sh...
“Continued strong operational performance
Allan Lockhart, Chief Executive, commented : "Our strong operational performance continued into the third quarter, reflecting that our occupational market is, in our opinion, in its best shape for five years. This view is endorsed by the Christmas trading results reported to date by NewRiver's top 10 retailers, including B&M, M&S, Boots, Superdrug and Sainsburys, which have been excellent. The continued importance of the physical store is becoming increasingly clear to best-in-class retailers, be they omni-channel operators with a clear understanding of the role of the physical store in the fulfilment of online orders, or retailers operating right-sized store-based models.
We delivered another quarter of positive leasing performance, a further expansion of our Capital Partnerships and have seen an increase in potential acquisition opportunities delivering attractive returns which we believe will be supportive of the future growth of our business. In the meantime, our activities continue to be underpinned by our clear strategy, well-positioned portfolio and the strength of our balance sheet."
Strong operational metrics underpinning growth potential.
I am watching it Ken- will need to sell some-thing to buy which is my issue.
Sold half my holding in Avation (LON:AVAP) - held in for years and been up and down. Dividends will not be resumed until debt paid down significantly. I bought Regional REIT (LON:RGL) rather than NRR due to yield (hopefully). Been following both for a while . Yields about 16% if the board can keep to the dividend statement :
"12 January 2024
Further to the announcement made on the 12 September 2023, the Board will
target a dividend of 5.25pps for the full year 2023 (2022: 6.6pps), which
equates to an annualised dividend yield of 19.2% at the closing price per
share on 8 November 2023."
The price has changed since then.
They do have quite significant debt, but recent statements indicate trading OK, propery has been sold above valuations. Last NAV was 76.49 so at a significant discount.
Interesting article/interview on Vietnam today:-
https://e.vnexpress.net/news/b...
That’s an impressive 6% 2024 Vietnam growth forecast for starters!
I hold both VinaCapital Vietnam Opportunity Fund (LON:VOF) £4.53 and VietNam Holding (LON:VNH) as the way to play the obvious Vietnam potential. VOF £4.53 share price is well below the £5.57 NAV reported today. Both Trusts report NAV daily. VNH is on a smaller discount to NAV with share price £3.30 and NAV £3.58.
Vietnam looks good- there was an interesting newsletter from VNH https://www.vietnamholding.com...
Hi Ken. I hold VinaCapital Vietnam Opportunity Fund (LON:VOF) as part of my fun portfolio, <0.5% of my total SIPP. Its just been trading in a range of £4.20 to £4.70 over the past year but I'm in for the long term. My reasoning to hold is for Vietnam to become an Emerging Market from a Frontier Market and hopefully attract far more investment. The countries GDP growth just never seems to get reflected in the Trusts NAV / price. I'm also anticipating that Vietnam will be a beneficiary of the tensions with China. It also sounds like their real estate challenges may now be over moving forward.
Agree with all that Andy- I hold VietNam Holding (LON:VNH) rather than VOF. But both good funds.
Andy. I also hold both VinaCapital Vietnam Opportunity Fund (LON:VOF) and VietNam Holding (LON:VNH) . There’s a strong case for splitting the stake between the 2 as they have in the past taken turns at being the one to do best. Your reasoning about the switch in time from frontier market to Emerging Market is one of the many attractions. When that happens there’s likely to be far more interest among big UK and foreign Investors in investing in Vietnam. afaiaa there is no Open Ended Fund/Unit Trust investing solely in Vietnam. Both VinaCapital Vietnam Opportunity Fund (LON:VOF) and VietNam Holding (LON:VNH) might well go to a premium to NAV then. But this might all be a while yet. Meantime there are plenty of other plus points like impressive growth figures and lower interest rates AND big Companies switching their production to Vietnam. E,g from China and Taiwan.
Hansa Investment (LON:HAN) This is Investment Trust with a large "Family" holding- William Salomon and Nomolas Ltd which Stephen Solomon is a director of and has significant control. The fund invests in a diversified international portfolio. It trades on a 40% discount. 23.7 % of the Portfolio is directly and Indirectly in Wilson Sons andOcean Wilsons Holdings (LON:OCN) . June 2023 Ocean Wilsons announced that
"all potential strategic options" would be considered as part of
the review, but noted the move was at an early stage and there
was still no certainty as to its outcome.
It was responding to a Sunday piece by Brazilian newspaper O
Globo saying that Swiss shipping group MSC was in talks to buy
Wilson Sons, in a deal that could total around 5 billion reais
($1.02 billion).""
This deal may or may not go through.
The Fund has ruled out share buybacks- mainly as it would reduce liquidity. But if the Ocean Wilsons transaction goes through it would seem they will review strategy.
I think Oakley Capital Investments (LON:OCI) , which I hold, is held back a little by the two big legacy investments in North Sails (a nautical kit and clothing business) and Time Out (LON:TMO) . On the latter, they now own around 30% of the listed company following a distribution last week from an underlying fund. The advantage to this is that OCI now has direct control over that holding and can be proactive in what they do with it. TMO is an odd one: it must have the lowest profile of any listed company. And the business model looks relatively real world and capital heavy, which doesn’t fit the OCI template. The same could be said of North Sails. But they are 2 good brands. Just a question if when/how/whether OCI can extract value from them and if so, how much. If they could get them off the books at NAV or better I think the market reaction would be very positive.
School night so a short post on trusts in general.
Thanks for the feedback on the Money Makers weekly email. There is too much to read, watch and listen to these days so I am trying to focus on quality stuff only. It's an ongoing battle!
I notice the following from various sources, maybe of interest to others here:
On the most recent MM podcast, Alistair Laing of Capital Gearing Trust (LON:CGT) talks about recent additions to the portfolio in the infrastructure sector (listen from 30 minutes): BBGI Global Infrastructure SA (LON:BBGI) and 3i Infrastructure (LON:3IN) . Both are at unusual discounts and are invested in good geographical regions. I will have to do some digging on BBGI Global Infrastructure SA (LON:BBGI) to understand the revenue reserves as the AIC website has "n/a". A yield of 5.5% could be attractive when rates finally start to drop. I understand the interest in 3i Infrastructure (LON:3IN) as it is very large and trading at an usual discount but the yield is not enough to get me interested.
http://tinyurl.com/5n83mfrx
The managers at @SREI are speaking with CityWire in the near future, hope they report back on this as I now have a holding. As the following article says, @SREI pays 7.5% covered dividend. Any capital gain from a narrowing of the current 30% discount to NAV is welcome.
http://tinyurl.com/2nbhbre3
More director buying at @FGT, @SSON and @AGT. Nick Train owns something like 3% of @FGT now but his recent update seems like a change in tone slightly in that he 'owns' up to a few errors. Still sticking to businesses with high margins and ROCE which makes good sense.
http://tinyurl.com/mpmvkr9n
I noticed the following disclosure for the Tokyo Stock Exchange earlier today. Clearly the new disclosure rules are a work-in-progress if the largest companies have yet to buy in!
BREAKINGVIEWS - Japan Inc’s value boost plan lacks key endorsement
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
SINGAPORE, Jan 16 (Reuters Breakingviews) - The Tokyo Stock Exchange’s big push to improve shareholder value is missing some big names. On Monday, the bourse released a long-awaited list meant to showcase which companies have taken steps to improve capital efficiency.
Just 40% of the 1,656 prime-listed firms made it, underscoring the long road ahead for Japan Inc to lift valuations. But what’s more disappointing is the omission of many influential corporate titans.
Marquee names like Toyota Motor 7203.T , Fast Retailing 9983.T , Nintendo 7974.T and SoftBank Group 9984.T are conspicuously absent.
The 20 largest companies whose names are missing from the list make up about a quarter of the Nikkei 225’s market value. Toyota said its plan for "growth with takeholders" was effectively the same as what the bourse was requesting. The company may have a point: the stock has returned some 62% over the past year, outperforming a 42% return in the broader index. It also reported a record operating profit in its second quarter and announced a big buyback to please investors. Even so, in a consensus-driven country, if corporate leaders can’t be bothered to heed the TSE’s calls, then efforts to spur smaller laggards into action will be harder.
The good news is that the publication will be updated on a monthly basis. Rising peer pressure and shareholder activism, including recent campaigns in Seven & I 3382.T and Fujitec Co 6406.T , should help, then. The Topix .TOPX , already up 6% this year, is outperforming all other major global indices. The rally can only be sustained if Japan Inc’s heavy hitters start taking Tokyo’s corporate governance efforts seriously. (By Anshuman Daga)
AIC Compass for January is a good read. Interesting articles on EM and Vietnam.
http://tinyurl.com/2p9sd86x
SSB
Thanks SSB.
I am a big fan of MM podcast and as a subscriber I am liking the new weekly newsletter format and also looking forward to Jonathan starting to refresh and provide more focus on the various portfolios.
The Compass is a new one on me, but having just skimmed it from your link (thank-you) I can see it being another useful read.
My most recent PF tweaks have been to start to come out of some single-companies and reinvigorate my PF with top-ups or new openings in Investment Trusts - my learnings over the last few years are that I am not a great stock picker and would rather have a bit more "security" in both a more diversified PF and look to allow some of the "better" investment managers to take on the responsibility.
I still have a reasonable part of my PF in a number of single-co holdings as I do enjoy the work around investigating companies and then following their progress, but it is a lot of work and the enormous thrill of finding a winner needs to be balanced with the smack-in-the-face of the few losers. I have a few missing teeth from the last couple of years!
A few top-tops I am considering include; Strategic Equity Capital (LON:SEC) TR Property Investment Trust (LON:TRY) Nippon Active Value Fund (LON:NAVF) - all of which I think have been well covered above.
Good posts on private equity, thanks for sharing. I used to hold Harbourvest Global Private Equity (LON:HVPE) but sold a while back a decent profit. This series of posts has forced me to understand the charts under 'Performance' on the AIC web site: using the 'Display' option, I chose 'Share Price + NAV'. This option shows that Harbourvest Global Private Equity (LON:HVPE) has always traded at a discount but not usually as much as 40%.
In terms of NAV, it's never fully up to date because there are so many funds/positions to value, only a percentage can be up to date at any one point in time. I asked Richard Hickman by email back in 2021 I think about how the NAV is calculated, the answer was along the lines of using current quoted valuations as a proxy which seems fine but it doesn't really answer the question "what if current quoted valuations are higher than normal ?" I'm sure some sort of haircut must be applied.
I currently own HgCapital Trust (LON:HGT) which has a very limited number of positions but as a consequence, each is much larger. Most are in back office tech (ie: HR, accounting and compliance software) and recent sales seem to have been at premiums to NAV. And as a result of investing in fewer positions, the NAV is a more recent calculation when HgCapital Trust (LON:HGT) reports is interim and final numbers. There was a recent interview with one of the trust managers in late 2023 on the Money Makers podcast which was helpful.
I also own Oakley Capital Investments (LON:OCI) through AVI Global Trust (LON:AGT). The manager of the AVI Global Trust (LON:AGT) trust bought more shares recently which gives me confidence.
fwiw, I made some notes from a Sep-22 interview with Steve Tredgett of Oakley Capital Investments (LON:OCI) on the MM podcast (second recording on this link and also available on iPhone podcast app). Maybe of interest.
Oakley Capital Investments (LON:OCI) NAV calc should be similar to HgCapital Trust (LON:HGT) as similar type of trust ie: smaller number of positions.
https://tinyurl.com/3ynbyjk2
# OCI reported 17% increase in NAV last week due to financial performance rather than valuations.# 26 holdings, mainly defensive in nature.
# Holdings tend to be operating in mega trends and some are potential disrupters with recurring subscription type revenues.
# 18% growth in EBITDA.
# OCI listed back in 2007 so has some history with average price growth of 10% per annum.
# Mature portfolio focused on tech, consumer digital and education in Europe.
# Mgt team focused on making on 3 or 4 investments per year.
# Valuations on deals have come down from 14 times to 11 times.
# If the NAV is growing at 17%, why is the trust on a 37% discount ? ST argues this doesn't make sense. OCI can control the NAV through deal making and managing investments well. They are now trying to start to control the discount by increasing the confidence in existing valuations (through consistent and conservative valuations plus regular sales that support those valuations), transparent reporting to investors, history of good performance and share buybacks. There was also some mention of trying to reduce conflicts of interest but no explanation.
# Fees reflect the fact that OCI is the highest performing European trust. Plus the costs of running a trust are significant: operations, accounting, legal, 50 strong investment team.
# Generally bearish outlook on equities but OCI believe they will be resilient due to counter cyclical trends that they invest in eg: online consumer + value creation through buy and build + good relations with large PE players eg KKR.
# OCI still has a couple of problematic holdings but ST didn’t talk about these in any detail (conflict of interest comment from above maybe ?)
# 52% average premium on sales.
# 3.5 year average holding period.# OCI trying to hold on to good performing assets for longer in order to enjoy cash flows and profits for the benefit of the trust.
SSB
Those are really helpful posts on Harbourvest Global Private Equity (LON:HVPE) and Oakley Capital Investments (LON:OCI) and many thanks for doing them.
A key reason I bought HVPE is that their buy the big dips and take profits after good gains matches my preferred investment method, and it works well time and again. I’m not bothered that they are reluctant to opt for buybacks as the success rate of Trusts that do is dubious to say the least.
Sorry you didn’t get the investor relations job Donald, but a bonus is you’ve time for the great posts you do on Stockopedia!
Don’t know what the catalyst for a re rating and for the sector in general will be, and for those looking to invest in the sector might find it will pay to wait, either for when we can see what the catalyst for a re rating will be, or when the sector in general shows clear signs of going up.
Not sure what to make of the latest OCI deal. Their judgement has proves sound in the past but this does look a rather strange change of strategy.
EDIT. This is the Liberum conclusion fwiw:-
Liberum view
Steer fits the Oakley Capital mould of investing in founder-led businesses operating in large addressable markets with scope to increase breadth. Steer has been an active expander, with M&A helping to drive growth. The deal will also add some sector diversification.
Oakley Capital Investments (LON:OCI) is my largest personal holding at around 7% portfolio. It's a long term holding which i wrote about back in 2021 (https://www.stockopedia.com/co...). I like the core strategy and fact that the Founders, particularly Peter Dubens are major shareholders buying consistently in the market.
Acquires Steer Automotive Group this morning in story that was rumoured yesterday. https://news.sky.com/story/buy...
It's part of Oakley's Fund V, of which Oakley Capital Investments (LON:OCI) is a 28% holder in the underlying fund. It's a pretty big deal at up to £90 million commitment for Oakley Capital Investments (LON:OCI), around 10% of the current market cap?
I'm slightly surprised at this deal as it is different in terms of the sector and nature of the business (b2b car repairs). It is also UK focussed (whereas most of Oakley Capital Investments (LON:OCI) success has been in Europe. The final concern I have relates to this not lining up with the origination strategy that Oakley Capital Investments (LON:OCI) has promoted as a key strength. This is a buy-out from existing private equity partners, and the founder, and is contrary to previous deals where they have been the first private equity firm into a business, often uncontested.
Any thoughts?
bsharman
You might find this aic link useful for researching Private Equity Trusts, if you don’t already know!
https://www.theaic.co.uk/aic/f...
3i (LON:III) is the stand out sector performer but is at a 24% premium as a result.
I’ve held Oakley Capital Investments (LON:OCI) for a good while and initial buy has tripled. It’s been a consistent good performer and despite the discount narrowing recently, it’s still 28%.
I also hold Harbourvest Global Private Equity (LON:HVPE) and current 40% discount might not last much longer.
HgCapital Trust (LON:HGT) is another quality Trust in the sector but discount only 12%.
Others in the sector look oversold too. Don’t know what the trigger will be for current excessive discounts to narrow but narrow they surely will in time.
I don’t think Private Equity Trusts buying back shares is a good idea. Even if the discount narrows as a result it tends to widen again when the buybacks end. For Private Equity Trusts especially, there’s better use for their spare cash.
Admittedly in a different sector, but Pershing Square Holdings (LON:PSH) a very successful Trust, has spent around £1 BILLION buying back their shares and the discount is still around 30%.
Harbourvest Global Private Equity (LON:HVPE) has a great long term record but non-existent PR. In fact, they wanted to employ a new investor relations person last summer so I applied, but didn't get the role. They don't do buybacks in any size (when they have, it has been very reluctant) and won't consider dividends. Their view is that when the markets are beaten up is exactly the time to be making investments, and they have been proved right over the market cycle. They sold a lot of stuff in 21/22, often at valuations 50-100% above the holding value.
It's hard to know what the catalyst for a rerating will be: possibly there will be next on costs disclosure for investment trusts imminently. PE funds have been really hit by that as their costs can look high, but you can't run a PE fund like a long only equity fund. The upshot has been the proportion of shares held through IFAs in this sector dropping by around 75% though, so if that money starts coming back in, the discounts should narrow.
Good Afternoon all. Does anyone have an opinion of the private equity investment trusts. I hold Pantheon International (LON:PIN) (on a 30% discount) and Harbourvest Global Private Equity (LON:HVPD) (on a 40% discount) - These discounts are quite substantial, so is it a case of the market not believing the asset valuations? I would guess that PE do best in an environment where the cost of debt is reducing? Thoughts appreciated and any other recommendations would be welcome. Cheers.
Hi bsharman- there is nervousness re valuations though not entirely sure why. Probably the catalyst will be when some of the PE funds start realising value abouve current valuations. I would look at Oakley Capital Investments (LON:OCI) and CT Private Equity Trust (LON:CTPE) as well as the 2 great funds you hold. PIN is tring to get the discount to narrow through buybacks as I am sure you know.
Charles, this FT link explains the business model well. I didn’t need to sign up or log in to FT to read it.
https://markets.ft.com/data/in...
Saves me time explaining beyond the obvious that they buy, then lease and then finally sell their aeroplanes. A big plus is that their major client is Emirates. The big unknown is the final value of those planes when the leases expire.
M48.
Yes that risk of the share just falling in line with the dividend payouts is there, BUT it was that risk that stopped mr buying sooner. And the result so far is not steady falls but a share price gain from 34p to current 42p. A yield of over 18% is imo likely to support the current share price for this year at least, not least becsuse yet another dividend increase is possible.
I’ll be selling by the latest at the end of next year well ahead of dividend cuts after July 2026. Before that as with every share and Investment Trust I hold, a sell decision would be on news ahead to justify it.
The chance of the lease period to Emirates is there. That would be a bonus. As would a decent price for them when they sell their planes.
At present it still seems an excellent opportunity, though admittedly it was even better ahead of the share price gains since I bought as at that 34p buy price the yield now is about 25% on top of about 20% already collected, with further dividend increase not out of the question.
Another plus is the quality of those A380 planes AND the more so bearing in mind Boeing’s current problems with their key plane.
I believe Simon Thompson has just tipped it again in Investors Chronicle but I no longer subscribe.
Thanks Ken
Hi Ken, I had another look and recalled why I did not buy. Comments in the Annual report about end of lease plane values and the ongoing strategy made me nervous so decided to avoid then- and my opinion has not changed. I have exposure as I said through AVAP and that is for me enough in the aircraft leasing sector.
In the latest Paul Hill video Edmund Shing suggests gaining exposure to Japan through an IT in the small cap sector.
Any thoughts?
I am a big fan and hold Nippon Active Value Fund (LON:NAVF) - it had a very good 2023 and has also absorbed two other IT's that were sub-sized. I like its active approach of looking to work with company boards to start to flesh out value in Japanese Co's - it isn't small company specific focussed, but has a lot of other respected followers also calling out its potential.
I also hold Nippon Active Value Fund (LON:NAVF) . With its recent size increase after 2 other Japanese Investment trusts merged with it I am hoping their active approach will reap rewards. I looked at other Trusts but this is the one for me.
Thanks Charles and Kevin. Edmund sees value in small caps generally and sees further growth in Japan this year. Having recently invested in VietNam Holding (LON:VNH) I may now look at Japan as a way to get exposure to the burgeoning Asia economies.
Frontier and Emerging markets are interesting at the moment. I hold trusts in India-India Capital Growth Fund (LON:IGC) and hold VNH. Blackrock have a frontier market fund BlackRock Frontiers Investment Trust (LON:BRFI) which I hold. Latin America could also benefit from near shoring by the USA( I posted at length lower down on Latin America). The Manager of VNH also pointed out friend shoring is a factor- so Vietnam rather than China.
I know this is a page for IT's, but I get my Emerging Markets exposure through a Unit Trust........argh I hear you say.
But I look at long-term performance and if I can justify the higher charges I will pay for it.
Here is the 3 & 5 year charts for RedWheel Next Gen EM UT. I still haven't worked out if HL charts show TR or returns excl dividends, but I think the outperformance is clear.
Looks a good performance- I thing it is accumulating. I will not buy an open ended fund due to potential redemption issues which I can see may cost in terms of performance. I only bought Blackrock Frontiers recently so will see how it goes.
Ive looked on the AIC website and I see for BlackRock Frontiers Investment Trust (LON:BRFI) their TR is 5yr - 31% and 3yr - 32% so I think you are right Charles.
What frustrates me with HL is their initial charts on their "at a glance" opening page are not TR, so the 5yr figure is 4% and 3yr 16%. They could do with making this TR as it gives an incorrect figure when looking at the bigger picture.
Never used HL Kevin. Hope you find something in Japan. I know another poster did very well with a Japan EFT. It was reply to a Japan thread last month here.
Hi SCI20.Nippon Active Value Fund (LON:NAVF) have just issued a Dec fact sheet https://www.nipponactivevaluef...
I included this section on Amedeo Air Four Plus (LON:AA4) in a post on the “How to win even in bear markets” thread just now. Seems worth putting it here too:-
STUNNING BIG DIVIDEND PAYING BARGAIN.
It’s Amedeo Air Four Plus (LON:AA4) which I luckily bought about a year ago at 34p. It’s still only 43p.
Read the dividend news today. It’s eye catching. They’ve increased the already huge dividend AGAIN. That’s the 3rd increase in a year. It’s now 2p a quarter and 8p a year. That’s a yield of 18% a year. AND they are confident about paying at least (I.e don’t rule out another increase) 8p a year until July 2026.
Don’t expect a big share price gain but the dividend alone means 36% annualised by the end of 2025. Dividend will be cut after July 2026 and share price fall ahead of that date is likely. And share price will eventually be dependent on likely terminal value of their planes on hire to Emirates.
Amedeo Air Four Plus (LON:AA4) goes ex the next 2p quarterly dividend next Thursday 18th Jan and pay day is Jan 31st.
Won’t though the share price logically simply drop by an equal amount each time they go ex-div? Rather than an income story (as they approach the end of the lease terms), is this not instead just a play on whether the airlines choose to buy the planes outright at the end of the lease? Boeing’s problems could well increase the chances of that, but feels like there’s a fair amount of luck involved here rather than too much within the company’s control. The gain in the share price you’ve achieved must have ridden a change in sentiment over that time period, how confident are you that will be sustained or continue? Not one for me I have to say.
Ken, I did look at this but cannot get the business model . I hold Avation (LON:AVAP) and have for 8 years- seen the ups and downs of aircraft leasing. I will re-visit it but-sure it was mentioned in the Investment Trust Handbook 2024 but cannot recall what was said.
Just taken me 3 days to sell a tiny holding(1356 shares) in Rockwood Strategic (LON:RKW). The company is issuing new shares as trading at a premium- not sure if that was the reason. I had bought at a relatively high price a few months ago before the share split so was pleased to finally exit without losing. Lesson learnt re small cap Trusts trading at a premium. Not sure why I bought it- I trade in AIM stocks directly, just read too much about the fund manager and got carried away.
Bitcoin- I am reading that it is expected ETF's will be approved tomorrow in the USA for spot bitcoin tracking. I have never touched Bitcoin as I do not fully understand it-my golden rule of investing. But see Standard Chartered think it could crive the price to $200,000 (currently $47,000). Maybe I should learn more about this !
Thanks to the 2024 Investment Trust Handbook discovered this fund information site. Doceo whose aim is for investors to " Receive regular fund manager video updates, discover articles, podcasts, interviews, and become a more informed investor." Basically seems a way of monitoring Investment fund PR releases. Trying it out as a free source of info.
VietNam Holding (LON:VNH) Just had portfolio gearing through
Excluding the banks (25% of portfolio), the gearing (debt to equity) ratio of the portfolio is approximately 58%.
Banks obviously use leverage to their advantage, and so a debt to equity measure is not very meaningful.
Is there an Asian ex China IT? I’m aware of Vietnam specific ITs but additionally I am looking for exposure to Japan, South Korea, Taiwan & Indonesia.
SC120.
As I’ve suggested before, the best way to find out is to use the aic website.This link gets you to the 5 Asia Pacific Trusts and the next one down to the 5 Asia Pacific Equity Income Trusts and the next one to the 3 Asia Pacific Small Companies Trusts:-
https://www.theaic.co.uk/aic/f...
Click on each Trust and then the “PORTFOLIO” heading. That brings up the top 10 Trusts in their portfolios AND the percentage in each Asian Country. I’ve just checked them all and it only took about 15 minutes.
There are plenty of Japan specific Trusts. For Korea, Taiwan and Indonesia SCHRODER ORIENTAL INCOME has the most exposure at about 40%, FIDELITY ASIAN VALUES about 38% and the rest mostly around 30%.
Hi SCI20. There is a Korea IT as well Weiss Korea Opportunity Fund (LON:WKOF) . I would probably use a combination of Investment trusts and ETF's- so there is an asian ETF ex China ex Japan. Franklin FTSE Asia ex China ex Japan UCITS ETF (LON:FLQA)
Thank you the Mitchell bothers. I appreciate your time.
Not brothers....!
Yes I know.
Digital 9 Infrastructure (LON:DGI9) has been a total disaster but the board seem to recognise this and have today announced the formation of a valuation committee. When a company is trading at around a third of NAV, that makes sense. Either the NAV is wrong (and if it is, you would wonder if the manager has been misleading the valuation agent in order to milk fees) or the company needs to explain what the market is missing. It is a positive step forward in any event.
India Capital Growth Fund (LON:IGC) I am slowly trying to find out what the ujnder lying gearing of the Investment Trusts I hold is- the portfolio gearing not the actual Investment trust gearing. Had this response from ICG.
The gearing at portfolio holding level is low. Typically, IT and Consumer Companies are debt free but others, such as Cement companies have a small level of gearing.
The Indian market is valued at multiple fold that of their neighbor Pakistan. The entire Pakistan stockmarket has a PE <5 (Last time I looked anyway). See Global X MSCI Pakistan ETF (PCQ:PAK) . Also unlike the Indian fund, this actually pays a good dividend.
Interesting thought. Will have to do some research on the outlook for Pakistan.
Having looked briefly at Pakistan there would seem a few issues that need looking into further. Inflation is high- 28.2% YoY , in Dec 23, down slightly from 29.2% in Nov 23. Interest rates around 18%. Found a broker who provides free research- see link to the daily briefing's they issue https://arifhabibltd.com/servi...
Yes their currency (Pakistani Rupee) had been collapsing hence the low valuation of their entire market (low PE) when measured in USD. Colombia is also cheap. Argentina is still cheap but has really taken off post election.
Alphaflight I purchased Blackrock Latin American Investment Trust (LON:BRLA) recently.
That IT is heavily biased towards Brazil if you look under the bonnet. Nothing wrong with Brazil though.
I own Brazilian stocks directly via two separate brokers in South America. Some of the Brazilian companies are churning out big dividends but many of these stocks do not have US listed ADRs (not that I trust US listed ADRs post Russia expropriation).
The Petroleo Brasileiro SA Petrobras (NYQ:PBR) accounts for about 9% of Blackrock Latin American Investment Trust (LON:BRLA). The Petrobras ADR is worth buying separately for the income stream in my opinion assuming you aren't worried about risks associated with ADRs/political risk.
For the record I don't like this Investment Trust because it is based on US listed ADRs. ADRs are not safe, especially ADRs of countires that are allied with Russia. I learned this the hard way. Instead I prefer to hold non-G7 stocks (where possible) directly via brokers located in said countries - a lot of trouble to setup but worth it if you are dealing with large sums of capital.
I take it most on this thread are familiar with the excellent and free Money Makers weekly podcast by Jonathon Davis which focuses entirely on Investment Trusts, including a summary of the week’s news https://money-makers.co/money-... Jonathon is also editor of the annual Investment Trust handbook (the ebook version is free to download).
Thanks, Brilliant Leader. It's been mentioned a few times, but it was your post that brought home to me that it's investment trusts only and I've now subscribed. Always worth mentioning things - you never know when it gets someone at the right time.
Jonathon Davis is, I assume, well regarded here?
Jonathon Davis is very respected as you can see from this link:-
https://www.harriman-house.com...
Also the 23rd December Money Makers podcast is a very good one:-
https://money-makers.co/2023/1...
Just discovered Hansa Investment (LON:HAN) . The shares are on a 41% discount to NAV. 26% of the Assets are in Ocean Wilsons Holdings (LON:OCN) , which has a Stock Rank of 98. The remainder of the portfolio is in regional and diversifying funds-mainly open ended funds,. So with the discount could be a play on Ocean Wilsons. I do not hold.
Hansa Investment (LON:HAN) looks very interesting, with Findlay Park and Pershing Square Holdings (LON:PSH) also in their top 10, but reading the annual report, they rejected the idea of buybacks. Given the market cap of £200m, they will struggle to attract institutions, and don't seem to do anything to attract retail investors. Its a good example of something that really should be wound up imo.
donald pond- Sort of my thinking as well. Will see if they will have a chat.
Rit Capital Partners (RCP)
Fascinating discussion about Investment trusts. I hold a few including the above which was not mentioned at all. Rather surprising but I remain contrarian on this occasion.
Thanks for posting Charles and others. I'm not sure it's helpful but my first reaction was that 27 trusts with therefore look through numbers of investments of over 1,000 seems like a heck of a lot to manage and a lot of beta. Or am I wrong?
Interesting point Richard. I tend to select regions or sectors and then look at a trust that covers this. Not so concerned with actual portfolio as NAV’s announced daily. In the 1980’s we would try and replicate to calculate NAV as only announced monthly. Certain funds like Georgia Capital (LON:CGEO) is highly linked to Bank of Georgia (LON:BGEO) , 3i (LON:III) to Action, but most do not have such a single concentration. So more looking at the macro than the micro of what stocks the manager is buying/selling. I have got a spreadsheet showing geographic splits within Trusts that do not have a single country bias, but it involves contacting the managers sometimes as not all produce in a monthly fact sheet.
But a valid point and one I do try and monitor when one or two investments are a significant part of a portfolio.
Many managers are open to be contacted by even small investors.
fwiw, a more general post on investment trust related articles I have read recently or podcasts I have listened to. Comments welcome as always.
I like this thread, still read it regularly and rec most of the posts. There are some well informed posters here. Subscribers add what they can when they have time, I'm no different, work takes over I'm afraid.
I'm think about stopping my IC subscription. I like the John Baron and John Rosier columns but they are only once a month. The BearBull column is good but there is little else. Maybe I will put the saved money towards a Money Makers trial subscription, anyone here got any experience ?
I don't like the year end reviews and forecasts for the coming year. Too many column inches written on these topics. The past year has gone and no one can forecast the future. The IMF keeps trying but never seems to revisit those forecasts a year or so later, wonder why ??! :-) And shouldn't we always be reviewing our portfolios and selling and under-performing holdings ? Ken, I think you have made this point in the past and it certainly makes the daily login to my broker account more bearable during downturns because there is less red to look at.
fwiw, the middle section of the December edition of the AIC magazine says private equity was the best performing sector in 2023, followed by technology. The former it seems is based on wide discounts at the start of the year, something, as private investors we can keep taking advantage of going forward. The latter based on the popularity of the big 7 plus AI, something that now seems obvious with hindsight. http://tinyurl.com/3e3rcn3h
I ran an AIC screen to understand the best performing prices over the last 12 months (mkt cap > 100m). Apologies, the link doesn't quite work, readers will have to click on "price performance" and make sure the arrow in the first column is pointing down. The list is then ordered best performers to poor performers. http://tinyurl.com/9x8akxe8
And an AIC screen to understand the best performing NAVs over the last 12 months (again, mkt cap > 100m). Again, click on "NAV performance" and make sure the arrow in the first column is pointing down. The list is then ordered best performers to poor performers. http://tinyurl.com/53kyswdm
Some definite similarities - private equity and tech again. But should we be focusing on the other end of the tables ? Maybe the 2023 losers will become the 2024 winners ? Dominated by China (uninvestable for me), property (surprised to see Tritax Big Box REIT (LON:BBOX) NAV down 19%) and the odd disaster story (Digital 9 Infrastructure (LON:DGI9) was slow to deploy IPO cash as I seem to recall ? And then had some specific valuation issues). Any favourites to re-bound ? Tritax EuroBox (LON:EBOX) ?
As a pure (maybe long-term) dividend payer, I like TRIG. The following article alerted me again. http://tinyurl.com/4x6n7ehd
3bn mkt cap means wealth mgt companies should be buyers. It's been listed for just over 10 years. The discount got down to almost 25%, now at 13% on the basis of expected interest rate cuts in 2024. And it pays a 6% dividend. the frustrating thing is the AIC doesn't have a revenue reserve stat. I asked about this a while ago and the response was that the AIC don't publish revenue reserves if they can't easily break out that number from total (ie: revenue + capital) reserves. I was pleasantly surprised by the increasing geographical diversification in the trust when I looked at the last annual report (Dec-22). And the better the technology becomes, the less it relies on government subsidies. See page 7 for the NAV breakdown. http://tinyurl.com/4wj5stwy
Charles, thanks for posting on Emerging Markets. I was going to respond to say that I preferred MUT as a global income option. http://tinyurl.com/46vkn7bc
But then I noticed your preference for BlackRock Frontiers Investment Trust (LON:BRFI) which has exposure to what appears to be quite stable countries. So I am going to do some more research on this trust.
I get regular emails from BlackRock and Schroders etc promoting their trusts. The former are easier to digest than the latter due to the length of the articles and especially the videos. I thought the following was interesting in that it enforces the message that certain resources (especially copper) are becoming more difficult to find and mine. Surely this will force up the price. BlackRock World Mining Trust (LON:BRWM) is a core holding for me.
Last time I checked the AIC web site, dividends were covered 80% by revenues reserves. http://tinyurl.com/ye26ycd8
Can copper only go higher from here ? It's already at a reasonably elevated price historically. http://tinyurl.com/3usxn8cv
For anyone not familiar with BlackRock World Mining Trust (LON:BRWM), the following video is a decent summary. http://tinyurl.com/5e7yrmx5
Will add some more thoughts as and when I come across interesting pieces.
SSB
“Maybe I will put the saved money towards a Money Makers trial subscription, anyone here got any experience ?”
Yes, it is excellent IMO and Jonathan Davis always produces quality, independent work. I always listen to his podcast in which he interviews Investment Trust experts. For small monthly fee it’s a bargain (think it’s £8pm).
Hi SSB - I echo OldSchool's views - at £8 per month it is very good value. I think the podcast is free, but you get access to the weekly summary of all the news with quicklinks to the RNS's. In addition there is a new weekly write-up with Jonathans thoughts for the week (approx 5-10min read) and of course access to the two or three demo portfolios.
The PF's aren't updated that often, but Jonathan has promised to update more in his weekly columns and he does put out a quarterly video update.
The IT Handbook is also a good read at this time of year - plenty of articles from excellent investors. Whilst pricey at £30 you can get a free PDF, although I do like a proper book.
I have cut back on my subscriptions across the last 12months and now limit myself to those that really add value only.
As an aside, I get my copper exposure from Global X Copper Miners UCITS ETF USD Acc (LON:COPG) an ETF, but am seriously thinking of just putting this into BlackRock World Mining Trust (LON:BRWM) and letting them run my commodities exposure, but I keep talking myself into hanging onto the ETF due to the likelihood of seeing copper spiking in the next couple of years.
I also have a couple of other ETF's & UT's I consider core-holdings, but haven't listed these here as they are not the focus of this post, but happy to share if anyone thinks it useful.
IT Handbook is available free on Kindle and has some good content
Hi ShoeshineBoy, Interesting post. Not sure Murray Int quite fits what I am looking for. Thanks for the mining info- I tend to avoid the sector for various reasons. I do keep looking at Yellow Cake (LON:YCA) , I am a believer in Nuclear energy-to the surprise of friends- I see Nuclear as safe nowadays. Looking also at getting exposure to Indonesia's Nickel and Copper reserves through iShares MSCI Indonesia ETF (PCQ:EIDO) .
Here’s a reply to some of the posts in your latest superb posts.
First to your direct question about selling losers. I’m much more ruthless on doing that with shares than Investment Trusts. And with shares I sell on bad news and my mistakes, rather than random stop losses. For good quality Investment Trusts, share price falls are quite often a top up opportunity as it’s often just bad timing. A classic example was Tritax EuroBox (LON:EBOX) this year, where buying at 60p looked a bargain…..ahead of that amazing top up opportunity at 44p. EBOX is now back up to 60p and as with the other REITS I’ve either held since the 2020 covid falls or bought this year there’s plenty more upside if inflation has peaked and if interest rates are coming down. And there are still dividends up to 10% a year while we wait. I hold Supermarket Income REIT (LON:SUPR) Tritax EuroBox (LON:EBOX) Schroder European Real Estate Investment Trust (LON:SERE) Schroder Real Estate Investment Trust (LON:SREI) abrdn Property Income Trust (LON:API) Aew UK Reit (LON:AEWU) and Alternative Income REIT (LON:AIRE.
It was a surprise that Private Equity had such a good year with 3i (LON:III) yet again the sensational stand out performer. I’ve held Harbourvest Global Private Equity (LON:HVPE) and Oakley Capital Investments (LON:OCI) for a good while.
I hold big dividend payer Amedeo Air Four Plus (LON:AA4) (15% dividend at current price but near to 20% n my lucky 32p buy price. Aircraft leasing Trusts also had a good year. BUT if buying Amedeo Air Four Plus (LON:AA4) beware that probably in 2025 dividends will cease or be dramatically cut AND the final value of their planes is conjecture. So don’t take that near 60% discount to NAV too seriously. Real NAV is a guess.
As for your point about whether we should look at this years big losing sectors as potential winners in 2024; a resounding YES to that. I’m always looking to buy after falls and ahead of gains instead of the other way round! Momentum investing also can work well but it’s not for me.
You mentioned Renewables Infrastructure (LON:TRIG) .fwiw I prefer and recently bought a sort of alternative GCP Asset Backed Income Fund (LON:GABI) .30% discount and 9% dividend and they apparently turned down a bid at 78p.
BlackRock World Mining Trust (LON:BRWM) which I’ve held for years looks THE pick of the Mining Trusts and the best way to play via Investment Trusts, the promised (but will it happen?) big mining sector bull market ahead.
Again fwiw ,Vietnam Trusts have been great holdings for me for the last 20 years. VinaCapital Vietnam Opportunity Fund (LON:VOF) is currently underperforming my other holding VietNam Holding (LON:VNH) . That’s partly because the discount is higher and also the non quoted part of the VOF portfolio. Some of the latter could well become big IPO successes.
Finally Scottish Mortgage Investment Trust (LON:SMT) is at last recovering. Great long term record but short term recent troubles. Used to trade at a big premium but currently on an 8% discount.
Same as Ken and KevinS1, thanks for posting your holdings Charles. Firstly, it's nice to hold some similar trusts (safety in numbers and all that). Secondly (and the purpose of my post here), are any of your existing holdings still buys ? Using the John Baron "rules" on buying investment trusts:
JB "RULES" IN CAPS. SSB comments in lower caps.
1.) TRUSTS THAT ARE TRADING AT A LARGER DISCOUNT TO NAV THAN USUAL IE - WHEN SENTIMENT TRAILS FUNDAMENTALS. For so long, many REITS and infrastructure trusts were trading at premiums. they are now at discounts. With expected interest rate falls, the past month or so has been a buying opportunity, will it continue ?
2.) GOOD REASON FOR THE LARGER THAN USUAL DISCOUNT EG - MANAGER OR SECTOR OUT OF FAVOUR. Not to be mistaken with poorly performing managers eg - Woodford Patient Capital Trust.
3.) LOW FEES. A HIGHER FEE DOES NOT GUARANTEE BETTER PERFORMANCE. This is not straightforward as the whole fee issue has been clouded by the awful regulations brought in by the EU and which have still not been reversed since the UK left. But on the whole, higher, hedge fund type fees are a waste of money.
4.) DECENT YIELD. Interest rates will not stay high forever as interest payments on government debt is becoming a problem.
5.) GOOD COMPARISON AGAINST OTHER TRUSTS IN THE SAME SECTOR. This is where the AIC screener come sin useful, both from a NAV and price perspective.
6.) BEATS THE BENCHMARK. As long as the benchmark makes sense eg - Christopher Mills freely admits the benchmark for North Atlantic Smaller Companies Investment Trust (LON:NAS) is a legacy issue that has never been updated.
7.) GOOD/RELIABLE MANAGER. GOOD LONG-TERM BUYS SHOULD FOCUS ON PERFORMANCE MORE THAN DISCOUNT. Presumably he is looking at people such as Curtis Job (City of London Investment Trust (LON:CTY)), Nick Train (Finsbury Growth & Income Trust (LON:FGT)), Katie Potts (Herald Investment Trust (LON:HRI)), Nick Greenwood (Migo Opportunities Trust (LON:MIGO)), Gervais Williams (Diverse Income Trust (LON:DIVI)) amongst others ?
8.) MANAGER OWNS SHARES IN THE TRUST TO ENSURE THEIR INTERESTS ARE ALIGNED WITH SHAREHOLDERS. Same as individual shares.
9.) LONG-TERM BUYS SHOULD FOCUS MORE ON PERFORMANCE THAN DISCOUNT. When I look at the 10 year charts for tech trusts (Polar Capital Technology Trust (LON:PCT) & Allianz Technology Trust (LON:ATT)), the performance has been fabulous but would you buy now ?
10.) UNDERSTAND THE TOP 10 HOLDINGS & WHAT PERCENTAGE OF THE TRUST THESE MAKE UP IE - IS A TRUST MADE UP OF CONVICTION BUYS ? eg - FGT run by Nick Train ('3 good ideas in 13 years') v WITAN which is a trust of trusts & hence very diversified. I tend to prefer the former.
11.) UNDERSTAND MORNINGSTAR RATING & TRUSTNET RISK SCORE. Makes sense in theory but are these scores really a view on volatility rather than risk ?
12.) UNDERSTAND IF GEARING IS ALLOWED & WHAT THE CURRENT LEVEL OF GEARING IS. Gearing works the same in declining as well as improving SPs.
Back to Charles' list of holdings and please bear in mind these are only the views of a conservative investor....
I like the look of BlackRock Frontiers Investment Trust (LON:BRFI) as it stays away from countries with unstable politics (particularly South America). BlackRock is a reliable manager and revenue reserves cover 80% of the current dividend. Interest rates in some emerging/frontier markets are already falling. And this trust offers a discount that is towards the lower of the 10 year scale. My only concern is how the manager visits companies from so many geographically different countries ?
CC Japan Income and Growth Trust (LON:CCJI) and Nippon Active Value Fund (LON:NAVF) have performed better than their Baillie Gifford counterparts. Smaller discounts on offer for both trusts but as several subscribers have noted and what I reported myself from the AIC conference, the positives are the Japan wide changes we are now seeing ie: inflation for the first time in decades is making both individuals and corporations think about moving cash into shares. I like both trusts. John Baron likes CC Japan Income and Growth Trust (LON:CCJI) and Jim Mellon told Merryn Somerset Webb on a Bloomberg podcast he was buying into NAVF.
Oakley Capital Investments (LON:OCI) focuses on technology (mainly back office I seem to recall) plus family owned businesses and the education sector. Similar to HgCapital Trust (LON:HGT) in many ways. I currently own AVI Global Trust (LON:AGT) (which in turn owns Oakley Capital Investments (LON:OCI)) and HgCapital Trust (LON:HGT). I understand the government has asked external auditors to review the NAVs of private equity trusts, will be interesting to understand the outcome of those reviews. I recall Nick Greenwood recently saying the NAVs are becoming more trustworthy because they are now being valued in a higher inflation/interest rate environment.
Richard Staveley presented well at Mello last month but Rockwood Strategic (LON:RKW) is now at a small premium to NAV. It has done well but it's not a buy for me now. The sector is cheap though.
I hold VietNam Holding (LON:VNH) but keep meaning to look at the private equity holdings of VinaCapital Vietnam Opportunity Fund (LON:VOF) to understand how and how often they are valued.
I also hold Caledonia Investments (LON:CLDN) for the long term. It's really a family office but I'm happy to pool my small amount of cash in with the Cayzer family.
I used to hold Supermarket Income REIT (LON:SUPR). I see it's now at a 9% discount to NAV and paying a 7% dividend. And the directors have definitely bought lots of shares over the past 3 or 4 years.
I like TR Property Investment Trust (LON:TRY) and thought about buying after the Money Makers interview with Marcus Phayre-Mudge back in about May I think. Again, well diversified and some really good knowledge on the differences between UK and European valuations ie: UK valuations are updated more regularly, the Europeans tend to overlook short-term movements in property prices. I'm sure I heard that and was slightly surprised. AIC web site says the dividend is covered 1.5 times by revenue reserves which is comforting.
I used to hold NextEnergy Solar Fund (LON:NESF) but definitely Bluefield Solar Income Fund (LON:BSIF) is better managed. The latter seem to have been able to get more out their assets than the former. Plus NextEnergy Solar Fund (LON:NESF) have some issues with a battery storage development which recently hit the SP.
Scottish Mortgage Investment Trust (LON:SMT), I keep reading the RNS and also the publications to my inbox. Maybe I should just take the plunge and buy a small holdings so I have an interest ? The stat that BG repeat around the human genome is compelling. The human race has come a long way!
Thanks again to Charles for posting.
SSB
Thanks for another superb post ShoeShineBoy. I’ll reply as soon as I get the time, and by Sunday, including to answer your question about selling underperforming investments. Will also reply to another must read post from Charles Mitchell. It’s good to see interest in this thread increasing too.
Shoeshine boy, For the moment happy with all of them. CC Japan Income and Growth Trust I sold yesterday and bought Blackrock Latin American Investment Trust (LON:BRLA) . I had to sell something and been looking at Latin America for a while . Blackrock Latin America does not have enough Mexico exposure for me so looking at iShares MSCI Mexico ETF (LON:0JF4).
I have looked at all the Vietnam funds, but am stocking with VietNam Holding (LON:VNH) . Craig Martin responds to emails quickly- I ask the odd question if I see something in the Vietnam Express paper.
I am pretty unhappy with BH Macro (LON:BHMG) - it was an impulse investment, always the worst type.
So happy with holding, will keep monitoring as I think I could change geographic weightings. Next project is to look at North Africa. I am pretty sure the enar shoring will accelerate- my nephew has some dental stuff made in Far East and is looking to move manufacturing.
Thought I would just list my year end Trust and investment Company holdings with comments
Sipp
Arix Bioscience (LON:ARIX) . Portfolio beeing acquired. Will hold RTW Biotech Opportunities (LON:RTW) as I am interested in the space. My nephew works in this space withing a Hospital setting-says activity from investors is picking up.
BlackRock Frontiers Investment Trust (LON:BRFI) Frontier markets look poised to see gains.
CC Japan Income and Growth Trust (LON:CCJI) . General exposure to Japan. Will sell at some time.
India Capital Growth Fund (LON:IGC) Core holding. Top slice as it becomes too large a %. India alswatys looks a little pricey, these managers though seem very comeptent.
Oakley Capital Investments (LON:OCI) Held this specialist PE fund(Education a main focus) for years. Very content to hold.
Polar Capital Global Healthcare Trust (LON:PCGH) . Long term holding.
Rockwood Strategic (LON:RKW) Hold for now. Wish they would stop dribbling new stock out, rather a decent sized placing. This can happen with Trusts at or above NAV.
Utilico Emerging Markets Trust (LON:UEM) Play on infrastructure in emerging markets.
VietNam Holding (LON:VNH) Very bullish on Vietnam. Risk is more near-shoring, looking to buy Blackrock Latin American Investment Trust (LON:BRLA) as well.
ISA
CT Private Equity Trust (LON:CTPE) Like the manager.
Dunedin Enterprise Investment Trust (LON:DNE) Small holding, being wound up slowly.
European Smaller Companies Trust (LON:ESCT) My choice for mainland europe exposure. Only bought a month ago.
Nippon Active Value Fund (LON:NAVF) As th names says active fund in Japan. Now enlarged with merger 2 other trusts. With more Assets should be able to disrupt further in Japan.
Pershing Square Holdings (LON:PSH) Long term performer.
Investment company
Georgia Capital (LON:CGEO) I tend to buy and sell this one. Always slightly nervous about Russia. But huge discount to NAV and Bank of Georgia seems to be performing well.
Wife's ISA
Alternative Income REIT (LON:AIRE) Held for income.
Bluefield Solar Income Fund (LON:BSIF) Held for income
Caledonia Investments (LON:CLDN) Performed OK.
Fidelity Special Values (LON:FSV) Held for the manager's skills. I used to work as a junior at Fidelity when Bolton launched the Special situations unit trust. Left after a year to become a broker !
Gore Street Energy Storage Fund (LON:GSF) Held for income.
Henderson Far East Income (LON:HFEL) High Income and hopefully capital growth.
Merchants Trust (LON:MRCH) Solid holding for hr requirements.
RIT Capital Partners (LON:RCP) Looked cheap compared to past.
Scottish Mortgage Investment Trust (LON:SMT) Bought a few months ago- discount looked over don.
Supermarket Income REIT (LON:SUPR) Income. Not sure why in 2 funds !!
Tritax Big Box REIT (LON:BBOX) Income, long term growth. Great performer until interest rates rose - should have sold jobbing backwards.
TR Property Investment Trust (LON:TRY) Property shoulkd revovr in 2024. Bought mid 2023.
VietNam Holding (LON:VNH) I am very bullish on Vietnam.
Investment companies
BH Macro (LON:BHMG) Should never have bought this for her ! Got carried away with historic performance at the last placing.
That is my exposure. Do comment.
Thanks for that very interesting post Charles. I’ll reply when I get the time and meanwhile hope others will too.
If you had posted that on the small cap value report thread it would have generated far more interest and follow up, than it does here. It’s disappointing and a disincentive to posting that so many Stocko subscribers only seem interested in the excellent daily SCVR updates and comments. Don’t know what the answer is to attract more interest in other excellent threads here.
Hi Ken
Hopefully Stocko will give us our own "corner". I am loathe to publish on the SCVR as many I am sure are more interested in the news that day.
Hopefully it will happen.
Charles
Fully understand your reluctance to post it on SCVR Charles. I did post there a couple of times because saw it as a chance to advertise both Investment Trusts and the great Investment Trust thread(s) you started and have already contributed so much to here.
AND arguably it was worth doing that. One of those posts I did there too got over 100 ticks compacts with then just 6 on an Investment Trust thread. And it’s noticeable how ticks for posts here are now higher as more check out Investment Trust threads perhaps bcause of occasional coverage on SCVR.
And my posts there were nowhere near the quality of yours!
I was going to reply to your brilliant portfolio post but can’t go beyond that I would be happy to hold all of them. You’ve that invaluable direct experience in the industry and it really shows . Mention that too on a one off SCVR post and that would whet yet more willing appetites.
Hi Charles,
Some really interesting and strong holdings there - many of which I hold myself. Here are a few additional trusts which I hold;
I held Arix Bioscience (LON:ARIX) a couple of years back but lost interest and sold out when it kept drifting lower, but appreciate that things are now different. My healthcare exposure comes from Polar Capital Global Healthcare Trust (LON:PCGH)
My Japanese exposure is through Nippon Active Value Fund (LON:NAVF) which I like and rate a lot and it has recently done very well. It is also merging taking-over two other trusts and I am hoping that this performance will continue.
I don't hold a specific Indian trust at the moment, but when I do take the plunge my favourite is Ashoka India Equity Investment Trust (LON:AIE)
For PE I use Harbourvest Global Private Equity (LON:HVPD)
I don't hold Rockwood Strategic (LON:RKW) but I have all of the three other IT's from Harwood Capital Odyssean Investment Trust (LON:OIT) North Atlantic Smaller Companies Investment Trust (LON:NAS) and Oryx International Growth Fund (LON:OIG) the latter sits on a 25% discount
I get my Emerging Markets exposure through a Unit Trust - Next Generation Redwheel Emerging Markets - 22% US/UK so not all emerging markets and 32% banks so not everyones cup of tea, but excellent 3 year returns.
I also hold some of your others; TR Property Investment Trust (LON:TRY) Pershing Square Holdings (LON:PSH) Scottish Mortgage Investment Trust (LON:SMT)
Others I hold not mentioned to date include;
Temple Bar Investment Trust (LON:TMPL)
BlackRock World Mining Trust (LON:BRWM) a solid dividend payer which should hopefully also reward any growth in commodities
Strategic Equity Capital (LON:SEC)
CQS New City High Yield Fund (LON:NCYF) for high-yielding bind exposure
Mid Wynd International Investment Trust (LON:MWY)
Jpmorgan Global Growth & Income (LON:JGGI) probably my biggest IT holding and my go-to staple trust for all of my accounts - SIPP/Drawdown & ISA's.
Good luck all.
Hi Kevin
Agree Ashoka India Equity Investment Trust (LON:AIE) is a good fund. I am monitoring the new Ashoka WhiteOak Emerging Markets Trust (LON:AWEM) . Interesting portfolio you have. Charles
Pershing Square Holdings (LON:PSH)
“Can anyone that follows investment trusts closely rationalise the Pershing Square Holdings(LON:PSH) discount to NAV for me?”
My opinion is that it relates to the hedge fund like fees, on one hand, and a difficulty for investors to understand the complex macro hedging instruments which Bill Ackman is famous for, on the other. It doesn’t fit neatly into a long only IT for that reason. Investors don’t know which box it fits into…
You end up with a very concentrated equity portfolio of around 10 long positions and then bets on the direction of interest rates or inflation. The macro bets have been extremely profitable off relatively small bets (in context of fund size). Ackman acknowledges you have to be correct on the direction of these bets but also the timing. I think he is currently macro positioned that US interest rates will fall faster than expected, and his record is vey good.
This is my main and largest US focused investment, I’m happy paying the fees for good performance in a market that I can’t profess to follow closely.
I suspect the end game for this Trust would be for Ackman and management to take it back on to US market through ongoing buy backs and them hoovering up stock themselves?
Thanks for this and other comments in response to my question - which was somewhat premature as I hadn't bothered at that stage to read the earlier comments or the company newsletters which do in fairness to them go to some length to try to address the question.
My observation now having read more would be that most explanations focus on the demand side, but I can only assume that actually there is also quite a lot of supply because the NAV growth has been so good in recent years, there's plenty of top-slicing going on. I remember Christopher Mills using this explanation once for the discount on North Atlantic Smaller Companies Investment Trust (LON:NAS).
Ultimately, I suspect the below comment in the August 22 shareholder letter will come to fruition and the issue will go away (on the basis there might not then be a weekly NAV to report against). Out of all the companies exiting the LSE market for different reasons, it would be perhaps the least surprising if Pershing Square Holdings (LON:PSH) were to go too.
Could PSH Eventually List in the U.S.?
As PSH grows in market capitalization and its ownership stakes in its portfolio companies increases, one can envision a world in which over time PSH becomes a controlling owner of one of more businesses that comprise the substantial majority of our assets and income. We expect to continually evaluate PSH and its operations, and consider whether in the future it may be able to operate not as an investment company in the U.S., but rather as an operating company that could be listed in the U.S.
M48 Thanks for the update re Pershing Square Holdings (LON:PSH) . Had not seen that comment. I hold.
Marten and Co note on Oakley Capital Investments (LON:OCI) I hold. https://quoteddata.com/researc... Another one where this discount seems excessive given its history of performance.
Latin America Research
I have been considering investing in a fund exposed to Latin America for a while now.
My main concerns have been:
Lack of political stability.
Economic (Mis)-management.
Criminality.
(I see today a kidnapping of a British citizen took place in Ecuador).
These are my brief notes following some research into the region. If your interested there are quite a few sites about these countries and their economic activity
I have not yet invested in the region other than through funds like UEM which have some exposure.
I have followed the Mexico ETF for nearly a year- should have bought 6 months ago but I was nervous- hence the research I have been doing.
Blackrock Latin American Investment Trust (LON:BRLA) is interesting- their Geographic split is Brazil 59.2%, Mexico 26.8%, Chile 5.8%, Argentina 3.4%, Colombia 3.3% and Panama 1.5%. It is the only listed closed und on the UK market investing solely in the region.
Latin America would seem to have many advantages as the world seeks to combat climate change. A region with huge water reserves and Large mineral resources in the key areas of lithium, nickel, copper, graphite, rare minerals and high-grade iron ore.
A recent presentation I listened to talked about the developments in renewable energy and logistics.
Adult literacy is 93% and the Birth rate is declining. Internet access is 75% and 98% have access to electricity. These are high numbers for a region considered by Investors as a Emerging market region.
See Charlie Robertson “https://www.goodreads.com/en/b....
The region would appear to have all the characteristic for sustainable growth for some time. I can only assume that until recently for Political/Economic regions the region has been to an extent ignored by Stock market investors- there is only one Investment Trust.
Companies in the region have lower leverage are more prudently run than in other developed regions – maybe due to the risk ratings applied to the area. Arguably these concerns are justified – economic policies need to be clear and then implemented, workers need more investment by companies in training and skill development and governments and private capital need to invest in infrastructure and the digital development of the region.
From what I can see this is happening- UEM a trust I hold invests in Infrastructure in emerging markets and in a recent presentation they mentioned logistics, digital roll out and green energy.
The Region also has huge fossil fuel reserves which have been only slightly exploited.
There is a move into Greener power sources across many countries in the Region.
Indications are that many countries want to move away from a reliance on natural resources and diversify into financial services- such as digital payments in Brazil. Brazil is leading the way in terms of attracting inward investment. As the worlds 10th largest Consumer market it cannot be ignored.
Latin America in a good position regarding New Global Value Chains (NCGV) Competitive advantages will place the region in a central position in the NCGV, especially in sectors like water, bio-economy, critical minerals, grains and proteins.
Perceived as a valuable trading partner by the western businesses have been seeking to move from Asia . In particular the USA has been decoupling from China. Covid caused significant disruption to supply chains and since the outbreak of the pandemic businesses are looking to find suppliers closer to them. This has increased as transport costs rose sharply after the outbreak of war between Russia and Ukraine. In particular the USA has been “nearshoring” to Latin America- in particular Mexico due to proximity, shared time zones.
There are established exported-oriented economic models covering products and materials regarded as strategic in the nearshoring context – including the automotive industry, textiles and pharmaceuticals.
Digital transformation will expand the region’s reputation as a technology and data hub.
Demographic and social factors, such as a comparatively young working population; the relatively low cost of labour in some, though not all, markets (this includes an expanding talent pool of technology specialists); an ever-growing domestic consumer market.
There are, of course, challenges for the region to overcome to fully realize its potential and capitalize on nearshoring. These include improving infrastructure, regional integration to reduce trade tensions and increase competitiveness.
The major export beneficiaries are Mexico $35bn, Brazil$7.8bn, Argentina $3.9bn and Colombia with$2.6bn. Other significant beneficiaries will be Chile, Costa Rica, Dominican Republic, El Salvador, Honduras and Peru.
Mexico
The USA is looking to reduce its dependence on China for critical minerals such as Cobalt Copper, Lithium and nickel which are available in the Latin America region.
The major beneficiary will be Mexico- due to its Large border with the USA(3100km) and corresponding cross border infrastructure. Mexico has an educated , young and relatively cheap workforce. Mexico has 102 ports and a well developed rail network-27,000KM. Within Mexico the manufacturing sector has been a major beneficiary-including the automobile industry. There is increasing investment form foreign investors into the renewable energy sector. This will only grow as the USA and Canada look to decarbonise.
Mexico is part of the biggest Trade agreement in the world-the T-MEC. It has investment agreements with 31 countries which bought in Foreign investment of $24831m. The Fintech sector is growing fast.
Free Trade zones on the Northern and Southern borders have a VAT reduction from16% to 8% and Income tax from 30% to 20%.
Brazil
Brazil has one of the world's largest economies mainly due to its natural resources-Oil, timber, minerals. It has enormous agricultural industry-supplying 10% of the world's food. Currently agriculture accounts for 25% of GDP.
The economy is growing, has a stable financial market and a liberal investment regime. GDP in 2023 is expected to grow by 3%.
The company is developing sustainable energy solutions- Hydro from its vast water reserves and solar. It has a developing infrastructure across the nation-Brail is a huge country.
Society and the economy are modernising with a rollout of internet and digitalization. There are a number of Tech start ups which are changing the way business is done- a disruptive positive for the economy.
Brazil has significant mineral reserves essential to modern technology – rare earth elements.
Brazil has the world's third-largest reserves of rare earths, standing at about 21 million tonnes, behind only China and Vietnam in this critical resource. This market opportunity has only been slightly exploited. Current productions is around 80 tonnes- a fraction of its reserves.
Lack of investment in this sector is an issue, though signs of increasing interest from overseas investors.
Argentina.
The country has socio-political issues and high inflation. Having been one of the fastest growing economies in the word it has struggled over recent years.It is the 3rd largest economy in Latin America and has a talented and well educated workforce. It however suffers from economic turbulence with a poverty rate of 40%. The peso has depreciated by 33% v the US $ between 2022-23.
It is a resource rich country with potential for future development. As well as shale oil and gas it has abundant solar and wind resources.
Argentina features the third-largest proven lithium reserves, after Chile and Australia, and is expected to become a leading exporter over the next decade. More than 70 percent of Argentina’s proven lithium resources are yet to be exploited.
The country is digitally capable, with high internet penetration and smart phone use.
Colombia
Colombia has democratic government with a well developed capital market. Investment into technology and innovation have tripled in the last few years-Colombia has the 3rd largest tech ecosystem in Latin America. There are over 5300 starts ups in Colombia- a couple have become Unicorns - Rappi and Habi .Colombia is a trading bridge between North and South America with its proximity to three oceans - Pacific Atlantic and Caribbean. The country has surpluses in Oil, Coal, Gold and Coffee which are easily shipped to both the Western and Eastern shores of the USA. Indications are that US businesses are increasingly looking at Colombia for their nearshoring requirements.
The economy has a long record of 4% economic growth, with 2022 showing 8% after the bounce back from Covid.They have 17 free trade agreements with 65 countries.As the government looks to transition to Green energy means they are constantly promoting foreign direct investment into Colombia.The USA is the largest trading partner and this will grown as the USA seeks to relocate from China. The country has a growing population, a young population , growing e-commerce and digitalisation. Domestic wealth creation is leading to a increase in the Middle class. This will complement the historic export driven economy as domestic consumption grows.
Businesses face difficulties in getting Bank debt- which is expensive at 135 bank rate.This domestic capital gap creates opportunities for foreign investors to invest with local businesses.
Peru
Peru is considered one of the world’s leading emerging markets, with an important, recent history of economic stability, based on an uninterrupted average annual growth over the past 16 years of 5.1% of its Gross Domestic Product (GDP),as well as people who stand out for their productivity and entrepreneurship. The reasons that make Peru the perfect destination for foreign investment.
Over the past decade, Peru´s GPD has tripled as a result of the country´s economy growth, moving increasingly towards a middle and upper-middle income economy.
The Peruvian economy has had the lowest annual average inflation rate in Latin America, at 2.5%, below that of Chile (2.9%), Colombia (4.6%) and Brazil (6.0%)
For these reasons, Peru is an increasingly attractive destination for foreign investment. It is a member of the Pacific alliance (Chile, Colombia and Mexico).
Chile
Chile has competitive costs, high GDP per capita and has a dynamic business culture. The country has invested heavily in education- it has a number of leading universities in Latin America with a total of 1.2m students across all its universities.
InvestChile runs a Visa Tech-Talent Attraction Progreamme aimed at IT professionals.
Integration and technology have allowed Chile to become an entrance door to the Pacific Alliance, it has Free trade agreements with 65 countries and International agreements and treaties to avoid double taxation with +30 economies.
There is a solid regulatory framework and policies oriented to the energy sector with a commitment to decarbonisation & green investment.
Ideally positioned for Solar energy, Wind farms , Marine and Hydro energy. They aim to be carbon neutral by 2050 and want to be seen as key producer and exporter of green energy.
They have large reserves of Lithium- they are developing a manufacturing industry for making lithium batteries
The country is rapidly adopting advanced digital technologies, such as: Artificial Intelligence, Big Data and VR/AR.
Chile’s venture capital industry has increased dramatically over the last few years – it is perceived as one of the safest countries for businesses to invest in worldwide.
Chile has 22% of the world’s copper reserves, 11% of the molybdenum reserves, 5% of the silver reserves, 7% of gold and 48% of the world’s lithium reserves. They are committed to sustainable mining.
The agricultural industry is a major supplier to the Northern hemisphere due to its counter-season production.
Panama
Panama has a strategic location, a developing infrastructure and the workforce to boost the country’s economic growth.
Panama has a stable political system political system -rated by the World Bank as one of the most politically stable countries in Latin America. It is the second safest country in Central America, as well as the fifth in America.
Annual economic growth in Panama is of 6%, one of the highest in Latin America.
Foreign Direct Investment (FDI) rates are on the rise. In 2018, the level of FDI inflow in Panama went from $954.9 million to $1365.9 million in the same year.
West, Center and East Panama is full of skilled labor that are bilingual, as English is taught as a second language from young ages.
Labor costs are substantially lower than major economies in the region, such as Brazil, Mexico and the United States, being between 47% to 85% cheaper.
Panama connects East and West, North and South in the Americas by sea, land, and air.
The country has the most active ports in Latin America creating an interoceanic region that is 80 km wide and has almost 6% of all international trade.
Conclusion
As a result, the incentives for the three North American countries to jointly address the current challenges for smooth business operations in the region will not dissipate. This will make Mexico increasingly attractive for nearshoring, and the first movers will be best placed to capitalize on this persistent trend.
Issues such as security, social and operational factors currently hinder Mexico and other countries in Latin America from fully capitalizing from the nearshoring opportunities.
As societal changes take place and governments see economic stability the opportunities will increasingly be taken. The risks of fraud and violence could diminish as industry and commerce increase across the region. Drugs and the associated criminality will remain a problem for some time though.
Stock Market Indices-P/E Ratio.
Argentina Current P/E 25x v. 3 year average of 27.7
Brazil Current P/E 10x v. 3 year average of 9.5
Chile Current P/E 7.7x v. 3 year average of 9.3
Colombia P/E 7.3 x v. 3 year average of 9.3x
Mexico P/E 14.9 x v. 3 year average of 16.8
Peru P/E 11.5x v. 3 year average of 13.0
Panama-Not found.
Ways to Invest.
ETF's prove the most options.
In terms of Investment Trusts there is only one:
BlackRock Latin America.
Geographic split is Brazil 59.2%, Mexico 26.8%, Chile 5.8%, Argentina 3.4%, Colombia 3.3% and Panama 1.5%.
Other funds like UEM have some exposure.
Mexico
iShares MSCI Mexico ETF (PCQ:EWW)
iShares MSCI Mexico Capped UCITS ETF USD (Acc) (LON:CMXC)
Brazil
Amundi MSCI BRAZIL - UCITS ETF (C) (LON:BRZ)
VanEck Brazil Small-Cap ETF (PCQ:BRF) (Small Cap)
iShares MSCI Brazil ETF (PCQ:EWZ)
Argentina
Global X MSCI Argentina ETF (PCQ:ARGT)
Colombia.
Global X MSCI Colombia ETF (PCQ:GXG)
Peru
iShares MSCI Peru and Global Exposure ETF (PCQ:EPU)
Chile
iShares MSCI Chile ETF
Latin America ETF
Amundi MSCI Em Latin America UCITS ETF - EUR (C) (EPA:ALAT)
iShares S & P Latin America 40 Index Fund (PCQ:ILF)
Hi Charles
Excellent posting, research and links many thanks.
Some macro geopolitics I follow is from this (rather bombastic) YouTube channel. Which does offer some useful insights into many topics.
One vid he did (from 2 months ago) looked at the US/Mexico evolving trading relationships, their pros and cons and the influences of the China/US relationship on the region. You might like to take a look.
He did a later vid on the role of the Cartels on the US/Mexico relationships. Another you might like to view.
Regards
Howard
Thank you Howard
Can anyone that follows investment trusts closely rationalise the Pershing Square Holdings (LON:PSH) discount to NAV for me?
If I look on the AIC website and screen the NAV growth over 5 years, it comes out top of any mainstream trust, with NAV growth of 29% compound, smashing even 3i which has achieved 24% compound. Yet #PSH trades on a 31% discount whilst 3i is on a 27% premium. Makes little sense to me. Both FTSE100 so liquid. Anyone follow it closely?
M48.
Yes; I follow Pershing Square Holdings (LON:PSH) and included it in a post on this thread covering other Investment Trusts too on December 10th. And there’s a good reply from Donald Pond too. It’s a faff finding posts on this thread but you should be able to.
I agree that the PSH discount makes no sense bearing in mind the excellent performance. But it’s been at a big discount for ages and with over £1 billion spent on buybacks not narrowing it, I don’t know what will.
Thanks for the reply Ken, I’ll look through the previous comments more carefully!
A major problem appears to be the performance fee, which may be putting IFAs off recommending Pershing Square Holdings (LON:PSH) . I don't like performance fees, but as long as they reflect sustainable long term performance (rather than riding a bubble like the problem with the fees at Chrysalis Investments (LON:CHRY) ) then I can live with them. But IFAs and wealth managers end up having to announce the cost of their underlying holdings, and many (some? most?) would prefer to say they achieved 10% return with 1% underlying fees than get a 20% return with 2.5% fees. Also bear in mind that whatever they can reduce from the managers they can perhaps retain for themselves. As a result a lot of trusts with higher fees - most obviously private equity and things like PSH - are being sold down in favour of trackers despite their better performance.
M48 agree-Sold 3i (LON:III) recently bought and sold for a 5 % gain. The focus on Action concerned me- well over 50% of NAV. I bought only because on a discount to normal price/NAV.
Pershing Square Holdings (LON:PSH) is a solid hold for me. 3i (LON:III) is not.
I think that some form of IT blog would be very useful but I can see that there would be quality control issues for Stocko if it is formalised. Incorporating statistical info on ITs in the Stockreports would be good but there could be cost issues for Stocko and the information is largely available on the AIC website. My vote would be to see how the blog goes and then expand from there if it is well received.
Agree - the data is on AIC- which is the marketing organisation "The Association of Investment Companies (AIC) was founded in 1932 to represent investment trusts – the oldest form of collective investment. Today, the AIC represents a broad range of investment companies, investment trusts, VCTs and other closed-ended funds." The Blog page is the idea, not data- although it would be good to have NAV's tracked re share price.
Arix Bioscience (LON:ARIX) - I wrote to Arix Bioscience (I hold) a month ago complaining about the terms of their proposed takeover by RTW Biotech Opportunities (LON:RTW) . The takeover is at an effective 130p against a NAV of 180p odd, of which about 60p is cash which Arix is not planning to distribute but to give to RTW.
I did not expect a reply, but to my surprise, they have written back offering a meeting with their CEO Rob Lyne on Monday 18 December at 11am (to be confirmed). It will probably be by zoom or teams (again tbc).
Are there any members of the Stocko community who hold Arix Bioscience(LON:ARIX) who would like to join this meeting?
If yes, please contact me on richard at mutlow.net (the at symbol has another function and won’t work!)
Regards to all
Ricardow
nb Re-posted from SCVR at another subscriber’s suggestion.
Hi Ricardow- replied on the SCVR thread. Emailed you as well.
Ricardow
Re Arix Bioscience (LON:ARIX)
I'm reading through this thread just now, so this is somewhat after the event. Hope you don't mind my asking, but did your pre-Christmas meeting with the management team occur? If so, were there any takeaways that you could share?
I note that the share price of Arix Bioscience (LON:ARIX) has ticked up over the last couple of weeks. However, it still doesn't seem a very good deal for the existing shareholders in ARIX.
Regards
PK
This discussion thread is an excellent addition to the Stockopedia offering. Agree with request to become a permanent fixture. Also the stock reports on Investment Trusts need some attention but I guess Ed had plenty of other requests on his priority list.
Hi everyone,
I agree this should be a permanent fixture, and I'd be a regular reader / contribute what i can.
I like Stockopedia, but have mentioned on occasion before that the lack of segregated / investment trust focussed metrics (such as discounts etc) leaves me needing to subscribe elsewhere and visit AIC. I would like Stockopedia to update the stock ranks for Investment Trusts, similar to the way Sharepad works.
Good to see a lot of Investment Trusts covered here in a range of posts and posters joining in the rally including:-
Tritax EuroBox (LON:EBOX) 59p and up today despite going ex dividend. Was way oversold at 44p!
Supermarket Income REIT (LON:SUPR) 84p and up 5% today and up from 70p low,
Scottish Mortgage Investment Trust (LON:SMT) 776p and up 26p today and up from 642p year low.
Augmentum Fintech (LON:AUGM) 102p and usefully up from recent posts after encouraging Results. Year low just 78p.
Good chance this Santa Rally will continue? And get built on next year if expectations of interest rate cuts increase. If so all the above and many more remain good value.
One that didn’t join in today is Henderson Far East Income (LON:HFEL) 206p. 11% dividend.
Interesting to see that, Ken. I wonder if the failure of Henderson Far East Income (LON:HFEL) to participate in the recent rally is because that dividend yield is illusory - the dividend is being paid out of capital, not income or capital gains? Here are six years of results, 2018 to 2023:
There was one year (2019) when the dividend was covered by earnings and one (2022) by cashflow. Otherwise the trust is just distributing capital. That is why NAV per share has fallen steadily. I couldn't bring myself to buy an IT with this profile:
There are some genuinely high yields out there, for example Blackstone Loan Financing (LON:BGLF) which is being wound up and in the meantime offers over 14% yield plus the prospect of a capital gain so long as the assets are realised or redeemed at close to NAV. It's very illiquid and there's a wide spread, so once you are in it's for the long term. Most of the assets mature in 2026-2028 but with that yield it's no hardship to wait, at least in my case - if you might need the money sooner then it's a poor choice.
Whitbourne.
Thanks for the brilliant info on Henderson Far East Income (LON:HFEL) which shows so clearly why it has so underperformed all the other Trusts in the sector.
But (and fully understand why many will disagree with this) that shows why past performance has been dire. What it doesn’t reflect is the recent removal of the Fund Manager AND there’s no reason why the investment team can’t see further changes that will lead to vastly improved performance.
And it’s the same as with our portfolios….if we see the light about why performance has been dire we can learn from that and have a clear out and then buy much better quality investments. I’m hoping that’s what will happen with HFEL. That might include cutting the seemingly sacrosanct “increase the dividend every year” policy, but that could see a positive share price response as it increases the chances of better overall performance. As you pointed out it’s the dividend policy that has made performance so bad.
btw…I agree about Blackstone Loan Financing (LON:BGLF) and held until recently . The reason I sold was simply because after so many Investment Trusts falling to crazy low levels and ever wider discounts some of these were likely to give a bigger capital gain AND some of those too were paying very big dividends.
Japan- Increasing inflation in Japan means that individuals are facing a decline in real incomes for the first time in many decades. This might well mean they look at other assets to invest in.In addition the Nippon Individual Savings account has been revamped which should also encourage individuals into Stocks- even if indirectly through Mutual funds.
I hold Nippon Active Value Fund (LON:NAVF) and CC Japan Income and Growth Trust (LON:CCJI) .
See below from Nikko Asset management. Full article here
"Key Takeaways
With the Nippon Individual Savings Account (NISA) scheme celebrating its ten-year anniversary in 2024, recently announced changes to the scheme should help encourage further investment from Japanese investors. Japanese savings clearly present an enormous opportunity that has yet to be tapped, households hold approximately Japanese yen (JPY) 2 quadrillion in wealth (approx. EUR 12.9 trillion), with over half of that in savings accounts or cash. Only 17% of this is invested in equities, bonds or investment trusts (March 2023).1
Growing an equity culture by weaning Japan off its savings habit
The Japanese government has been keen to change Japan’s savings mindset for decades. The slogan “from savings to investments” was a campaign slogan in Japan as far back as 2001. Why is changing the savings culture into an equity culture so important? Chart 1 shows the different types of investments held by citizens in Japan, the US and the Euro area, respectively. As the chart demonstrates, 54.2% of Japanese households’ JPY 2.0 quadrillion yen (approx. EUR 12.9 trillion) in assets is kept as cash and deposits.
Nippon Active Value Fund (LON:NAVF) I also hold this - was very impressed with an interview with the manager a few months back on Money-Makers - the weekly podcast is free and available on all normal podcast providers.
It is a brilliant resource for IT's and the £8 per month charge for the additional info and articles is good value. Jonathan Davies knows his stuff and has a very good group of interviewees who have a lot of experience.
Gore Street Energy Storage Fund (LON:GSF) Following the news coming out of the USA re interest rates and the BoE holding UK rates I have added to our holding in Gore Street-we have an ISA for my wife aimed at income and capital growth. Infrastructure funds have been out of favour but if we see interest rates coming down the discount should narrow. Gore street is pretty geographically diversified and although GB revenues per MW/h are only around £7.50 , overseas they are much higher at £19.6 (Shore Capital note). 58% of revenue is from outside the UK. Current NAV is £115.6p. The Shore note is on Research Tree.
I would very much welcome this as I have learnt and benefited from the content of this thread over the last few weeks.
Thanks to Charles Mitchell for starting this Investment Trust thread, and also to all who have posted.
This seems to be where most IT comments are ending up and the thread is getting quite long. Eventually it will be too long.
Would it be possible to start a blog like the SCVR, for Investment Trusts, but perhaps opened once a week instead of every day, administered by volunteers?
The SCVR has become the first port of call for many active Stockopedia users, and most of the people who post comments, because it opens a new thread every day. That's only possible because the writers are paid. Making an IT blog weekly instead of daily might make it achievable by volunteers especially if we could persuade Stocko to allow perhaps 3 people to have shared posting rights like Paul, Graham, Roland, etc. have on the SCVR.
A regular blog could stay topical by focussing on news about individual ITs in the same way that the SCVR focusses on company news, while also giving users somewhere to discuss individual ITs in detail.
If this idea were to work there is something that would make it specially beneficial. One of the weakest features of Stocko is that there is no way of searching comments - or if there is I haven't found it. For example, there are useful comments here about Baillie Gifford Shin Nippon (LON:BGS) but if you open the page for that Trust and click on "Discussions" the most recent entry is from 2016. A weekly IT blog would be more effective if the administrators "tag" ITs which are mentioned in the comments. If an IT is tagged the reference to it becomes searchable. This would increase the amount of work for the admins but would greatly enhance the usefulness of such a blog.
Comments?
Fantastic idea and certainly gets my vote !
Hi Michael C. This (blog) has been raised with Stockopedia who say they will look into it. I will email them again and mention the tagging-does seem strange this does not happen. They seem more tied up with multi-baggers !
This sounds encouraging. The fact that this thread has stayed active longer than most says that there is fairly wide interest in ITs.
Yes Charles, I cant understand the multi-baggers either. Stockopedia has taken a strange direction since it first launched the concept of quality investing through Stockranks.
Yes - this would get my vote. I would also try to contribute where possible.
Tagging is a problem. The threads are more of a conversation than a library of information. I might also add that Stockopedias info on ITs is limited and could be improved.
It would get my vote too. Thanks to Charles Mitchell too for raising it with Stockopedia.
This is probably a minority view but I don’t agree with Stockopedia trying to improve their information on Investment Trusts, From memory they used not to include stock pages for Investment Trusts but were pressured to do so. The result is a load of figures that are irrelevant and for anyone not clued up on Investment Trusts, downright misleading, And must know information like NAV and discounts are missing.
There’is already an excellent site for must know facts and figures on Investment Trusts and that’s THE trade body for Investment Trusts, AIC.
https://www.theaic.co.uk/
And Trustnet is very good too, so what is the point of Stockopedia trying to match the quality of those? . They won’t be able to. even if committing a lot of time and expense trying to. Both Trustnet and AIC are free sites.
Let Stockopedia focus on and further improve what they do well and not try and almost certainly fail to improve the one thing imo they do badly.
I do my research on IT on the AIC website, but I like being able to add them to a Stocko folio so that I can keep track of the value of all my investments (and would like to be able to add my Vanguard product for the same reason).
"I do my research on IT on the AIC website, but I like being able to add them to a Stocko folio so that I can keep track of the value of all my investments (and would like to be able to add my Vanguard product for the same reason)."
I also use the AIC website for information on ITs. My investments are mainly in ITs and ETFs nowadays, so I would want to continue being able to add ITs and ETFs to a Stockopedia folio in order to keep track of the value of all my investments, even if there is no more information provided by Stockopedia on ITs and ETFs than at present. If I'm no longer able to do that, I would probably stop subscribing to Stockopedia.
Ken, Interesting view. I think what is suggested is a blog space on the Stockopedia site, tagging so appears in discussions. I have also suggested they add the NAV to the stock chart- I assume Morningstar would supply that data, but no idea the fee. I would not suggest they go any further. When I worked at Woodmac in the early 1980's we used to input(using punch cards into a computer the size of a room) every Trusts holdings/geographical split to calculate NAV. Now they are announced on the whole daily no need for that !
I have another reply. Ed and Megan may consider it. The Tagging issue has been raised with tech.
I think we will see a big rally in mid and small caps in 2024 and that should mean a double whammy when discounts narrow in investment trusts. I hold Downing Strategic Micro-Cap Investment Trust (LON:DSM) Oryx International Growth Fund (LON:OIG), Jpmorgan UK Smaller Companies Investment Trust (LON:JMI) and JPMorgan Mid Cap Investment Trust (LON:JMF) (which are merging) and Blackrock Throgmorton Trust (LON:THRG) - Which are your favourite small/mid cap investment trusts and why? I like the performance of Strategic Equity Capital (LON:SEC) and Rockwood Strategic (LON:RKW), so perhaps I should think about buying these?
Bsharman I hold Rockwood Strategic (LON:RKW) and do monitor Strategic Equity Capital (LON:SEC) . On the whole I use Trusts for overseas or Private Equity exposure. Hopefully discounts will narrow, but on the whole not convinced what some of the generalist trusts offer. The AIC site lets you get some good performance stats.
My main concern is that there is a structural imbalance in the UK. For decades now we have seen the number of listed companies falling sharply, and yet there has been no corresponding fall in the number of ITs, particularly those focussed on smaller companies. As a result, there is a huge amount if crowding going on as more and more trusts and forced to chase fewer and fewer stocks. IIRC there has been over a 50% decline in the number of listed UK stocks over the last 20 years. I’m not really sure how that can end. In theory, if the tide turns and people start bidding up UK smaller company funds there could be a nice double whammy. But the basic proposition must be that a weak and shrinking stock market is unlikely to be the best pond to fish in.
IT s have flexibility if the boards decide to change the mandate and introduce an international aspect. But agreed a period of poor performance before this happens would be annoying.
Having said that the Gov is pushing for 5% of pension assets to be invested in UK small co sector so a number of structural factors might just reverse in a positive way. Might !
India Capital Growth Fund (LON:IGC) have announced a redemption at 3% of NAV. Date 20/12/2023. Current discount is around 7% of NAV. Worth watching for an arbitrage opportunity nearer the redemption date.
Utilico Emerging Markets Trust (LON:UEM) Informative presentation on InvestormeetCompany this morning. UEM invest in operational infrastructure Assets in emerging Markets(EM). The companies they invest in are trading companies with growing income with many paying Dividends-therefore the yield on UEM is 4% or so , covered by earnings-80% of the portfolio companies pay dividends. The portfolio split is Energy transition 38.7%, Social Infra 20%, Digital. Infra 21% and Global Trade 20%. Energy transition is a key area for many EM countries- in a country like Brazil for example much of the wind power generated is in the North, Hydro in the Centre and needs moving to the Urban areas. Digital Infra is perceived as a strong growth area driven by Social and business changes. Global trade drives transport and logistic projects as Global trade shifts from say China to Vietnam and Brazil/. Social Infra is driven by the desire for EM countries to rollout Water and Sewage collection across the whole country.
The managers seek out quality companies across the EM- with no bias to any country. They do not follow the MSCI index. They expect the EM to Developed market gap to widen as growth continues in EM and slows in the DM's. They expect the US$ to weaken.
I hold as it provides an alternative way to invest in EM's, has a yield and is relatively less volatile than other funds in the EM sector. At a 16 % discount with a compound total NAV return of 9%
Meeting is here https://www.investormeetcompan...
Utilico Emerging Markets Trust (LON:UEM) latest fact sheet just published https://www.uemtrust.co.uk/app...
Charles, I really liked your post on Japan trusts, thanks for posting. I am still digesting the contents and hope to revert in time.
fwiw, I picked up some SREI for yield and HGT for (hopefully) long-term value a couple of weeks back.
I like EBOX and the recent update as the large NAV falls seem to have stopped. Also like CLDN but the discount is unlikely to significantly close as it is run as a family office in the long term by the Cayzer family, they are not selling their holding any time soon.
I notice that one of the directors at BRWM bought a chunk of shares recently. The SP is down 19% over the last year but should be a good long term hold for the dividend. Yield is currently 7% and 90% covered by revenues reserves.
The recent Money Makers podcast interview with Emma Bird is well worth listening to. For me, the key point regarding REITs is made on about 38 minutes: the average spread of UK property companies over a 10 year UK gilt yield is 300 basis points (3%). We are now back at that level as gilt yields have continued to fall. If that trend continues then maybe we will see property company NAVs increase ?
https://tinyurl.com/39mk7625
I liked the following article on AGT. Explains the trust well, both it's holdings and it's process of realising value. I'm tempted to buy a few of these.
https://tinyurl.com/4fvr5fjs
The IC interview with Stuart Widdowson of OIT is also well worth listening to. In short:
# Very concentrated portfolio. HL says the top 5 makes up 57% of the portfolio.
# SW says they are unlikely to go above 20 stocks in total.
# Focus is on special situations and GARP.
# Trust holds UK companies but the focus in on exporters with some of the holdings making 75% of their revenues from exports.
# Unusually, the trust holds no cash at the moment. I'm sure I heard the normal level of cash is around 8%.
# I liked the description of avoiding investing in bad investments ie: are any of their previous mistakes present in a potential new buy ?
# ELM is the second largest holding which SW says the trust is holding "way below fair value".
https://tinyurl.com/5469vucx
Listened to the following podcast on a walk this morning, really good detail on Vietnam (listen from 7 minutes) and Indonesia (14 minutes). I notice VOF had a problem with a continuation vote recently so maybe an opportunity if the SP is volatile ?
https://tinyurl.com/yd8hwz3n
This weekend's Money Makers podcast featured an interview with Baroness Altmann who is putting forward a private members bill to resolve the issue of the incorrect reporting of fees on investment trusts that are domiciled in the UK. Quite staggering really and the UK is shooting itself in the foot if this isn't corrected (listen from 35 minutes).
https://tinyurl.com/4nxcke9j
And finally the latest edition of the AIC online magazine, Compass. Trust manager predictions for next year are a waste of time but the Ian Cowie column is good. Interest rates coming down already in Emerging Markets maybe makes some of those trusts potentially interesting. Charles was posting on that recently. For me, anything with too much China is uninvestable.
https://tinyurl.com/mvtkb2mu
Hope some of this is of interest. My focus at the moment is on putting some cash to work in a good UK small cap trust (maybe ASL ?) and also Japan (maybe NAVF ?). Thoughts welcome as always.
SSB
Ken,
Not sure if you know this but there is a box above the last comment marked 'sort by' which includes: 'most popular', 'oldest', 'latest'. Mine is set to Latest and so the last post is at the top.
Hope I haven't just stated the obvious.
Also, thanks for continuing to post on value stocks and IT's at large discounts to NAV. Hopefully next year we'll start to see some of the discount Net Asset Values really start to close up.
Graham.
Thanks Graham. I hadn’t realised there was that facility and I had it on “oldest!” As for discounts narrowing and IT shares going up next year, hasn’t that already started? E.g my REITS like Tritax EuroBox (LON:EBOX) and Supermarket Income REIT (LON:SUPR) have gone up as much as 30% from the lows, but there are still Investment Trust bargains galore to choose from.
I see ShoeShineBoy has highlighted some more to check out in yet another of his excellent posts. Haven’t had time to look at all his links yet but have seen the text coverage of that Baillie Gifford podcast on Vietnam.
I’ve invested in Vietnam via VinaCapital Vietnam Opportunity Fund (LON:VOF) and VietNam Holding (LON:VNH) for most of this Century and they’ve proved fabulous investments but they are still cheap while the huge Vietnam potential remains so little understood. Also it’s still classed as a frontier market and will get far more recognition when at last it is upgraded to full Emerging Markets status.
Key points on Vietnam mostly from that podcast include:-
1. Lower labour costs than China. About half theirs,
2. From geo political angle (and unlike China) Vietnam is everyone’s friend. E.g Countries like US (including Apple) Korea, China and many others now invest in Vietnam. Some are switching from China to Vietnam too.
3. Vietnam exports are up 9 fold over 14 years.
4. AND on standardised education testing they comfortably outscore the UK!
5. Low and falling inflation and falling interest rates
6. Vietnam economy is growing fast too.
VietNam Holding (LON:VNH) presentation Dec 13th 2023 https://www.research-tree.com/...
Pershing Square Holdings (LON:PSH) have spent $1.2 billion buying back their shares since starting their buyback programme in May 2017. The intention behind Investment Trusts buying back their shares is to narrow the discount and enhance NAV. So far as BnB has posted the discount has remained stuck around 30% despite those huge buybacks. It does beg the question about how effective these buybacks are and whether that $1billion plus would have been better spent on the portfolio.
Separately I find it very irritating (unless I am doing something wrong) that the most recent posts appear at the bottom instead of the top so to find them can mean scrolling through a large number of posts. It discourages people from using and posting.
I included Pershing Square Holdings (LON:PSH) in a post I did on the small cap thread about 5 good value Investment Trusts. I’ve pasted it below just in case anyone on this thread doesn’t use/read the daily ( very good and very popular) small cap report feature here:-
“Just in case of interest to anyone, the following five Investment Trusts all look well worth checking out.
Henderson Far East Income (LON:HFEL) 203p.
Awful performance for a good while now, but at last the share price has stopped falling. Recent update was frank about the failings and the Manager has gone. Dividend yield is 11.5% and it’s been increased for multiple years and they are determined to keep to that annual (albeit tiny now) increase policy. Good one to lock away.
International Biotechnology Trust (LON:IBT) 596p.
Biotech sector has boom and bust spells. The bust spell has now lasted around 3 years and signs of the worst bring over with share well up from 546p low. IBT with 5.3% dividend yield and at 10% discount is a good way to play the sector.
BlackRock World Mining Trust (LON:BRWM) 540p.
I posted on Sunday why 2024 could be a very good year for Mining sector on a separate thread. BRWM with the bulk of their portfolio in major Miners like Glencore (LON:GLEN) (9.7% of their portfolio) BHP(LON:BHP) (8.5%) Rio Tinto (LON:RIO) 8% etc is a good way to play it. Discount is modest at 4.5% but useful 7% dividend yield even in weak year like this one and much higher in good years like 2021 and 2022. Share is near the year low of 530p.
Pershing Square Holdings (LON:PSH) £31.50.
This Trust has a superb record and even this very bad year for the Investment Trust sector where discounts are at near record levels, PSH is up 12%. Over 5 years it’s up 194%. Yet it’s trading at an extraordinary 34% discount to NAV. If PSH was an open ended fund investors would have to pay that full £59.65 NAV. So it’s a Stunning bargain price at £31.50 though off the even more stunning year low of just £27.
Caledonia Investments (LON:CLDN) £35.50
Another excellent performer at a bonkers too wide discount of 32%. Share price is still down 6% this year but up 43% 3 years and 143% 5 years.
Best site for checking out all Investment Trusts is in my opinion the official trade body site for Investment Trusts AIC. This link gets traders to Pershing Square Holdings (LON:PSH) .
https://www.theaic.co.uk/aic/f...
Just click on the red PSH heading to bring up a wealth of info and headings.
Also very good is Trustnet:-
https://www.trustnet.com/fund/...
82
The question of the effectiveness of the buyback is something Pershing Square Holdings (LON:PSH) covered in their last AR. They don't regard it as being about closing the discount but about adding to NAV. I suspect that when they feel full bore bullish on the prospect for their underlying PF they might rein it in a little:
"While a corporation’s persistent discount to its intrinsic value impairs its ability to raise low-cost equity capital and is a negative for shareholders who seek to sell in the short term, it can be a significant opportunity for long-term owners of PSH. We have no interest in raising equity capital, but relish the opportunity to buy back shares at 30+% discounts to NAV. We took advantage of the discount in 2022 by purchasing 8.3 million shares representing 4.1% of shares outstanding at an average price of $31.94 and a discount to NAV of 33%.
Since we began our share repurchase program on May 1, 2017, we have acquired 59.8 million shares or 25% of our shares outstanding at an average price of $18.80 and discount of 28%, which has added 1.2% per annum to our annual NAV returns since the inception of the program.
We intend to continue to opportunistically repurchase shares if it remains a good use of our capital relative to other opportunities. Our requirements for buying back shares include:
We continue to believe, and our experience to date has demonstrated, that even an aggressive share repurchase program will not cause the discount to narrow. That said, if the above criteria are met, share buybacks can be a useful and value- creating opportunistic tool for PSH."
I think any discussion of investment trusts should at some point consider the best performing general trust, which still sits on a huge discount and is currently at all time highs. Pershing Square Holdings (LON:PSH) doesn’t have half the following it should have. It used to be regarded as a hedge fund but the manager Bill Ackmann no longer takes short positions and performance has much improved as a result. It has a super concentrated portfolio of around 10 positions, led by the likes of Universal Music NV (AMS:UMG) Alphabet (NSQ:GOOG) and Chipotle Mexican Grill (NYQ:CMG) and occasionally places a hedge, usually to protect downside risk, that has asymmetrical upside. This has, over time, added a lot of value.
In addition, it has a lot of cheap long term debt and has aggressively bought back its stock while it sits at a 30%+ discount to NAV. Since 2018 they have bought back over 25% of their shares in issue and continue to buy back most days. The fees are expensive but a large part of that is performance based. It’s large, liquid, has a great track record and is at a big discount. I think it should be close to the top of any list.
Also, great shareholder communication with a decent annual report but very comprehensive quarterly investor calls.
Pershing Square Holdings (LON:PSH)
There’s no denying the long term performance, which appears to have more to do with the skilled hedging than the stock choice. But the discount is much the same as it’s always been. I don’t see that changing much. It is simply at the lower end of a tight range of 70%-80% of NAV that has held through thick and thin since 2017.
Ive just put the following comment on a post entitled "Why the US is the place to be":
If one is keen on US technology shares, there are two global investment trusts with excellent past performance records, both long-term and short-term, which invest mainly in US technology shares and are on historically high discounts to Net Asset Value of about 13% at present and may be worth considering. They are Polar Capital Technology (PCT) and Allianz Technology Trust (ATT). Their performance records can be seen on the AIC website:
https://www.theaic.co.uk/compa...
https://www.theaic.co.uk/compa...
Henderson Far East Income (LON:HFEL) have just published their annual report. Honest admission of poor performance. Given the current yield and changes in the portfolio construction I am considering buying. https://cdn.janushenderson.com...
I have now bought for my Wife's ISA- she likes income !
Charles, I averaged down Henderson Far East Income (LON:HFEL) yesterday. They clearly realise that performance has been inexcusably dire and starting with Manager changes plus recent explanations about how they are intending to improve it justifies buying now and holding or adding if already in.
They are clearly determined to maintain their long record of annual dividend increases and even if they only achieve that and with no increase in the share price that’s a yield of 11%, which is a good annual return on its own. Add in good chance of improved performance and that NAV and share price upside, and the gains become rewarding on top. Also HFEL has gone from trading at an undeserved premium to a near 5% discount too.
Separately it’s so good to see the Commercial Property REITS highlighted here and on the small cap report bb (where they get far more recognition) really taking off and with Tritax EuroBox (LON:EBOX) leading the way with a 7.4% weekly gain. 5 REITS feature in the Citywire biggest weekly winners list.
Here’s a link for that and much more besides, It’s well worth registering (it’s free) for their excellent Investment Trust updates:-
https://citywire.com/investmen...
Thanks to the great insight provided by Charles & Ken over the last month I have invested in Oakley Capital Investments (LON:OCI) , Harbourvest Global Private Equity (LON:HVPE) and Tritax EuroBox (LON:EBOX) with the latter showing good gains.
Good choices. I am not sure how I overlooked Harbourvest Global Private Equity (LON:HVPD) - bought Oakley Capital Investments (LON:OCI) instead.
Emerging markets are predicted to have GDP in excess of the developed markets by2050. Many companies in this sector have good cash flow, pay dividends and look to have above average earning potential. I have been looking at the funds that invest in this area and so far have bought two Utilico Emerging Markets Trust (LON:UEM) and BlackRock Frontiers Investment Trust (LON:BRFI) . Research is key to investing in these markets and both of the teams in the funds I have purchased visit the areas frequently- even if they currently do not have an investment holding. Both funds differ considerably from the MSCI Emerging markets Index.
Utilico Emerging Markets Trust (LON:UEM) invests in infrastructure in Emerging markets , most of the holdings are profitable and as result the fund yields 3.86%. They focus on Infrastructure, Utilities and Telecoms. The latest geographical mix was:
Brazil 23.5%
China incl. HK 12.5%
Other Europe 11.5%
India 11.1%
Other Latin America 9.8%
Vietnam 7.7%
Other Asia 6.7%
Middle East/Africa 6.6%
UK 5.9%
The Philippines 4.7%.
I do hold VietNam Holding (LON:VNH) and India Capital Growth Fund (LON:IGC) so an element of overlap, but the sectors weightings are different as far as I can work out. IGC has a weighting towards financials and consumer stocks. which UEM has no exposure to. VNH also has 30% in Financials and 11% in Financial services, 11% in Industrial Goods, 9% in Retail. They do hold 15% of the Portfolio in Telecoms.
UEM sectors
Electricity 21.5%
Ports & Logistics 18.1%
Renewables 11.9%
Data Services & Digital
Infrastructure
11.3%
Other 7.7%
Gas 7.5%
Water & Waste 6.9%
Telecommunications 6.1%
Airports 4.7%
Road & Rail 4.3%.
BlackRock Frontiers Investment Trust (LON:BRFI) is the only Trust focusing on the Frontier markets. They also invest mainly ion companies that pay dividends so the Fund yields around 3.8%. Currently trading at a discount-which is historically unusual. Shareholders can tender at a small discount to NAV in 2025.
The Geographic split was.
Saudi Arabia 15.6
Indonesia 13.6
United Arab Emirates 8.7
Thailand 8.4
Philippines 8.0
Kazakhstan 7.0
Hungary 5.8
Vietnam 5.5
Poland 5.2
Chile 5.2
Malaysia 5.1
Qatar 4.3
Colombia 4.0
Greece 3.0
Turkey 2.6
Multi-International 2.3
Czech Republic 2.1
Argentina 2.0
Georgia 1.9
Peru 1.7
Romania 1.3
Kuwait 1.1
Oman 1.1
Cambodia 1.0
Ukraine 0.9
Kenya 0.5
Bangladesh 0.5
Egypt 0.4
Total 118.8
Short positions -3.1
The best performing Emerging market fund is the Gulf Investment fund, but that is to specialist for me.
Sector wise they have no particular theme- this was the latest.
Financials 39.9
Energy 14.7
Industrials 14.7
Materials 12.2
Consumer Staples 10.3
Consumer Discretionary 7.0
Information Technology 6.8
Communication Services 6.7
Real Estate 6.0
Health Care 0.5
Total 118.8
Short positions -3.1
I am also looking at one other fund Ashoka WhiteOak Emerging Markets Trust (LON:AWEM) but it was only recently launched. The managers also run Ashoka India Equity Investment Trust (LON:AIE) which has performed well.
I did hold Mobius Investment Trust (LON:MMIT) but sold it a while ago-it had a very small yield.
Charles Mitchell:
This is all true but bear in mind what happened to Investment Trusts, ETFs and ADRs with Russian exposure. Whereas if you held Russian equities directly on MOEX via IBKR for example then the UK/US/EU governments didn't steal your money (well not yet anyway).
I understand your point. JPMorgan Emerging Europe Middle East & Africa Securities (LON:JEMA) certainly had that issue. One has to hope the Managers are more aware than JPMorgan were. They were though largely invested in Russian securities. I sold Georgia Capital (LON:CGEO) at a small profit for this reason.
Charles Mitchell: I was able to open brokerage accounts in a few different (non G7) jurisdictions - a non trivial task but worth it I feel.
Alphaflight Not sure a route I would be looking to go.
Citywire article today on BlackRock Frontiers Investment Trust (LON:BRFI) https://citywire.com/investmen...
Indonesia represents huge investment opportunity but the limited collective investments available are heavily weighted towards banking and telecoms. The real growth is in the significant mining and energy sectors and the industries that support these. The country has significant deposits of most of the commodities used in economies of today and those of the future.
Its biggest trading partner by some margin is China and the slowdown in the Chinese economy is likely to limit potential growth. Like many other countries Indonesia has accepted significant infrastructure investment from China and the reliance upon China is being questioned.
Presidential elections take place next year with three main candidates. One is pro US, one pro China and the other campaigning for a more self reliant economy. Elon Musk has been courted for sometime with a plan to bring Tesla closer to the rare metals it requires and the need to invest in AI is seen as a priority. The result of the election could determine the growth trajectory of the Indonesian economy.
What is not in question is the growth in the affluence of the aspirational middle classes. Home ownership, cars, luxury goods and travel are the goals of more and more Indonesians. With a median age of 29.9 years and a motivated workforce the country is not weighed down by a welfare system, it does not have one, is not suffering from a lack of productivity inherent in many Western economies post Covid and is undoubtedly at the centre of the rise of Asian economic growth. Corruption at all levels of society and the threat of terrorism are the real barriers to many Western countries looking to increase trade although the need to diversify away from China may well see countries like the UK turn towards Indonesia.
Interesting SC120. I have been looking at Indonesia for a few weeks- I read Nickel sales are forecasted to increase substantially. iShares MSCI Indonesia ETF (LON:0JKH) is the purest way to follow Indonesia though I am using BlackRock Frontiers Investment Trust (LON:BRFI) for a exposure
Charles here is a link that you may find useful :https://uk.investing.com/indic...
I hold ADRO.JK , ANTM.JK, UNTR.JK
Thank you- but I will not be investing directly- I have not enough knowledge of the region- find the UK hard enough. I am considering the iShares tracker.
Happy with the results from Tritax EuroBox (LON:EBOX) today. Recent asset sales have nudged the LTV down though still around 44% apparently. They say slightly on the high side. Good news is recent sales have been above latest book value and new builds have been contracted so reduced exposure and more income coming.
Overall NAV seems to have stabilised nicely since March stats. Drop is c3% for the last 6 months though looks more worrying when they present year on year showing 22% drop!
Divi maintained so hopefully onwards and upwards over the next 12 months.
Digital 9 Infrastructure (LON:DGI9) now on a huge discount of almost 70%. Was trading at a small premium to NAV mid-2022! But ran into cashflow problems and sold their best asset. But the following explains where that asset is and when the trust can expect the cash to hit their bank a/c! Listen from 24 mins for approx 5 mins. https://tinyurl.com/n52je99j
The HL web site makes the premium and now discount to NAV very clear on the chart. https://tinyurl.com/2n4vfdf6
Anyone tempted by this ? Gotta be so careful when buying some of these trusts. With Tritax Big Box REIT (LON:BBOX) you can see the warehouses in the annual report but with some of the other infrastructure trusts, need to make sure they are operational and in relatively good locations. The discounts and yields are so tempting. Thomas Lloyd Energy was another but now taken over I think, name doesn't appear on the AIC site or here on Stockopedia.
SSB
Japan is looking increasingly attractive as ongoing corporate governance is beginning to take affect. Traditionally many companies were managed for the benefit of the Directors rather than Shareholders. Poison pills used to block takeovers are under increasing scrutiny and could lead to an increase therefore of corporate activity. There are a number of activist funds operating in the Japanese market and they are forcing changes through on reluctant companies. Corporate share buybacks are expected to continue to grow.
The move to diversify supply chains from China to countries like Vietnam , should also see Japan benefit in the higher end technology sector.
As a reader pointed out ETF's have provided the best returns over the last years. Here is a link to EFT's following the Japanese Stockmarket Japan ETF. I am no expert in these funds.
The Investment trusts investing in Japan are as follows:
Japanese Smaller Companies.
AVI Japan Opportunity Trust (LON:AJOT)
Baillie Gifford Shin Nippon (LON:BGS)
Jpmorgan Japan Small Cap Growth & Income (LON:JPSS)
Nippon Active Value Fund (LON:NAVF)
I hold Nippon Active.
Nippon Active Value
Total NAV : £298m
Yield: 2.15%
Discount: 13.45%
3 Year Performance : 15.2% Annualised.(£ year performance)
Fees. 1.00%
Performance Fees: Nil.
Gearing: 0%
Historic range: 0/0.
The following is from the Companies site.
"NAVF targets attractive levels of capital growth for shareholders from the active management of a focused portfolio of quoted small cap Japanese equity investments.
Nippon Active Value Fund plc (NAVF) is an activist investor targeting attractive levels of capital growth from investing in small and midcap Japanese companies.
Corporate governance reform and key regulatory changes in Japan have created an environment for increased shareholder activism which coupled with very low valuations offer investors the potential for outsized returns now and in the future.
NAVF is advised by Rising Sun Management which is led by James Rosenwald and Gifford Combs who have delivered uncorrelated activist investment returns in Japan over decades. They are backed by a proven team which includes RSM Chairman Paul ffolkes Davis as well as analysts and corporate finance specialists based in Tokyo who have extensive experience in negotiating with and investing in Japanese companies.
The Company will primarily invest in a highly selective portfolio of shares issued by quoted companies that have the majority of their operations in, or revenue derived from Japan or a majority of whose consolidated net assets are held in Japan, or that are included in the TOPIX (“Japanese Shares”), and which the Investment Adviser deems attractive and undervalued and typically where (i) cash and other liquid investments, real estate and/or tradeable securities constitutes a significant proportion of the investee company’s market capitalisation; and (ii) the relevant company has no controlling or majority shareholders."
They are an activist investor and take an role in encouraging friendly or hostile take over bids. They also encourage restructuring-changing board members-so that companies focus oin thier shareholders rather than stakeholders and change the culture of conservatism and poison pill protectionism.
Funds investing in the wider market are:
Baillie Gifford Japan Trust (LON:BGFD)
CC Japan Income and Growth Trust (LON:CCJI)
Fidelity Japan Trust (LON:FJV)
JPMorgan Japanese Investment Trust (LON:JFJ)
Schroder Japan Trust (LON:SJG)
I hold CC Japan.
Total NAV : £291m
Yield:3.06%
Discount: 8.89%
5 Year Performance : 6.9% Annualised. (5 Year not 10)
Fees. 1.17%
Performance Fees: Nil.
Gearing: 20%
Historic range: 16/24
The investment team however is not based in Japan. They have lived in Japan and regularly visit. I rather overlooked this fact when I bought the shares. They focus on Companies that can deliver consistent earnings and dividend growth.
I was attracted by the yield and the dividend growth of 8.5% on an annual compound basis.
I will give this fund a year or two to see how it performs.
I have been looking at possible funds to invest in to get exposure to Frontier markets. I already am exposed to Vietnam through VietNam Holding (LON:VNH) which frontier funds hold. BlackRock Frontiers Investment Trust (LON:BRFI) looks interesting and whilst research it they seem very bullish on the future for Indonesia due to its nickel reserves which exported value is expected to increase from $12bn in 2020 to $45bn in 2025. There is a way to get a pure exposure to Indonesia through Lyxor MSCI Indonesia UCITS ETF - Acc (EPA:INDO) . I have used EFT's for specialist exposures-I hold WisdomTree Artificial Intell UCITS ETF USD Acc (LON:INTL) for AI exposure and iShares Elctrc Vhcls and Drvng Tech UCITS ETF USDA (LON:ECAR) for exposure to Electric vehicles. Not sure the latter was my smartest investment and I am considering selling it at a loss. I have never been convinced electric vehicles are the best way forward and only bought the EFT as it seemed they way the world was going. I am a fan of hydrogen as the future-I hold Hydrogenone Capital Growth (LON:HGEN) and a more direct exposure to Hydrogen cars thought a Welsh company called Riversimple who have developed a hydrogen car that is been driven around Europe. Invested in it through Seedrs.
Other frontier funds exist so need to look at these as well. But for pure exposure to Indonesia ( or most other frontier Countries) and EFT looks the best way. I would be interested in any comments.
School night so I will be quick.
Decent interims announced by SREI today. NAV down marginally, LTV of 37%, 90% of debt fixed at 3.5% and 99% of rent collected. Plus the AIC web site says 7 years of revenue reserves. Goes ex-div on 30th for the final quarterly payment of the year. I'm guessing a little the price went down because of Andrew Bailey's comments on interest rates ie: they may not come down as quickly as some are suggesting. Other REITs suffered today eg: BBOX down 3.7%, EBOX down 4.5%. So maybe SREI down 3.8% is pretty much in line with the market. Still on a 31% discount to NAV. Any views welcome.
https://tinyurl.com/3pb3djxj
HGT and AGT (good holding of OCI) annoying up on a marginally down day. At some point, I am just going to take the plunge with a half trade for each. Lots to like about both of these trusts. HGT invests directly into a relatively small number of private businesses involved in back office tech eg - accounting, compliance, HR. AGT invests in mainly UK family owned businesses, small Japanese companies which have little analyst coverage and also other unvalued trusts, mainly private equity hence the 10% holding in OCI.
Good interview with the existing manager and soon-to-become manager of EDIN.
https://tinyurl.com/2u7x99fn
# Geo-politics matters now!
# Asset managers look cheap.
# Free cash flow stats in general for the London market are good.
# Valuation will help the London market re-rate in time.
# EDIN contains 75% FTSE100, 15% FTSE250 8% outside UK. SSB: I bought late 2020 if I remember correctly.
# James DeUpaugh is retiring, New manager is Imran Sattar who has worked with James for some time.# EDIN portfolio includes WTB (looking to expand rooms by 50% with stronger ROCE as a result) and recently added MKS (listen from 20 minutes: store development + online offering is helping ROCE + styles are improving enough for Sienna Miller to advertise them).
# Good question on when does JdU lose faith in companies ? Answer is data driven eg: EDIN sold RKT and bought HLN because the former had negative volumes & the latter has positive drivers with plus the valuations were the wrong way round and have since corrected.
# JdU also likes ADM because it is in the early stages of recovery. Much better option than DLG.
# Focus in 2024 is on building a defensive portfolio capable of growing revenues.
# Another good question on the discount that refuses to go away ? JdU answer: “discounts are the joy of investment trusts”. The only weak answer IMO.
Latest John Lee interview with the IC lined up for the walk to the station tomorrow :-)
SSB
This week's Investors Chronicle has a supplement with several articles on investment trusts.
There are some recent very interesting articles on Citywire Investment Trust Insider, which cover many of the IT sectors mentioned on this thread. The articles also comment on the recent involvement of SABA building positions in liquid equity Trusts
I mainly favour liquid equity ITs and am happy to invest when these look cheap on a historic basis. The involvement of SABA is therefore intriguing.
Some of the other sector ITs look very cheap, but come with uncertainty.
Articles on the REITS suggest some trusts which are having to sell assets in the current market to meet dividend payments (Warehouse REIT). I am not sure that this is a good idea long term and wonder if shareholders would actually be better of passing on the dividend to protect the portfolio?
The renewable ITs look equally bombed out.
There are probably some bargains here but its difficult to establish the true asset position of many of these trusts and whether the generous looking dividends can be maintained without portfolio sales.
Still this is a good thread and hopefully interest in ITs will sustain discussion. It would help if Stockopedia had better data for ITs - but I doubt that this will happen in the foreseeable future.
Here’s the link for the Citywire articles and very good weekly summary, including the biggest winning Investment Trusts over the last week and the biggest losers. They also update on cheap and expensive Trusts every week. Their articles are free and it’s well worth registering to get them.
https://citywire.com/investmen...
Personally I am looking at adding either Nippon Active Value Fund (LON:NAVF) or AVI Japan Opportunity Trust (LON:AJOT). The Japan seems to be full of companies with conservative balance sheets this eposide https://money-makers.co/2023/0... gives a good description on how active fund managers are introducing our supposed more efficient use of capital - with resultant increases in valuations and/or return of cash. Its a different style of investing compared to elsewhere.
Agree littledavesab. I just increased my holding inNippon Active Value Fund (LON:NAVF)
The point that you can get significant gains without single company risk is not lost on me. The likes of F&C, Alliance Trust, Witan invest globally and while there is some exposure to the US/Tech Markets these are somewhat diversified vehicles and therefore much safer than any single company share. On a 10 year view of course few funds have managed to beat the S&P 500 - there is a good article on Trustnet (not sure if am allowed to post the link).
The funds taking an active management approach to Japan are interesting. India has always interested me as a market and Vietnam is of course now interesting as well. The VC plays look attractive.
I guess the thing is to try not to be too clever compared to the market…. Likes of Hignosis SONG and the infrastructure plays looked sensible a few years ago but less so now! So there are still risks of significant downside moves!
I cannot help feeling however it is simpler, less risky and less time consuming to build a portfolio of decent Its compared to a individual share portfolio – and certainly compared to a AIM portfolio. Still as I have said before I feel a lot of markets are linked to global cash moves and are not operating independently of each other.
Also is it me but some It’s seem to be more akin to an operating company than an investment fund, I am thinking of SONG + those operating infrastructure assets, so perhaps these have less potential upside but still have significant potential downside risks.
Final thought and without looking at any statistics to back it up - it also seems to me that Worldwide investing funds do at better when considered over a rolling 5 / 10 year view compared to the majority of their peers and IT’s often do better than their Unit Trust/OEIC relatives.
Comment ftrom VietNam Holding (LON:VNH) in this months newsletter "Any future upgrade by MSCI is expected to attract inflows of US$7-10bn into Vietnam's stock market and provide a basis for re-rating of listed companies." https://newsfile.refinitiv.com...
Any thoughts on Japan?
I hold Baillie Gifford Shin Nippon (LON:BGS) which has had an awful performance despite Japan having a good recovery - I think this is due to the weakness of the Japanese Yen and perhaps I should average down?
Does anyone have any insight into the Japanese market ? Fidelity Japan Trust (LON:FJV) looks like a good performer over 10 years.
I've held WisdomTree Japan Equity UCITS ETF JPY Acc (LON:DXJP) for a few months. It's a GBP hedged Japan equity ETF which has done the opposite to Baillie Gifford Shin Nippon (LON:BGS) . Up 39% year to date ! No idea if it will continue to do so wel,l but currency not such an issue.
Interesting Redice, had not thought of holding an ETF.
Hi bsharman I hold Nippon Active Value Fund (LON:NAVF) Just doing some research on the market. Looks like some structural changes going on which may help re-value some companies. I looked at Baillie Gifford Shin Nippon (LON:BGS) but could not get excited about it. I am slightly concerned about the merger(Abrdn Japan and Atlantis Japan Groth) going on with Nippon Active and whether it will prove a distraction. I also hold CC Japan Income and Growth Trust (LON:CCJI) .
AVI Japan Opportunity Trust (LON:AJOT) have just issued a monthly newsletter which highlights some of the changes going on. https://www.assetvalueinvestor...
A few thoughts, probably stating the obvious but anyway....
I like Lindsell Train Investment Trust (LON:LTI) but for those not aware it is (from memory) about 40% Lindsell Train asset management business and the rest a pf similar to Finsbury Growth & Income Trust (LON:FGT) but with a few global stocks, probably more akin to their global equity fund. That fund management business is hard to put a value on, although simplistically it could just be a % of assets under management. Asset managers are are lows just now generally.
I really like Jpmorgan Global Growth & Income (LON:JGGI) as an investment. Although it has done really well for a stretch now so I might be guilty of being attracted by that. I'm surprised it's not been mentioned before as I think it's a good idea for a global fund and a great starting point for anyone.
A neat tax trick for ETF's is you can harvest CGT gains by selling one FTSE 100 tracker (for example) and buying another straight away. They are classed as different investments so this is not classed as B & B . Repeat next year ad infinitum.
There are a lot of UK smallcap trusts around, mostly with good reps and discounts, how do people choose between them?
Hi doug2500. Smaller company Trusts. Not really had a look at them recently. I was thinking of Marwyn Value Investors (LON:MVIR) but decided not too. Discount 52% and yield 11.0 %. Need to re-examine as there may be something happening I have missed .
Hi Charles, I know very little about Marwyn Value Investors, but I've just looked it up on the AIC website. Its one and three-year NAV Total Returns are better than other UK smaller company ITs, but its ten-year one is much worse. It is a relatively small IT, with a market cap of £43m and total assets of £92m, which I suspect makes it unattractive for wealth managers to own and might be the reason for its huge discount. The 11% yield is enticing, provided that it isn't cut for some reason. However, Interactive Investor is quoting a 5% bid-offer spread on it at present, which is much too high for me to consider buying it.
PKA Yes agree- same reason I have not bought. But i do wonder how long The Trust will continue to exist as it is.
"A bill to rectify issues with cost disclosure rules for investment trusts has been chosen for debate in the House of Lords as the sector’s ongoing campaign begins to bear fruit.
Baroness Ros Altmann, the consumer champion and former pensions minister, submitted a private members bill to remove investment companies from the Alternative Investment Fund Managers Directive (AIFMD) regulation.
It is one of 25 bills selected from a competitive ballot held two days after the state opening on 7 November and will have its first reading on 22 November."
https://citywire.com/investmen...
Thanks PKA. This the EU rules about having to disclose charges if a Trusts holds other funds- i.e aggregate them I think. Prevents many Pension funds holding some Trusts as I recall.
European Smaller Companies Trust (LON:ESCT) There was a ShareSociety presentation this afternoon by the fund manager. I had been looking at Europe for a while. Was quite convinced by the manager-so set up a monthly regular investment plan through platform. Here is a link to the presentation. https://www.sharesoc.org/event...
Private Equity Closed End Funds.
The positive about Investment Trusts (Closed End Funds) listed on the Stock Exchange is that the Company capital is fixed. Unit Trusts (open ended Funds) are not and so if holders sell units the fund managers has to sell shares to repay investors. That can cause issues when a large numbers want to sell.
Investments Trusts will always have the same capital- but if investors keep selling the discount to the Net Asset Value(NAV) of the company will fall.
But as these investments on the whole tend not to be listed the valuation of those assets can cause concern as to the methodology of valuation.
Given some of the large discounts the industry, I feel, need to do some-thing to encourage shareholders to buy these funds. The new chairman of Pantheon International (PIP) has said as much- see the end of this blog.
I recall a time when general Investment Trusts traded at 25-25% discounts- back in the 1980's. Over the following decades some were taken over, others changed investment strategy to become specialist and offer a sector or geographic specialism.
I feel that the same could happen in the PE sector. They do invest in good companies, there are obviously some duds, but across the funds covered here most performance have been reasonable.
A few are winding up and I would expect more boards to be looking at options- as PIP has done to see what can be done to narrow the discount and improve returns to shareholders.
The sector need to convince shareholders of the methods of valuation and look at performance fees. Kicking it at 8% seems generous to managers, not so to shareholders.
Potentially interesting times for this sector.
The below was compiled from research as I looked through the sector to get a better understanding of the opportunities. All views are my own and should be taken as that.
Any data errors please let me know.
Listed on the Stock Exchange according to the Association of Investment Companies the following listed funds invest in private equity.
3i (LON:III) 3i Group
abrdn Private Equity Opportunities Trust (LON:APEO) abrdn Private Equity Opportunities
Apax Global Alpha (LON:APAX) Apax Global Alpha
CT Private Equity Trust (LON:CTPE) CT Private Equity Trust
Dunedin Enterprise Investment Trust (LON:DNE) Dunedin Enterprise
Harbourvest Global Private Equity (LON:HVPD) HarbourVest Global Private Equity
HgCapital Trust (LON:HGT) HgCapital Trust
ICG Enterprise Trust (LON:ICGT) ICG Enterprise Trust
JPEL Private Equity (LON:JPEL) JPEL Private Equity
JZ Capital Partners (LON:JZCP) JZ Capital Partnership
Literacy Capital (LON:BOOK) Literacy Capital
LMS Capital (LON:LMS) LMS Capital
NB Private Equity Partners (LON:NBPU) NB Private Equity Partners
Oakley Capital Investments (LON:OCI) Oakley Capital Investments
Pantheon International (LON:PIN) Pantheon International
Princess Private Equity Holding (LON:PEYS) Princess Private Equity Holdings
Symphony International Holdings (LON:SIHL) Symphony International Holding.
Please note fees and performance figures are what I have found. Please do your own research. I cannot be held responsible for any errors or omissions.
3i (LON:III) 3iGroup
I hold
Total NAV: £18590m
Yield: 2.60
Fees: ? Self managed so NAV is net of fees.
Carried Interest: 12% if performance +8% p.a.( Hard to calculate but I think this is the figure having spoken to the IR officer at 3i)
10 Year Return: 24.45% annualised.
Discount to NAV: +11.0% (Premium to NAV)
The largest fund by a long way is 3i . I do hold this, took me a while to invest as the largest part of their assets is invested in Action. But Action looks sound and growing and 3i are looking at other investments to become equally long term compounders for the company. The Investment executives have motivation- bonuses kick in after 8% growth . Hard to work out fee structure as they are self managed, but their PR told me every quarter Asset value reflects the fees and possible bonuses (they call it GIR). So the Executives do well if things work out- and they have over time.
The companies figures were announced 9/11/2023. Performance was good, Action continues to grow. Concerns over some investments in consumer orientated products and realisations may take longer to achieve. The company has a strong balance sheet and is under no pressure to realise investments for less that is considered the fair value.
Simon Borrows, 3i's Chief Executive, commented:
"Against a tough macroeconomic environment, we delivered another good result in the period for 3i. Action continues to perform very well. Its LFL sales growth, continued new store expansion and significant free cash flow from operations have once again underlined what an exceptional business it is. The strong performance of a number of our other investments in the value-for-money, private label and healthcare sectors underpins our confidence that a number of these investments will also become longer-term compounders over time.
We remain cautious about the investment and realisation market given the macroeconomic environment in general, the breadth of geopolitical risk and our belief that the full implications of the global recalibration of interest rates are still yet to work fully through the system. We will continue to look for opportunities to deploy capital into this uncertainty, but we will not change our patient and disciplined approach. We have a strong balance sheet and are under no pressure to sell companies if the price or terms do not properly reflect the prospects of the business."
Top 20 Holdings Sept 2023
Action General, merchandise discount retailer 12,862,
3i Infrastructure plc Quoted investment company, investing in infrastructure 818,
Cirtec Medical Outsourced medical device manufacturing 579,
Scandlines Ferry operator between Denmark and Germany 547 ,
Royal Sanders Private label and contract manufacturing producer of personal care products 486 ,
AES Engineering Manufacturer of mechanical seals and provision of reliability services 396 ,
nexeye Value-for-money optical retailer 390 ,
SaniSure Manufacturer, distributor and integrator of single use bioprocessing systems and components 375 ,
Tato Manufacturer and seller of specialty chemicals 330 ,
Smarte Carte Provider of self-serve vended luggage carts, electronic lockers and concession carts 316 ,
Evernex Provider of third-party maintenance services for data centre infrastructure 315,
WP Global manufacturer of innovative plastic packaging solutions 273,
Luqom Online lighting specialist retailer 225 ,
European Bakery Group Industrial bakery group specialised in home bake-off bread and snack products 207 ,
MPM An international branded, premium and natural pet food company 198 ,
Audley Travel Provider of experiential tailor-made travel 173,
WilsonHCG Global provider of recruitment process outsourcing and other talent solutions 156
BoConcept Urban living designer 155
ten23 health Biologics focused CDMO 149
Q Holding Manufacturer of catheter products serving the medical device market 145
I will continue to hold this fund as it is the leader in the sector.
There are couple of funds in the process of winding down and returning assets to shareholders. Always a risk buying these as obviously the best assets are easier to sell .
Dunedin Enterprise Investment Trust (LON:DNE) Dundein Enterprises
I hold
Total NAV: £34m
Yield: 11.13 (winding down)
Fees: 1.4%
Carried Interest: 4.05% past 10%of realised gains if performance +8% p.a.
10 Year Return: 10.7% annualised.
Discount to NAV: 16%
I have bought Dunedin Enterprises as the Company’s investment objective is to conduct an orderly realisation of its assets, to be effected in a manner that seeks to achieve a balance between maximising the value of the Company’s investments and progressively returning cash to shareholders.
They invest in companies between £20-100m
“The Board is committed to returning proceeds of asset sales to shareholders and doing so efficiently. While the portfolio realisation process continues, the Board will look at opportunities to combine the proceeds of more than one sale before conducting a further tender in order to achieve economies in the process. Outlook Following discussions with the Manager and the Company’s advisers, the Board does not currently anticipate putting formal proposals to Shareholders for a members’ voluntary liquidation of the Company in the short to medium term while the orderly realisation continues.”
Main holdings:(% of NAV)
Weldex 14%
Premier Hytemp 12.8%
FRA 8.5%
Realza 7.9%
Hawksford 2.4%
Having looked at current portfolio and recent realisations it seems could be an upside of 10%. What the time scale will be I have no feel for though.
JPEL Private Equity (LON:JPEL) Jpel private equity
Total NAV: £40m
Yield: 0
Fees: 2.5%
Carried Interest: 4.05% past 10% of realised gains if performance +8% p.a.
10 Year Return: 6.3% annualised
Discount to NAV: 37%
This fund is also winding down. I have looked through the companies announcements but in my opinion so vague I cannot get a feel if there is any upside.
This gave little confidence.
“As JPEL continues to run-off its portfolio organically, the Board would like to remind shareholders that it will revisit a variety of options once JPEL's NAV approaches approximately . As global markets continue to be affected by well documented macroeconomic factors, the JPEL portfolio may be impacted, similar to other private equity funds, in timing, valuation, or amounts of realisation activity. As a result, distributions in 2024 are likely to be unpredictable. “
Not an investment for me.
JZ Capital Partners (LON:JZCP) JZ Capital Partnership
Total NAV: £254m
Yield: 0.0
Fees: 5.15%
Carried Interest: In Fees of 5.15%
10 Year Return: -5.8% annualised.
Discount to NAV: 50%
Quote from a recent company release.
“In August 2020, the Company’s shareholders approved changes to the Company’s investment policy. Under the new policy, the Company will make no further investments except in respect of which it has existing obligations or to continue selectively to support the existing portfolio. The intention is to realise the maximum value of the Company’s investments and, after repayment of all debt, to return capital to shareholders.
Outlook Our view of the outlook for the Company remains substantially unchanged to that reported in the Interim Report. The Company is committed to delivering on the New Investment Policy. For the reasons mentioned above, it will probably take more time than might have been expected a year ago. The Company is well-positioned to weather potential financial pressures from an economic downturn or period of volatility in the financial markets, which should allow the Investment Adviser the time needed to maximise the value of the portfolio and implement the New Investment Policy in an orderly manner. The Board expects that in due course a significant amount of capital will be returned to shareholders.
Looks like the wind up is taking longer than expected. One to monitor , it is on a 50% discount. They seem to be scarce with press releases so would need to be cautious in my opinion.
Funds review
Symphony International Holdings (LON:SIHL) Symphony International Holdings.
Total NAV: £397m
Yield: 5.1%
Fees: 2.45%
Carried Interest: NIL
10 Year Return: 1.8% annualised
Discount to NAV:37%
Poor performance over 5 and 10 years.
They focus on particular sectors – healthcare, hospitality, lifestyle, branded real estate, and new economy ventures – that we believe will continue to profit from the increasing disposable incomes of Asia’s growing middle class. Anil Thadani the manager has increased stake from 15% to 20%.
I will avoid- a risk too far for me much as I like investing in Asia through funds.
LMS Capital (LON:LMS) LMS Capital
Total NAV: £42m
Yield: 4.1 %
Fees: 4.77%
Carried Interest: 0.12% if outperform benchmark
10 Year Return: -3.79% annualised.
Discount to NAV:57%
A poor performing fund with only £42.7m of assets. Running costs exceeded income by £0.3m for Q3 2023.
They state “We seek to achieve a balance between preserving and growing wealth. We expect to deliver an overall total return, net of costs, over the longer term of 12%-15% per annum, of which an element will include an annual distribution.
We invest in areas where we have demonstrable success over some 40+ years of investing:
Late-stage private equity
Unless the performance figures I am seeing are incorrect they have lost 3.79% over 10 years.
The company seem to realise this and are doing some major changes to the strategy. But I will not be part of that journey. To me the 58% discount seems justified.
It seems the new strategy is to focus on retirement home space and through Dacian the oil and gas industry.
I feel if I wanted to invest in these areas there are clearer ways to do it.
Literacy Capital (LON:BOOK) Literacy Capital
Total NAV: £296m
Yield: 0%
Fees: 2.35%
Carried Interest: NIL
10 Year Return: N/A. New fund 1 Year performance 21.6%
Discount to NAV:8.7%
Literacy Capital is focused on investing in and supporting UK businesses and helping their management teams to achieve long-term success. They donate 0.9% of our net assets every year in cash to literacy charities in the UK, amounting to more than £7.8 million since Literacy’s creation in 2017
They invest in mainly UK based businesses generating £1m - £10m EBITDA (or £0.5m+ for bolt-on acquisitions
Launched in June 2021, ongoing charges are 2.41% (As at 31/12/2022). Performance since launch has sen the price increase from £3.00 to £4.40 , trading at a discount of 8.6%.
The managers control 40%.
Given the newness of the fund I will be not investing, but the initial performance has been good.
Oakley Capital Investments (LON:OCI) Oakley Capital Investments.
I hold
Total NAV: £1194m
Yield: 1.03%
Fees: 2.45%
Carried Interest: 20% of sale above 8% gain. Performance fee 0.8% if outperforms 8% gain.
10 Year Return: 14.4% annualised.
Discount to NAV:36%
I have held this fund for 5 years. They invest in Invest in Technology, Education, Consumer and business service unlisted companies throughout Europe. Using their origination network they are often the first Institutional investor in the portfolio companies.
My P.A Dubens has recently bought 200000 shares in the Trust and now holds 10.86%. If you look at Director dealings they are all buys over the years. That makes me confident the board are vested in the success of the Trust.
Top holdings as at 30/6/2023
Cegid
9.4
WebPros
6.0
Phenna
5.8
IU Group
5.7
idealista
5.7
Schülerhilfe
5.0
Facile
4.1
Ocean Technologies Group
4.0
Bright Stars
3.7
TechInsights
3.6
The current discount to NAV is 36% which given the 5 year performance of 154% seems high to me.
For me the narrow investment sectors they look at is appealing- and they managers certainly get a lot right.
Key long term holding for me despite the fact the carried interest charge is pretty high. Hoping the board will look at this.
CT Private Equity Trust (LON:CTPE) CT Private Equity Trust
I hold
Total NAV: £538m
Yield: 5.7%
Fees: 1.8%
Carried Interest: NIL. Performance fee 0.88% of Internal Return Rate of 8% p.a claculated over 3 years.
10 Year Return: 14.36% annualised
Discount to NAV:33%
The Trust takes stakes in private equity focused limited partnerships, offshore funds and investment companies as well as direct private equity investments, mainly through co-investment in specific companies.
The private equity funds in which the Trust invests comprise buy-out funds, venture capital funds and mezzanine funds.
There is therefore an element of double charges as they charge a fee as may some of the funds they invest in. This is not ideal, but in this case I am backing the manager, Hamish Mair. If he left I would possible sell.
Directors have been buying shares in the Trust.
abrdn Private Equity Opportunities Trust (LON:APEO) abrdn Private Equity Opportunities
Total NAV: £1185m
Yield: 3.67%
Fees:6.25%
Carried Interest: NIL
10 Year Return: 15.2% annualised.
Discount to NAV:43%
The investment objective is to achieve long-term total returns through holding a diversified portfolio of private equity funds and direct investments into private companies alongside private equity managers, a majority of which will have a European focus.
I do struggle to take Abrdn seriously after the rebranding of Aberdeen but perhaps that is a naïve view.
The fund performance is reasonable.
They Invest in Primary funds which do look like they are investing in interesting areas and sectors.
Fund
Commitment
Description
Hg Saturn 3
£25.8m
European buyout fund focused on Software and B2B Services.
Latour Capital IV
£25.4m
Mid-market buyout fund which focuses principally on French headquartered companies in the business services and industrials sectors.
Advent Global Private Equity X
£25.2m
Global buyout fund which focuses on attractive niches within business and financial services, healthcare, industrial, retail and technology sectors.
Investindustrial Growth III
£25.2m
Lower mid-market fund focused on niches within the Industrials, Business Services and Consumer & Leisure sectors primarily in Southern Europe.
Nordic Capital XI
£25.2m
A fund which focuses on medium to large-sized buyout deals in Northern Europe, principally in the Healthcare, Technology & Payments and Financial Services sectors.
ArchiMed MP 2
£25.1m
Healthcare specialist fund, focused on European and North American mid-market companies.
PAI VIII
£25.1m
Pan-European upper mid-market fund focused on Food & Consumer, Business Services, General Industrials and Healthcare.
IK Partnership II
£20.8m
Pan-European mid-market fund focused on co-control and minority opportunities in Food & Consumer, Business Services, Healthcare and Financial Services.
Capiton VI
£16.9m
European lower mid-market fund with a focus in Pharma, MedTech, Industrial Automation and Sustainable Consumption.
Windrose Health Investors Fund VI
£15.1m
Mid-market buyout fund based in the United States, that has a specialist focus on the healthcare sector.
Great Hill Equity Partners VIII
£14.6m
Growth-focused private equity fund based in the United States.
One Peak Growth III
£12.9m
Growth fund which targets rapidly growing technology and tech-enabled companies in Europe.
They also co-invest directly into unquoted companies.
One I will monitor, investigate further and get over my dislike of the new branding of Abrdn.
ICG Enterprise Trust (LON:ICGT) ICG Enterprise Trust
Total NAV: £1283m
Yield: 2.86
Fees: 2.77%
Carried Interest: 0.7% if performance +8% p.a.
10 Year Return: 13.2% annualised.
Discount to NAV:41.4%
The Trust exclusively invests in BuyOuts- which does make it different from its peers.
They focus on investing in buyouts of businesses that are profitable, cash generative and have defensive growth characteristics that we believe will deliver strong and resilient returns across economic cycles.
The investment strategy results in a differentiated portfolio with attractive growth characteristics.
Portfolio composition at 31 July 2023
Flexible mandate that enables us to deploy capital in:
Portfolio composition at 31 July 2023
The Portfolio is well diversified and weighted towards sectors with defensive growth characteristics. Technology (24.1%), Healthcare (13.2%), Business Services (12.9%) and Education (5.4%) make up 55.6% of the Portfolio.
Whether the buy out sector is a great one at the moment would need more investigation.
Apax Global Alpha (LON:APAX) Apax Global Alpha
Total NAV: £1107m
Yield: 7.48%
Fees: 2.15%
Carried Interest: 2.45%
5 Year Return: 11.26% 5 year annualised performance due length of life
Discount to NAV:29%
AGA aims to build and maintain a high-quality, global portfolio of investments across four core sectors - Tech & Digital, Services, Healthcare and Internet/Consumer.
Target: an annualised Total NAV Return across economic cycles of 12-15%, net of fees and expenses. AGA also aims to pay a dividend yield of 5% of Net Asset Value (“NAV”) per annum.
Private Equity 71%
Derived Investments 29%
PORTFOLIO SPLIT BY ASSET TYPE
Private Equity71%
Derived Debt 28%
Derived Equity1%
PORTFOLIO SPLIT BY GEOGRAPHY
North America60%
Europe14%
United Kingdom14%
Israel3%
India3%
China1%
Rest of the World 5%
PORTFOLIO SPLIT BY SECTOR
Tech & Digital36%
Services31%
Healthcare13%
Internet/Consumer 20%
The fund has a resolution every 3 years as to whether to continue. The fund has a good spread of holdings. The positives are they aim for a Total NAV return of 12-15% net of fees and a good sector yield of 7%.
Harbourvest Global Private Equity (LON:HVPD) HarbourVest Global Private Equity.
Total NAV: £3160m
Yield: 0%
Fees:3.36%
Carried Interest: 1.8%- average over 5 years.
10 Year Return: 17.8% annualised.
Discount to NAV:45%.
One of the latger PE funds it has performed well and I have rather overlooked it as in investment. Their aim is provide easy access to a diversified global portfolio of high-quality private companies by investing in HarbourVest-managed funds.
The fees seem reasonable modest given the performance over 10 years.
HgCapital Trust (LON:HGT) HgCapital Trust
Total NAV: £2167m
Yield: 1.79%
Fees:1.93%
Carried Interest: 20.0% over capitalised return of 8% annually.*
10 Year Return: 17.2% annualised.
Discount to NAV:20%.
*KID info An incentive based on performance, or “carried interest” is payable after the repayment to the Company of its invested capital plus a preferred return of 8% capitalised annually thereon for each Fund to which the Company makes a commitment. Once these conditions have been met, carried interest of 20% of the aggregate profits applies.
The fund is focused on defensive growth buyouts in software and services operating in specific end-market ‘clusters’ with enterprise values (‘EVs’) of £100 million to over £10 billion, growing faster than the broader economy. Hg predominantly seeks controlling equity buyout investments in businesses headquartered in Europe and North America, often with a global footprint and customer base.
Reasonable performance. Carried interest looks high , but it does focus on specific sectors. Buying controlling stakes slightly concerns me.
Princess Private Equity Holding (LON:PEYS) Princess Private Equity Holdings
Total NAV: £1088m
Yield: 7.0%
Fees:2.4%
Performance fee: Seems to be about 2% depending on performance
10 Year Return: 12.0 % annualised.
Discount to NAV:15%.
Investment style Princess pursues a relative value investment strategy, the goal of which is to systematically identify and invest in private equity investments that are particularly attractive at a given point in time based on its global scale, broad market overview, insight and strong deal flow.
The team has experience in all major jurisdictions around the globe and specializes in the following sectors: healthcare, consumer, media & telecom, IT, industrials, infrastructure/energy & utilities, financial and business services, and real estate.
They tend to invest direct into unlisted companies rather than using other funds. Industrials (28.7%) and Healthcare (22.9) are the largest sectors. 16.8% is in consumer discretionary which might not do that well in the current financial environment.
They have a quarterly report presentation by the managers on Nov 23 2023 which I have registered for as I am finding it hard to get a flavour of this fund. Good yield for the sector .
Pantheon International (LON:PIN) Pantheon International
I hold .
Total NAV: £2250m
Yield: 0%
Fees: 3.35%
Performance fee: NIL
Carried Interest: Nil
10 Year Return: 13.7% annualised.
Discount to NAV:37%.
PIP's portfolio is diversified by manager, underlying companies, vintage, region, investment type, and sector, to maximise risk-adjusted returns.
The fund aim's to generate sustainably high investment returns through a well-managed, institutional grade portfolio built by investing with the best private equity managers globally through three strategic pillars of primary, secondary and co-investments, with each offering their own merits. We believe that by combining the three ways of accessing private equity investments, we are able to:
As portfolio companies are sold by our private equity managers, PIP’s share of the cash that is generated from those sales is deployed into new investment opportunities
The Company’s policy is to make unquoted investments. It does so by subscribing to investments in new private equity funds (“Primary Investment”), buying secondary interests in existing private equity funds (“Secondary Investment”), and acquiring direct holdings in unquoted companies (“Co-investments“), usually either where a vendor is seeking to sell a combined portfolio of fund interests and direct holdings or where there is a private equity manager, well known to the Company’s Manager, investing on substantially the same terms.
The Company’s policy is to adopt a global investment approach. The Company’s strategy is to mitigate investment risk through diversification of its underlying portfolio by geography, sector and investment stage. Since the Company’s assets are invested globally on the basis, primarily, of the merits of individual investment opportunities, the Company does not adopt maximum or minimum exposures to specific geographic regions, industry sectors or the investment stage of underlying investments.
USA
54%
Europe
29%
Global
9%
Asia and EM
8%
Small/mid buyout
46%
Large/mega buyout
26%
Growth
20%
Special situations
5%
Venture
3%
2021 and later
31%
2020
8%
2019
13%
2018
13%
2017
10%
2016
9%
2015
6%
2014
3%
2011-2013
4%
2010 and earlier
3%
Primaries
34%
Co-investments
33%
Manager-led secondaries
21%
Fund secondaries
12%
Information technology
32%
Healthcare
19%
Consumer
14%
Industrials
11%
Financials
10%
Communication services
7%
Energy
3%
Materials
2%
Other
2%
I had watched a couple of presentations before I invested in this fund and always came away impressed.
They have recently had a new Chairman, John Singer. He has given interviews stating what he feels PIP- and other funds- need to do to attract investors-and so get discounts down.
He has visited a number of key investors to sound them out. One of the issues was true governance- what is the real relationship between Board and Managers. Valuations as well documented was another concern.
Buybacks is one way funds can increase the return to shareholders by increasing the NAV.PIP have now announced a buyback formula that will increase the amount of buybacks the wider the discount.
They are working to encourage the whole private equity sector to put shareholders first.
There is a transcript of the interview on the AIC site
PE Funds May have been better to have a new thread. Hopefully Stockopedia will sort a space for O.T soon.
Thanks for opening up this conversation on Investment Trusts. I too have been moving into ITs over the past 18 months - especially infrastructure, alternatives and small and mid cap UK trusts on big discounts and what I feel have the best risk/reward potential. I'd like to buy some more global trusts I currently hold Scottish Mortgage Investment Trust (LON:SMT), Monks Investment Trust (LON:MNKS) and Keystone Positive Change Investment Trust (LON:KPC)
I am very tempted to buy Lindsell Train Investment Trust (LON:LTI) because it has a very good record over ten years, is trading at a 11% discount and the share price looks like it is at or near the bottom of a range. Does anyone have opinions on this trust in particular or any other global trusts I should look at with the best recovery potential when the bull market begins?
I'm also intrigued by Herald Investment Trust (LON:HRI) but I'm concerned about what will happen when Katie Potts decides to retire.
Also enjoy the market makers podcast at the weekend!
Scottish Mortgage Investment Trust (LON:SMT) bought recently and will hang on. Lindsell Train Investment Trust (LON:LTI) I have looked at several times but not 100% convinced at the moment. They seem to have slightly lost their way.
Thanks for starting some sort of IT blog here, Charles. This is where we all need to get the Stocko to work out how to search on comments, so it's not only the poster whose tags get found, though. Otherwise this will get very long! Not your fault. I feel there must be some sort of wordsearch possible of @theticker.
Anyway, I am happy to join the discussion, as I and family hold a high number of ITs at present, all at pretty steep discounts, although discounts aren't the only reason.
PE Trusts Oakley Capital Investments (LON:OCI) ,NB Private Equity Partners (LON:NBPE) ,CT Private Equity Trust (LON:CTPE) and ICG Enterprise Trust (LON:ICGT)
REITS Real Estate Investors (LON:RLE),Regional REIT (LON:RGL) and Triple Point Social Housing REIT (LON:SOHO)
Energy/storage/infrastructure GCP Infrastructure Investments (LON:GCP) ,Gore Street Energy Storage Fund (LON:GSF) ,Triple Point Energy Transition (LON:TENT) and NextEnergy Solar Fund (LON:NESF)
Specialist debt funds Chenavari Toro Income Fund (LON:TORO) , Volta Finance (LON:VTA) and VPC Specialty Lending Investments (LON:VSL)
Overseas focussed VinaCapital Vietnam Opportunity Fund (LON:VOF) , Henderson Far East Income (LON:HFEL) and Taylor Maritime Investments (LON:TMIP)
Happy to discuss any of them one at a time (!), when I'm back next week. But for those of you with a mind to add them up, apart from VinaCapital Vietnam Opportunity Fund (LON:VOF) and the PETs, the average of the others is probably a 10% yield and 30+% discount. I bought more GCP Infrastructure Investments (LON:GCP) ,Gore Street Energy Storage Fund (LON:GSF) and Triple Point Energy Transition (LON:TENT) in the last week. Bonkers discounts for things that can't really go bust. I attended the GCP Infrastructure Investments (LON:GCP) webinar last week, and, while there are short-term disappointments from certain shareholders because of the failure to take over GCP Asset Backed Income Fund (LON:GABI) , the actual business has been proving its NAV and div cover. All you need is the discount to halve in the next 18 months, when interest rates start to finally subside a little, and you'll have made over 40% while sleeping at night. Well, that's what I believe!
One other tick in the box for ITs or ETFs is the tax treatment. If shares (individual or ITs) are held outside an ISA or SIPP, then CGT will be harvested every-time a share with a gain is sold. This has a drag on the long term performance. The advantage of an ETF or IT is that there is no CGT within the fund and the only time an investor is charged CGT is when the fund is sold. So the growth over time can be greater in a fund than holding the same shares as an individual. Choose a good IT and you may hold it forever. The other advantage for older investors is that under current regulations, CGT disappears on death so if a fund is held for many years, that large CGT bill just disappears.
I hold both ETFs and ITs. Due to the large discounts currently on many ITs, I am currently selling ETFs and buying similar ITs - sadly with a CGT bill to pay on the swap-over.
Although ITs have many advantages, in my opinion they do have the following two disadvantages when compared with ETFs: (1) The purchase of most ITs is subject to 0.5% stamp duty on purchase, whereas there is no stamp duty paid when an ETF is bought. (2) The bid-offer spread on most ITs is significantly wider than that on most ETFs.
It would be excellent if the government would level the playing field between ITs and ETFs (many of which are domiciled in other countries such as Ireland) and abolishes stamp duty on ITs.
Just a bit on where to start, and also Vietnam and stunning performance of Vietnam Trusts for multiple years, and Private Equity Trusts.
If unfamiliar with Investment Trusts then it’s arguably best to start by checking out UK mainstream, UK small Companies and UK Equity Income (there are 4 aic UK sectors) as it’s likely they will hold shares we are familiar with (and like sometimes). Also NAV is usually updated every day and as they hold portfolios just like us, the NAV figure and discount to NAV figure is pretty accurate. But from there move on to take advantage of the so many Investment Trusts investing globally, or in Japan, US, Emerging Markets etc etc. I posted possible Trusts and sectors to start checking out a couple of days ago.
PRIVATE EQUITY.
This is a more complicated specialist area. The sector is unloved and hence some very big discounts to NAV. The jury is out on whether buying back shares to reduce those discounts (as Pantheon are doing and pleading with others in the sector to go for too) is effective, but that’s been debated to death and the evidence is inconclusive.
Private Equity is not the place to start imo, except perhaps for very small initial buys where posts here or updates or quality info from aic or Trustnet or (excellent) weekly Money Makers podcast, or some of the high quality articles from Citywire, make the odd small buy look irresistible!
What DOES stand out is the excellent long term performance of so many Private Equity Trusts. And even this year isn’t bad despite those so wide discounts to NAV.
I hold 2 Private Equity Trusts, Oakley Capital Investments (LON:OCI) and Harbourvest Global Private Equity (LON:HVPE) .
OCI is on a 35% discount o NAV. (Go to aic here to check it and others out)
https://www.theaic.co.uk/aic/f...
OCI is UP 16% in 1 year, UP 102% from my Nov 2019 buy price and up 220% over 10 years and UP 6 fold since the 2008 banking crisis.
HVPE is on a 45% discount. It’s UP 17% 1 year and 32% since I bought in Sept 2020. It’s UP 356% over 10 years and 6 fold since launching in 2010.
Some Private Equity Trusts have done far better still!
e.g top performer is 3i (LON:III). It’s the only one on a (deserved) premium to NAV. Premium to NAV is 8%.
3i is UP 67% over 1 year, 678% over 10 years and 18 times higher than at 2008 low. I’ve always thought and still do that I’ve missed the boat so don’t hold!
Non private Equity Trusts that have multi bagged include Polar Capital Technology Trust (LON:PCT) up 16 fold since 2008, Scottish Mortgage Investment Trust (LON:SMT) up 11 fold despite recent problems and poor performance, Oryx International Growth Fund (LON:OIG) up 11 fold. Many more are up 5 times up to 10 times too.
Finally to VIETNAM.
These 2 Trusts really ARE worth checking out as possibly excellent buys away from the UK.
VinaCapital Vietnam Opportunity Fund (LON:VOF) and VietNam Holding (LON:VNH)
I’ve held both apart from temporary sells in 2008 crisis and then 2020 covid crisis when I sold a lot of my portfolio. These are both UP even this year. Yet both are on significant discounts.
Over 10 years VOF is up 284% and since 2008 it is UP 9 fold.
Over 10 years VNH is UP 286% and UP a whopping 17 times since 2008.
Both have only gone up modestly since a significant temporary (as usual) dip this time last year. VOF up 10% from that low and VNH up 20%. Check out their monthly updates and the usual Results updates for a lot more info.
Happy hunting….and it’s so good to see this thread waking up too. Quality posts here could well alert us to excellent Trusts at bargain prices.
AND as the gains just from these few examples show, Investment Trusts are NOT boring investments. There are some huge past winners and there will be again, and with far less risk than single Company shares.
Yes, this thread is a welcome addition to the board.
Not quite an Investment Trust, but if you are interested in frontier markets and closed end investments then maybe City of London Investment Group might be of interest City of London Investment (LON:CLIG).
I have a core holding held for a number of years. Historically most of the profit has been distributed as a generous dividend, to the point where the original holding has been covered by these dividends.
Originally bought when i heard the CEO talk on the company. Struck me as a very straightforward person. The company has morphed into something a bit different recently so some research is recommended.
Below is the most recent monthly Manager comment from VietNam Holding (LON:VNH)
Manager Commentary - Taking stock in Vietnam
Vietnam continues to outpace the world and other ASEAN countries in terms of real GDP growth, having expanded by 5.33% in the July to September period from a year earlier, despite unremitting global geopolitical and economic distress.
Q3 2023 stats show how its economy is benefiting from both the government's slew of supportive measures this year, including more public investment roll outs particularly in Ho Chi Minh City, and the ever-evolving shift in manufacturing supply chains given today's exponential technological and regulatory change. A healthy flow of foreign direct investment is also helping Vietnam strengthen its position in the global supply chain.
In September, the country's trade balance managed to stay on its month-to-month record-surplus course in spite of lingering headwinds, namely the continued economic weakening in the US and Europe, which together account for around 42% of Vietnam's goods exports. In the end, enhanced domestic demand and steady increases in other manufacturing exports helped fuel the growth throughout the month, with electronic exports to mainland China rising after having shown significant declines in early 2023. Industrial production also stood out, climbing 5.1% YoY after having contracted by 0.4% YoY in the first eight months of 2023. Additionally, retail sales maintained its momentum, with an 8% YoY rise.
The International Monetary Fund (IMF), which is currently holding its annual meetings with the World Bank and international banking community (this year gathering in Marrakech), forecasts Vietnam's growth for 2023 at 4.7% while the Asian Development Bank (ADB) expects a growth of 5.8%. Although a cut down from earlier expectations, these rates still make Vietnam once again the fastest growing country in Southeast Asia.
September proved to be another volatile month in Vietnam's equity market, however, due to an upsurge in profit taking activities after the long rally that had been running since May. The bearish sentiment this month was also attributable to fresh volatility in the FX market when the VND depreciated 1.3% given the dollar index's surge and the pressure that put on all emerging market currencies. The Fund's NAV declined 4.3% during the month, outperforming the VNAS index. The Fund has outperformed the market on a 1-year, 3-year, 5-year and 10-year basis.
While Vietnam's equities are still trading at an attractive valuation versus its peers, the market volatility is likely to last in Q4 because of the considerable amount of retail participants. This is not a bad thing though since their active participation supports the long-term development of Vietnam's stock market, including its ultimate progression towards being included in the MSCI EM Indices.
With our high conviction and concentration across key themes of domestic consumption, urbanisation and industrialisation, VNH remains focused on maintaining a resilient portfolio for more solid growth in 2024. For example, Gemadept (GMD), one of our top-ten holdings, is a pioneer in many sectors, and leading performer in its core businesses of Port Operation and Logistics.
The portfolio has benefited from our overweight in GMD this year as the company continues to implement key projects for increasing its scale and long-term growth plan for the period 2021 to 2025 with a vision to 2030 that ensures the needed resources and cash flows are there for expanding both its Gemalink Deep-sea Port and Nam Dinh Vu Port projects. Vietnam will remain a key beneficiary of the shift in global manufacturing supply chains to competitive Southeast Asian hubs.
For more information please contact:
Dynam Capital Limited
Craig Martin Tel: +84 28 3827 7590
info@dynamcapital.com | www.dynamcapital.com
www.vietnamholding.com
Cavendish Capital Markets Limited
Corporate Broker and Financial Advisor Tel: +44 20 7220 0500
And here’s the detailed latest Monthly Report from VinaCapital Vietnam Opportunity Fund (LON:VOF)
https://vinacapital.com/wp-con...
VietNam Holding (LON:VNH) Craig Martin will normally reply promptly to an email.
Before dipping my toe into the world of PE and Unit Trusts and specifically LON: PCT the question I have is that would an ETF such as IXN not provide better returns? Lower costs, lower spread and better overall return. Or am I missing something here?
SC120.
The first thing to do is to get to grips with Investment Trusts. They are NOT Unit Trusts and imo are way superior to most Unit Trusts.
I’ve pasted below a post I did at the depths of the covid market crash in 2020 on another site explaining the key plus and minus points for Investment Trusts and Unit Trusts. The latter are called open ended Funds and Investment Trusts are closed ended.
Investment Trusts I bought then are still well up and some have tripled from the prices then. The great thing right now is that NOW looks a similar stunning Investment Trust buy opportunity!
The following was aimed at those unfamiliar with Investment Trusts.
“Why Investment Trusts are so often far better investments than Open Ended Funds.
I found it hard to get enthusiastic about doing this post. Main reason is the likelihood nearly everyone here knows all, or most of it already, but I'll get it done in case of use to a few.
1. INVESTMENT TRUSTS and UNIT TRUSTS both invest in a portfolio similar to ours, run by an investment team or sometimes a star fund manager. There are also specialist areas like Property. Then they also invest in physical properties as well.
2. THERE ARE THOUSANDS of Unit Trusts to choose from but only around 300 Investment Trusts. Financial Advisers mostly recommend Unit Trusts/Open Ended Funds. That's partly because they are a bit easier to understand (and some individual financial advisers know nothing about Investment Trusts). But the key reason why is perhaps because their own financial reward is better with Unit Trusts.
I THINK INVESTMENTS TRUSTS ARE GENERALLY FAR BETTER THAN UNIT TRUSTS.
(Obviously there is the odd exception).
WHY ARE THEY BETTER?
1. Unit Trusts are usually traded once a day at a fixed time. Miss that slot and your buy or sell will have to wait 24 hours or longer sometimes.
So risk in markets like this one of being stuck in while very fast one day falls. OR buy price you get ending up a lot higher than when you decided to buy.
INVESTMENT TRUSTS are traded on the stock market exactly the same as shares. So unlike with UNIT TRUSTS investors can buy and sell in seconds during market hours, at the price there and then. SO much easier and less stress too.
Epic code the same as shares and my Investment Trusts and shares are all lumped together in my ISA accounts.
2. SELLING.
UNIT TRUSTS have either to have a big cash pile to use when their investors want to sell (and this often happens when markets fall fast and many investors panic sell)or they HAVE TO SELL INVESTMENTS to raise the funds to pay investors out.
This can badly affect performance if there is very heavy selling as so much of their portfolio has to be sold!
Sometimes if the selling gets too severe Unit Trusts BAN ALL SELLING and their investors are locked in to possibly continuing heavy falls!!
This happened with Neil Woodford and has happened right now with some Unit Trust Property funds where the fund managers just can't suddenly sell real properties in order to pay out. So they ban ALL selling!!
INVESTMENT TRUSTS RARELY IF EVER HAVE TO DO THAT!
If investors want out of an Investment Trust they can usually sell immediately just as with a share they want to sell.
Unlike Unit Trusts, Investment Trusts continue to allow their clients to sell out of their property trusts... but heavy selling means the share price drops way way way below NAV. That means a lousy price for the seller BUT A SCREAMING BARGAIN price if wanting to buy!!!
3. THE HUGE HUGE INVESTMENT TRUST PLUS POINT!
Unit Trusts always trade at NET ASSET VALUE. i.e if the value of all their portfolio added up comes to £1 a share then the Unit Trust price will be £1.
BUT Investment Trusts trade at the price investors are willing to buy or sell at.
SO INVESTMENT TRUSTS can trade WELL BELOW NET ASSET VALUE.
eg when Investment Trust NAV is £1 a lot of investors selling out might cause Investment Trust share price to fall to, say, 60p EVEN THOUGH THE PRICE SHOULD STILL BE £1.
So investors keen to buy instead of sell can buy at bargain price WAY BELOW what they KNOW the share price really should be AND WOULD BE IF if it was a Unit Trust.
AND it gets better still!
If believing that the best time to buy is after big market falls then this applies doubly so to Investment Trusts! That's because whenever there are big market or sector falls that is when the DISCSOUNTS TO NAV are at their largest!
In extreme examples in extreme bear markets Investment Trusts can even go to 50% NAV discounts. i.e we can buy £1 worth of that Investment Trust for just 50p.
WHICH MEANS even if NAV stayed stuck at £1 the IT price could double, if heavy buying lead to that big 50% discount dwindling to near zero.
A FEW OTHER PLUS POINTS.
1. INVESTMENT TRUSTS can borrow to invest. The technical term used is GEARING. GEARING means BORROWING.
So Investment Trusts can buy more when shares are cheap while Unit Trusts usually have to sell investments when markets are cheap.
(Meanwhile Unit Trusts are having to sell to pay investors wanting out. SO Unit Trusts often HAVE TO SELL when they would rather be buying! Investment Trusts CAN buy whenever they want to and can borrow at low interest rates to do that too).
2. WHERE THERE ARE SIMILAR UNIT TRUSTS AND INVESTMENT TRUSTS investing in the same shares and with the same Manager the Investment Trust usually performs much better.
One key reason why is for the reason just explained! That fund manager might be forced to sell some of his Unit Trust shares ... and he/she can buy those same shares back in his/her parallel Investment Trust!!
FINALLY.
ONE Investment Trust negative.
VERY successful and popular with investors Investment Trusts can trade at a PREMIUM to NAV.
i.e instead of those bargain DISCOUNT TO NAV buy opportunities explained above investors might have to pay £1.40 when NAV is only £1. THEN a similar UNIT TRUST would be the better choice.
Hi Ken,
I am very grateful to you for taking the time to reply in so much detail and clarity. I have learnt a lot over the last week from both yourself and Charles Mitchell.
Certainly the discounts to NAV currently available on a number of Investment Trusts are extremely attractive. On a separate post I have raised the question of whether an ETF outperforms an IT with specific reference to Polar Capital Technology Trust (LON:PCT) v iShares S&P Global Technology Sector Index Fund (PCQ:IXN.
Hi SCI20
Three main points I think
1. ETFs if you are talking about the index tracking variety might have greater exposure to certain shares, eg US mega caps (or other major index components), where as active managed funds are more likely to have cap of the size of any 1 share, from memory 5% / 10%, its in the small print (ETFs no cap!)
- So that in itself brings about differing performance
2. It times of market stress the discounts on IT's tend to widen and if we ever return to over exuberant times these will narrow or possibly turn into premiums !
- So if you want to actively trade in and out ETF's are the vehicle. If you want to allow the fund manager to do the work for you then its ITs
- Unit Trusts/OEICs dont tend to have discounts unless the individual fund hits a major issue in which case selling might be put on hold (Woodford)
3. Fees, your point correct but these are different vehicles. Separately There is currently debate about whether IT's fees are excessive compared to OEIC/Unit Trusts - my personal opinion is that IT's have historically been thought of to have decent fee structures (although watch performance fees which you are more likely to get on ITs) so I am happy enough with IT' but each has to be looked at individually.
Thank you for your feedback. It helps me to better understand the world of ITs. I am leaning towards IT over ETF put have yet to pull the trigger.
Good to see some comments on Investment Trusts building up. As other contributors have said the AIC and Money Makers sites are both very useful sources of information. I hold around 20 Investment Trusts which can be usefully divided into Growth, Income and Defensive strategies. Unfortunately both growth and income strategies have been hit badly by the rapid rise in interest rates and the resultant relative attractiveness of gilts. At current prices yields, if sustainable, on many of the income strategies are in excess of 7% with the potential for future dividend growth. However, the defensive plays Ruffer Investment (LON:RICA), Personal Assets Trust (LON:PNL) and Capital Gearing Trust (LON:CGT) have proved anything but defensive heading down with everything else. It doesn't help when there are specific problems at certain investment trusts, notably Asian Energy Impact Trust (LON:AEIT) and Digital 9 Infrastructure (LON:DGI9) (sadly I hold both!), which damages the attractiveness of ITs in the alternatives space. However, some of the discounts to NAV are pretty much unprecedented aside from in the Covid panic and the GFC, at least over the last 20 years+. Ken Mitchell has commented on Supermarket Income REIT (LON:SUPR) and its discount as being 'bonkers' and I can see his point given that the major supermarkets are not going anywhere and many leases are long term and inflation linked. There are probably other seriously mispriced Investment Trusts out there particularly those with safe levels of gearing (at fixed and/or long term financing). If I didn't already have significant holdings I would definitely be looking at acquiring some ITs with these large discounts.
I would also endorse Money Makers weekly IT podcast which I discovered a couple of months ago. Brief macro commentary usually followed IT info and an interview.
One other "must-listen/read" I use is the Money Makers podcast which is weekly and free.
A great weekly summary of the IT world and always at least one interview from some very knowledgeable fund managers and experts.
I also subscribe (I think its £8 per month) for access to the other material - happy to pay for a coffee each week to get further insights and regular updates from Jonathan Davies on where he sees things. It has taught me a lot about IT's.
Agree this site is an excellent source of information on Investment Trusts. Must listen podcast on a Saturday afternoon and the subscription is well worth the money.
The Citywire website has recently announced its "Citywire Investment Trust Awards 2023: Best performers & Best Board":
https://citywire.com/investmen...
This might be a useful source of ideas for investment trusts to buy.
I’ve just seen this excellent article from ShoeShineBoy written a few days ago. Well worth reading. It might not have been immediately obvious from the subject heading that it was about Investment Trusts:-
https://www.stockopedia.com/co...
Hi Ken,
hope you are well. Good to see you posting on investment trusts on Stockopedia as the MW site runs down. I have learnt lots from you over the last few years, both trusts and dividend paying bargains!
I will post more as I read/listen.
SSB