Investment Trusts

[bitchstewie]

Just reading this.

What's the secret to becoming an Isa millionaire? Expert research reveals investment trusts are a key part of the biggest pots

Anyone here have bias towards using Investment Trusts?

I hold most of my investments in them but I seem to mostly read about funds being discussed.

[bogie]

So you have to be in the market a long time, im sure many of these are from pre ISA days (PEPS?) and max out your allowance each year. You only need a few percent a year over 30 or 40 years to break a million

[anonymous-user]

Hmmm, I'm not sure I trust their table of information,

• Average ISA account holds 35.5% direct equities? That feels astoundingly high. How are people picking them?

• Average millionaire ISA account holds only 7% funds? The AVERAGE account? There must be a mahoosive number at 0% to achieve that.

• Average ISA account holds 10% cash? That's a lot of people shooting themselves in the foot before they get out of bed in the morning!

What I'd be interested to see is how 100% Investment Trusts stacks up against 100% Funds.

[bitchstewie]

Yes I was a little confused by their table, I just put it down to a poor article around specifics but I've read several times that the central point apparently stands around investment trusts.

I think the fund v trust issue isn't helped in that many trusts have been around for years whilst many funds haven't, at least not in the UK.

[anonymous-user]

bhstewie said:

I've read several times that the central point apparently stands around investment trusts.

Yes, it's often heard and read - although, curiously, I've never seen a significant body of opinion pushing in the direction of "everyone should be avoiding Funds because Investment Trusts do a similar thing and are so much better".

You'll be aware the open ended/closed ended aspect was debated in the context of Woodford. To pay out "sellers" a Fund has to sell some of its investments and they may be very hard to sell quickly for a sensible price (e.g. Woodford) whereas an Investment Trust just watches its own share price hit the floor. Whether it would have made any material difference to Woodford investors is hard to tell. Clearly those who panic and sell at the bottom (a whole load of private investors?) would take a very deep bath whereas temporary closure of the Woodford fund enabled orderly exit for everyone.

[bitchstewie]

rockin said:

Yes, it's often heard and read - although, curiously, I've never seen a significant body of opinion pushing in the direction of "everyone should be avoiding Funds because Investment Trusts do a similar thing and are so much better".

You'll be aware the open ended/closed ended aspect was debated in the context of Woodford. To pay out "sellers" a Fund has to sell some of its investments and they may be very hard to sell quickly for a sensible price (e.g. Woodford) whereas an Investment Trust just watches its own share price hit the floor. Whether it would have made any material difference to Woodford investors is hard to tell. Clearly those who panic and sell at the bottom (a whole load of private investors?) would take a very deep bath whereas temporary closure of the Woodford fund enabled orderly exit for everyone.

I assume both have pros and cons.

Investment Trusts don't have FSCS cover so far as I'm aware which might be a concern for people?

One of the "interesting" things with the Woodford saga was watching the share price of the trust right after was replaced as manager.

Keeping in mind it held the exact same stuff so far as I'm aware!