Constructing, monitoring and then maintaining successfully a portfolio of investments takes considerable time and resources and demands a thorough understanding of market circumstances. Inevitably opportunities change over time and by managing your funds on a discretionary basis, we are in the best possible position to react to these changes without delay and in accordance with our clients’ best interests. Compare that to the more typical annual review offered by advisers elsewhere, by which time it may be too late to make any necessary alterations.
One area where we consider that we do things very differently from the majority of the industry is our involvement within the collective Investment Trust sector and this has been a major benefit to investors to date. Like Unit Trusts, Investment Trusts themselves are managed and involve numerous underlying holdings. However, unlike Unit Trusts where you pay the value of the underlying investments plus any initial charges, Investment Trusts are themselves traded on the Stockmarket, like a share. Consequently, the price you pay can often become detached from the value of the underlying investments, thereby presenting opportunities if the trading price of shares is discounted. We have enjoyed wonderful results from this sector, often buying a stock at an excessive discount to the underlying value, either because the market is small and difficult to trade, investors have fallen out of love with the sector or perhaps because the sector is not well understood. We are more than happy to accumulate a position in such Trusts where we identify recovery opportunities and often are rewarded with healthy dividends meantime. Occasionally, this may take a period of time, but we are happy to be patient and would never trade just for the sake of it.
Investment Trusts also enable positive returns when the market is flat, through the narrowing of the discount. One example involved us buying the equivalent of £1’s worth of assets for 75p. The market did nothing but the share price rose to 90p (as the shares became more popular), so we made 20% (15p/75p) for nothing – a technical correction. Some Trusts that we purchase at discounts themselves contain a range of Investment Trusts trading at discounts too! Strangely, we have found that many investment and pension platforms on the market do not offer access to Investment Trusts which we think is very odd indeed, as without that those platforms are restricted and not a “whole of market” offering. Potentially, those investors are missing out on tremendous opportunities for market beating returns. Of course, we are very happy to fill that void for our clients!
