Welcome back to the fabulous world of Whistler finance in this shiny new decade. I am minded to have a quick peep at the past and, given that I wrote my first piece for The Whistler in 1999, a little of what has happened since then. Those of you who have suffered this column for any length of time will know my penchant for investing little and often and spending time in the markets, rather than making an attempt at timing the market. So, what better than a quick look at the performance of one of my favourite investment vehicles – the Investment Trust (IT) – since the beginning of the century? Let’s take a look at some of the top-performing ITs of the century so far. While we should all know that the past is not necessarily a guide to the future, the New Year allows us a glance over the shoulder at the past and get, maybe, some insight to the future. Continue reading Over My Shoulder . . .
Tag Archives: Investment Trusts
Investment Trusts
They may be unfashionable to some, but I have long been a supporter of Investment Trusts. Despite their name they are not written under a trust deed, as Unit Trusts are. They are, in fact, Public Limited Companies, listed on the London Stock Exchange, for the purpose of investing with others (who all become shareholders in the Company) in a collection of securities to spread the costs and the risks, just as with Unit Trusts, Life Assurance funds, Open Ended Investment Companies etc. However, apart from their structure, there are two more important features: they are ‘closed ended’ i.e. there are only a specified number of shares in existence. Supply and demand in the market will have an effect on the shares’ value, as well as the values of the underlying holdings. It is worth noting that there may be issues of liquidity, in the case of poor demand. Another important factor is that Investment Trusts can borrow money in order to purchase more shares for their portfolios. This action, known as ‘gearing’ has the effect of multiplying both the gains and losses that market swings create in the value of their shares. As you can imagine, this can result in some quite marked variations on prices, especially in volatile times. A useful and interesting point is that Investment Trusts tend to have slightly lower charges than many other collective investments, which certainly adds to their attraction.
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Balmy not Barmy
I closed my last article with thoughts of a “balmy Spring” and as I write, the sun is beating down and, at last, the weeks of rain and drizzle – that have plagued us since the official announcement of a drought – are over (for the time being anyway). Alas, despite a favourable upturn in the weather, there has been no such happy outcome for the UK stock market. The gains that have been accumulated since January have evaporated, since the renewed troubles in the Euro-zone and the elections in Greece and France. It seems like the theme of volatility, that followed us through last year, may well be one that stays with us for 2012 and into next year too!
Continue reading Balmy not Barmy
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