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'Other' investment trusts
Matt A
Posted: 08 May 2018 12:54:14(UTC)
#1

Joined: 19/03/2010(UTC)
Posts: 5

I am fairly happy with the allocation of my SIPP but am wishing to add something in what I would describe as the 'other' category; I'm thinking Private Equity, REIT, Healthcare or Technology.

I have HICL and 3i Infrastructure funds already, I also have TR Property.

I would welcome recommendations for me to research.
AJW
Posted: 08 May 2018 13:02:27(UTC)
#2

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What % are we talking?
Matt A
Posted: 08 May 2018 13:32:43(UTC)
#3

Joined: 19/03/2010(UTC)
Posts: 5

I'm thinking of adding no more than 10% so that I end up with 25% in the UK, 35% in Global Developed, 20% in Emerging and 20% in 'other'.

I've recently sold all bar one bond holding as they were getting me no returns. This is my pension fund so I've got a 25 year investment horizon and am happy to take a risky approach now to potentially increase future gains.
Alan Selwood
Posted: 08 May 2018 13:38:14(UTC)
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Worldwide Healthcare and Allianz Technology must be worth a look in this situation. International Biotechnology Trust and [BIOG] must be worth looking at too.

WWH is probably the least racy of these.
King Lodos
Posted: 08 May 2018 14:47:11(UTC)
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I find it a real challenge to find good Alternatives.

I just bought Primary Healthcare Properties (small position), having weighed it up for a while.

I also like warehouse distribution centres – I'm in Tritax Big Box and Aberdeen European Standard Logistics.


Tech and Healthcare stocks, I'd see as pretty well covered by most regular stock funds, and indexes .. I'm not sure there'd be a diversification argument.

Specialist Real Estate at least can provide good income (that being the hardest thing to come by in stocks and bonds these days)
2 users thanked King Lodos for this post.
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Mr Helpful
Posted: 08 May 2018 15:17:12(UTC)
#7

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For information only we spread around :-

Real Estate : GRIO (special case), NRR (but cautious), BLND, LAND, BBOX (last somewhat over-hyped), HSTN (again cautious).

Renewables : TRIG, UKW

Infrastructure : BBGI, 3IN

Private Equity which has a Beta well above 1.00, so not expected to be a good diversifier to Stocks.
FPEO, SLPE, III

Remember not recommendations !!!
Jenki
Posted: 08 May 2018 17:37:02(UTC)
#8

Joined: 23/02/2016(UTC)
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As K L mentions, warehouse distribution centres is something to look at.

I favour Warehouse Reit.

Good dividend and good growth prospects.
Split Cap Jim
Posted: 08 May 2018 18:10:21(UTC)
#9

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Some suggestions for you to resaerch

Technology - Herald (HRI), Polar Cap Technology (PCT), Allianz Technology (ATT)

Healthcare - Worldwide (WWH) or for more risk & yield International biotech (IBT)

I would strongly suggest some Private Equity (maybe 5%)
- Diversified funds of funds - Pantheon (PIN) or Harbourvest (HVPE) or Standard Life Private Equity (SLPE)
- More focused ICG Enterprise (ICGT) or Princess (PEYS)

I wouldn't consider FPEO at the current premium.

You could also consider British Empire (BTEM) which has a good spread of alternative funds (& plenty of Private Equity) and has a recent article on the news page of the site.

I would stick with TRY for property.

I hold all of the above except for ATT.

1 user thanked Split Cap Jim for this post.
dlp6666 on 17/05/2018(UTC)
Antony A
Posted: 10 May 2018 12:15:18(UTC)
#10

Joined: 02/09/2013(UTC)
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You might want to consider the following (all in my SIPP):

Tech - ATT (5%) as it seems to be the best of the specialists in this sector. The manager Walter Price is canny and doesn't just buy the usual FANG suspects: he has a lot in mid-caps and a selection of key themes. PCT has performed well too; I've avoided HRI because it seems too focused on the small UK market.

Biotech and Healthcare - IBT (2.5%) has done better than its competitor BIOG recently, largely closing its discount because it's adopted a 4% dividend, partly taken out of capital. However performance of all biotech has been poor over the last 2 years and though I am investing here as a long-term "theme" (huge scope for technical discoveries and growing demand in ageing societies), I'm considering dumping IBT in favour of more generalist trusts.
- WWH (2.5%). Long-term performance has been excellent, but has slackened off recently, perhaps because of the hostile tone of Trump and Hilary Clinton during the US election. The loss of Sam Vecht as long-term manager won't have helped.

Private Equity - 3i and fund of funds HVPE and SLPE (2.5% each). None have done particularly well over the last year, and 3i is on a hefty premium which is gradually declining. I have some duplication as 3i and SLPE have large holdings in the rapidly-growing supermarket chain Target. Share price movements can be choppy because NAVs are usually only updated quarterly or half-yearly, when the market suddenly starts noticing these trusts again. The trusts on large NAV discounts barely budged during the recent 10% correction.

Infrastructure - I am nervous about this sector because of Labour threatening to cancel PFI contracts, and because it seems very income-heavy, which I generally avoid as I suspect it tends to damage long-term capital growth. I would revisit the sector and renewables in the event of a significant downturn, which will probably be too late as everyone else will have the same idea. But even if the likes of BSIF go to a higher premium, the income will be very useful to keep some kind of growth in place through the downturn.

Property - SRI and ARTL (6%). I like these companies for their excellent performance over the last five years. Sirius re-develops German business parks to improve their mix of offerings and their yield: Alpha Real has a whole mix of assets, including 25% in ground rents, and has recently moved into UK build-to-let, where they purchased their sites in Leeds and Birmingham very cheaply. These trusts' income is useful but nothing stellar: they make their money through organic growth. TRY would be a reasonable substitute.

Discount-spotters: I think this is the wrong part of the cycle to be holding BTEM or MIGO: they rely too much on discounts narrowing after markets re-assess the performance of their underlying holdings. In the event of a significant downturn and loss of optimism, I think those discounts are going to widen again, compounding your losses.
8 users thanked Antony A for this post.
Sara G on 10/05/2018(UTC), Slacker on 10/05/2018(UTC), Mickey on 10/05/2018(UTC), Jim S on 11/05/2018(UTC), Peter59 on 11/05/2018(UTC), Richard_L on 13/05/2018(UTC), dlp6666 on 17/05/2018(UTC), Guest on 25/05/2018(UTC)
Ermintrade
Posted: 10 May 2018 15:31:58(UTC)
#11

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Another option, although not a fund or an IT, is Burford Capital. This has done extremely well for me. They provide finance for very large commercial law suits. They are still in expansion mode. I continue to hold as I believe the company's success will continue. It is pretty much uncorrelated to stock markets.
Regards
ermintrade
2 users thanked Ermintrade for this post.
Jim S on 11/05/2018(UTC), masud on 12/05/2018(UTC)
Antony A
Posted: 10 May 2018 16:02:17(UTC)
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I forgot to add: if you are looking for diversification via income-producing assets that have low correlation with equities and/or bonds, Interactive Investor had a useful article on this: see http://www.iii.co.uk/art...vestments-5-plus-yields

The lowest correlation with equities was the Specialist Insurance sector, followed by Gold, although this was quite highly correlated with bonds, so it we get a simultaneous slide in bonds and equities, perhaps from a generalised reappraisal of risk, then gold may not be the safe haven it's often claimed to be. Gold also notoriously generates no income. Poorly-researched and undervalued small gold miners may be a better bet.

The next lowest correlation was via ground rents, commodities and renewables, followed by asset leasing, property debt, infrastructure and specialist property. I think the latter means areas like student accommodation, care homes and other medical facilities. There is some useful detailed discussion in the article of potential trusts and funds to invest in. You may not feel these are appropriate for your portfolio now, but I found it useful to think about what I might invest in if we did enter a period of significant downturn.

We have been investing in a tech-fuelled, low-inflation, low-interest-rate environment for so long, supported by huge QE purchases of government and corporate bonds, that I don't think anyone, including central bankers, really knows how to react if we did have another financial crisis, or rapid growth in inflation, or a Middle Eastern war and oil price shock. Self-managing SIPP growth investors like me will probably be particularly vulnerable, because we've never invested through a recession before, so it may pay to try and be prepared!
3 users thanked Antony A for this post.
Mr Helpful on 11/05/2018(UTC), Jim S on 11/05/2018(UTC), dlp6666 on 17/05/2018(UTC)
Chris Ould
Posted: 11 May 2018 14:40:36(UTC)
#6

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King Lodos;61920 wrote:

Specialist Real Estate at least can provide good income (that being the hardest thing to come by in stocks and bonds these days)



Having around 8% in TRY, was thinking about adding to property exposure via a more specialist real estate trust. Germany / Berlin focused groups (Phoenix Spree) could have further to run.

Whilst researching i noticed that Buffet had recently entered the fray:
http://www.dw.com/en/us-...operty-market/a-42846499
1 user thanked Chris Ould for this post.
King Lodos on 11/05/2018(UTC)
Law Man
Posted: 11 May 2018 16:47:55(UTC)
#13

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I can add nothing of substance, but thank posters for some useful thought provoking ideas.

I guess one of the tests is whether a general fall of equities would drag down any of these 'alternatives' with them.
Newbie
Posted: 11 May 2018 18:21:39(UTC)
#14

Joined: 31/01/2012(UTC)
Posts: 2

Some more suggestions for you to resaerch

Technology - Allianz Technology (ATT)

Healthcare - Worldwide (WWH) AND International biotech (IBT)

Private Equity - III

Other - Tritax

Global - Scottish Mortgage

Others - India Growth Capital

Hope this helps.

Stephen B.
Posted: 11 May 2018 20:11:31(UTC)
#15

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Some reasonable suggestions here, but I'd just point out that private equity isn't an asset class - PE investments may be in specialist areas like tech but are often just in the usual market sectors, the difference is more in the way investments are managed. Basically you pay higher management fees but get much more hands-on management for it.
Matt A
Posted: 16 May 2018 16:17:38(UTC)
#17

Joined: 19/03/2010(UTC)
Posts: 5

Thank you for all of the responses, for now I decided to invest in BBOX and III and have added a few other to watchlist for future investments.
Ludditeme
Posted: 16 May 2018 17:21:06(UTC)
#18

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III seems to be approaching a 40% premium, which is a bit rich for my taste.
Stephen B.
Posted: 16 May 2018 17:36:58(UTC)
#19

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It's a special situation - a large chunk of IIIs NAV is a holding in a retailer (Action) which the market seems to be valuing more than the (probably conservative) III estimate. In effect it's being treated as a shareholding in the retailer with an attached investment trust, rather than vice versa. Probably in the next year or two there will be some kind of flotation - I'm not sure there's any precedent for a demerger from a PE trust so it could be a very large chunk of cash coming back.
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