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Posted: 18 February 2013 13:26:29(UTC)

Joined: 15/12/2012(UTC)
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Hi, I would be interested to have some feedback or ideas regarding investing £100,000 into investment trusts/oeics/etf's

I already have investments made up of oeics/investment trusts & etf's, so I am familar with them to a degree.

The management charges on etf's are low but how safe are they ?
Invest/trusts management charges are next best but I have found some of the really popular ones fees are not always that much different to oeics/unit trust that have been bought through a platform with a rebate on commission.

If I was going to buy oeics I was thinking of £25k into 4 different ones buying through hargreaves for nil fees.

If buying invest trusts I would probably buy 2 at £50k each to cut down on buying costs and apply the same to etf's.

Not really into buying shares as I have had my fingers burnt in the past prefer something slightly less volatile.

Are oeics that much dearer to run overall when you take into account buying fees, stamp duty etc on invest trusts.

I welcome your views & ideas.

Stephen Doyle
Posted: 18 February 2013 16:12:10(UTC)

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Suggest Personal Assets Investment Trust

Very low to zero costs. Very safe and reliable. Core holding
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cheshire on 19/02/2013(UTC), Guest on 20/02/2013(UTC)
ERic Hancock
Posted: 18 February 2013 16:50:30(UTC)

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Here's where to invest your £ 100,000 (assuming you want to make some money via dividends)

Office to Office (OFF) P/E 6.2 Div 10.7%
GlaxoSmithKline (GSK) 13.1 5.2%
Schroder Real Est Tst (SREI) 11.1 8.7%
Picton Prop (PCTN) 12.0 7.3%
Cable & Wlss Comms (CWC) 11.2 5.8%
Alpha Pyrenees Tst (ALPH) 5.2 17%
Greenwich Loan Inc Fd (GLIF) 10.6 9.1%
Carador Inc Fund (CIFU) 7.4 13.1%
Persimmon (PSN) 14.0 8.5%
Resolution (RSL) 9.7 7.6%
Aviva (AV.) 7.5 7.1%
Royal Sun Allc (RSA) 9.9 6.9%
Hansard Global (HSD) 15.2 6.6%
Tullet Prebon (TLPR) 6.9 6.3%
Morgan Sindall (MGNS) 8.9 7.0%

I'll leave you to work out the amount of capital you want, in each. After all, I've done all the hard work for you!

Eric JH

PS Yes, Alpha Pyrenees is indicating a 17% dividend at the moment - that's not a misprint.

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cheshire on 19/02/2013(UTC)
busy bee
Posted: 18 February 2013 17:10:51(UTC)

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What a strange collection in the previous comment - from what I see you would have lost out - a couple of intersting ones - so thank you ! But compare these to Finsbury Growth & Income (FGT) and practically any investment trust invested in China or Fae East. You really have to do your own homework.
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cheshire on 18/02/2013(UTC)
Posted: 18 February 2013 17:30:16(UTC)

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It would take a relatively sophisticated investor to understand that posts like that - listing yields without analysis or explanation - need to be taken with a pinch of salt and subject to considerable further research. If ever there is an unusually high yield, there is always a story behind it. Yes, Alpha Pyrenees does appear to yield around 17% - if you are happy with 75% geared property in some of the worst-hit countries of the Eurozone and a divi which is uncovered on some analyses. You would also need to understand that had you bought it for yield last year, you would by now have lost half your capital value! Can OFF maintain it's dividend? The jury's out. Persimmon's 14% includes a special dividend which they have undertaken as a 'return of cash' over a decade, but will not be paid every year. Etc Etc. A good place to start your research, maybe, but don't take these figures at face value.
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Clive B on 18/02/2013(UTC), cheshire on 18/02/2013(UTC), philip gosling on 18/02/2013(UTC), Bryan Jefferson on 19/02/2013(UTC), Paul Davies on 25/02/2013(UTC)
David 111
Posted: 18 February 2013 17:32:06(UTC)

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I don't really get the logic of buying only two ITs vs 4 oeics. The extra cost of buying 4 rather than 2 ITs in only likely to be about £20.

This is insignificant when investing £100,000 and likely to be dwarfed by the difference in ongoing charges and performance between the two types of investment.
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Clive B on 18/02/2013(UTC)
Posted: 18 February 2013 18:01:00(UTC)

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Sorry to chip in with something that's probably not very helpful, but I'm not sure what you mean by 'buying through hargreaves for nil fees', unless it is only in the context to initial fees?
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cheshire on 19/02/2013(UTC)
Posted: 18 February 2013 18:30:36(UTC)

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hi, If i decide to invest in oeics/unit trusts the majority can be bought through hargreaves lansdown without any fees payable.
Posted: 19 February 2013 08:38:57(UTC)

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Apologies Cheshire,
All I meant was, yes, there might be no initial fees, but there will still be trail commission (which I assume you are aware of), so it's not a completely 'nil' process.
I mentioned it because there are clearly some people who, from their remarks, don't seem to appreciate this and do actually believe it is free.
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Bryan Jefferson on 19/02/2013(UTC)
Posted: 19 February 2013 09:08:34(UTC)

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Cavendish online is I think is the best bet at the moment if you plan to go with OEICs/UTs.
They rebate all the available trail commission, normally around 0.5% from a 1.5% AMC, but you still get stuck paying the remaining 1% covering manager and platform fees (plus the extra hidden costs). IT's may well be cheaper if held off platform as the AMC is often lower than 1%. Need to therefore balance the long term saving in AMC over the likely dealing costs.

A 10K OEIC investment may cost you £50/year more than an equivalent IT which puts the £10 + £50 stamp duty ( 0.5%) into perspective particularly if you are a buy and hold investor. Obviously if you plan to switch investments often the dealing fees will mount up and start to make the OEIC route more cost effective.
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cheshire on 19/02/2013(UTC)
Income Investor
Posted: 19 February 2013 11:08:31(UTC)

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A lot of ideas there - but as several comments have noted, you need to be the master of your own investment ship and chose the risk/reward profile you are happy with.

Kudos to Eric H for sharing his high-yield selection - but this is probably far too high-risk for most investors.

As you will know, in the long run you need to minimise tax and fees and maximise total return (which is capital + income). My own take on this is a 50/50 split between *reasonably* high-yield dividend shares and fixed-income. One of the cheapest and safest ways to achieve this is with ETFs (because the fees are lower than funds but you still get diversification). However, particular market segments (as well as the market overall) can underperform. For this reason I have been diversifying outside the UK (using ETFs).

You might keep a portion of your portfolio to invest in specific securities - such as those suggested by Eric: but do your homework and make sure you understand why the yields are so high.

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cheshire on 19/02/2013(UTC)
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