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Should I sell these two?
philip bowen
Posted: 08 December 2017 20:58:26(UTC)
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I have held Aberdeen Asian income and Perpetual IG Trusts for 5 years hoping for good income and some capital growth. What has gone wrong with them? What alternatives are there? I was keen on an Asian income trust to diversify away from U.K. income and PI and G has always done well long term.
Keith Cobby
Posted: 14 December 2017 13:40:30(UTC)
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Philip, I used to hold Aberdeen Asian Income (together with the other Aberdeen Asian trusts) but became disillusioned with their performance and sold about 3 years ago. I like Henderson Far East (which I have held for many years) and Schroder Oriental Income. Also have a look at Henderson International Income which has no UK holdings.

I sold PLI and EDIN due to their poor performance since the financial crisis. I have moved away from UK Equity Income trusts but you might have a look at Finsbury.

3 users thanked Keith Cobby for this post.
dlp6666 on 14/12/2017(UTC), philip bowen on 14/12/2017(UTC), Guest on 17/12/2017(UTC)
Mr Helpful
Posted: 14 December 2017 14:17:23(UTC)
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philip bowen;54058 wrote:
I have held Aberdeen Asian income and Perpetual IG Trusts for 5 years hoping for good income and some capital growth. What has gone wrong with them? What alternatives are there? I was keen on an Asian income trust to diversify away from U.K. income and PI and G has always done well long term.


We hold AAIF, HFEL, and SOI in our Asia/Pacific mix.
Do not expect any of these to shoot the lights out, as they are Income orientated.
AAIF is trading at a significant discount, which might affect the timing of any decision?
And in the meantime offering a reasonable real (growing) yield circa 4.5%.

As for what is better, that is a matter of differing opinions.
Might clarify if we knew whether income or growth the objective?
If unwilling to underperform markets, the standard advice is then to buy those market through a tracker of the markets, such as :-
VWRL Global Stocks
VUSA US Stocks
VERX European Stocks
VUKE UK FTSE100

Outside of that many here have good experience of Investment Trusts turning in stellar outperformance, but as to whether such outperformance will continue into the future is well above this investor's pay-grade!
4 users thanked Mr Helpful for this post.
Inderpal Singh Khalsa on 14/12/2017(UTC), philip bowen on 14/12/2017(UTC), Doubter on 15/12/2017(UTC), Mike L on 16/12/2017(UTC)
Keith Hilton
Posted: 14 December 2017 14:23:38(UTC)
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I was also disappointed with AAI so switched into JPM Asian (JAI). It's been on a good run lately, but is still on a 12% discount to NAV.
3 users thanked Keith Hilton for this post.
Mike L on 16/12/2017(UTC), laang lee on 16/12/2017(UTC), gillyann on 24/12/2017(UTC)
King Lodos
Posted: 14 December 2017 14:49:29(UTC)
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The tricky thing is that at some point, the worst performing funds often become the best .. Which is what's meant by 'mean reversion'.

Usually when a fund underperforms, it's a matter of an investment style being out of favour – and Morningstar's Portfolio tab can give you clues, such as whether a fund's tilted towards Value or Growth.

We know from fund data that investors buy and sell funds at exactly the wrong times .. It's as tricky an art as picking outperforming companies (because that's really what you're doing) .. I'd either see if you can find an index tracker that fits your needs, or look at John Baron's portfolios, as he seems to be judging funds on sound criteria (Google: john baron portfolio)
8 users thanked King Lodos for this post.
Tim D on 14/12/2017(UTC), Inderpal Singh Khalsa on 14/12/2017(UTC), I predict a riot on 14/12/2017(UTC), Big boy on 14/12/2017(UTC), philip bowen on 14/12/2017(UTC), laang lee on 16/12/2017(UTC), Andrew Smith 259 on 17/12/2017(UTC), Rickenbacker Al on 18/12/2017(UTC)
Big boy
Posted: 14 December 2017 15:20:39(UTC)
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I would sell both and reinvest into following BLND,HMSO,INTU and LAND. I am 100% invested and have over 50% in these Commercial Property shares which stand on average discount of nearly 30% and provide a good yield....I tend not to go for yield as prefer to live on capital........less tax to pay.

Since BREXIT investors have flooded into Global stocks which now look fully valued and could be on the crest of the wave. With the outlook for BREXIT becoming clearer I suspect sterling will recover. Since purchasing the above we have had mergers/TOs(Intu and Westfields) anounced and I suspect the value buyers will be looking very closely. ( I am sure the M&A departments will be very busy over XMAS)
I know others on this site will say the Companies have not done well over so many years but don't be put of by them as I like to look forward.
8 users thanked Big boy for this post.
Tim D on 14/12/2017(UTC), jvl on 14/12/2017(UTC), I predict a riot on 14/12/2017(UTC), Mr Helpful on 14/12/2017(UTC), philip bowen on 14/12/2017(UTC), IanL on 16/12/2017(UTC), Mike L on 16/12/2017(UTC), c brown on 19/12/2017(UTC)
Tim D
Posted: 14 December 2017 15:58:43(UTC)
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Big boy;54247 wrote:
I would sell both and reinvest into following BLND,HMSO,INTU and LAND. I am 100% invested and have over 50% in these Commercial Property shares which stand on average discount of nearly 30% and provide a good yield....I tend not to go for yield as prefer to live on capital........less tax to pay.

Since BREXIT investors have flooded into Global stocks which now look fully valued and could be on the crest of the wave. With the outlook for BREXIT becoming clearer I suspect sterling will recover. Since purchasing the above we have had mergers/TOs(Intu and Westfields) anounced and I suspect the value buyers will be looking very closely. ( I am sure the M&A departments will be very busy over XMAS)
I know others on this site will say the Companies have not done well over so many years but don't be put of by them as I like to look forward.


Any opinion on why FCPT has swung back to a (small) discount in the last week? It's needed something like 2008 or the immediate aftermath of the brexit referendum to knock its usual premium off before. All I can think is it's some anticipation of the imminent quarterly NAV update writing down FCPT's prime London properties on renewed banker brexodus fears (or equivalently the market just not believing the NAV).

Definitely expecting to be directing my "dividend hose" towards domestic UK asset beds over the next year. "Be greedy when others are fearful" etc (although I suspect the point of maximum dooooom has yet to arrive). Already had years of filling my boots with global assets while sterling was still worth something.
1 user thanked Tim D for this post.
Mickey on 14/12/2017(UTC)
Big boy
Posted: 14 December 2017 16:54:40(UTC)
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Not sure why FCPT hold up so well when you can buy a good pot of Commercial Property at discounts around 30%. I think investors love the story and hype therefore they feel safe being with all the other investors.....looks like recent sector IPOs have failed or struggling to find investors at this level. The yield will not hold the share price when the assets come under attach.....Come and join the party in the above stocks.

3 users thanked Big boy for this post.
Tim D on 14/12/2017(UTC), Mickey on 14/12/2017(UTC), Guest on 15/12/2017(UTC)
Big boy
Posted: 14 December 2017 17:01:41(UTC)
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FCPT. have purchased Bristol Property on yield of 5% and now have net gearing about 20%.
Keith Cobby
Posted: 14 December 2017 17:53:58(UTC)
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FCPT , which I and my son hold, is available through the F & C savings plans so there is a constant demand for the shares. Also I think it is a quality portfolio.
Mr Helpful
Posted: 14 December 2017 19:01:09(UTC)
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Big boy;54247 wrote:
I would sell both and reinvest into following BLND,HMSO,INTU and LAND. I am 100% invested and have over 50% in these Commercial Property shares which stand on average discount of nearly 30% and provide a good yield...


BLND and LAND now moving ahead nicely.
HMSO not so much. (gave that one a miss, as just a bit too retail rich for us)
Well researched and highlighted.
Thanks again and keep the insights coming.
2 users thanked Mr Helpful for this post.
philip bowen on 14/12/2017(UTC), c brown on 19/12/2017(UTC)
Peter59
Posted: 14 December 2017 21:57:14(UTC)
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iShares IAPD would give you exposure to Developed Asia (with income), then you could mix in EM exposure as desired. The problem with Asia Pacific as an AIC sector is that there is such a wide invest-able universe, returns are are mostly correlated to Developed/EM allocation rather than stock selection. But of course, you may be happy giving a fund manager the freedom to make those decisions. Personally I would rather the remit of the trust be more specific to a sector or geographical area.
3 users thanked Peter59 for this post.
Tim D on 14/12/2017(UTC), Sara G on 14/12/2017(UTC), Mike L on 16/12/2017(UTC)
King Lodos
Posted: 15 December 2017 00:56:29(UTC)
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I think you have to ask why you're holding regional funds.

– With passives, you get the whole market in a world tracker, so you don't need to add anything .. So the decision to hold extra EM or China is a deliberate overweight to riskier, potentially higher return, regions;

– With actives, the idea would be that a manager can know a local market better, and give you expertise .. But I don't see much evidence for that outside Micro-cap funds .. e.g. the FTSE 100 has more exposure to EM than to the UK, so how is it not really a global fund? .. And then the question is: Could the manager find 10 better companies outside the UK?


Probably, but then the manager would have to give up a much easier benchmark (the FTSE 100) .. The FTSE or MSCI World is harder to beat because it's always positioning itself towards the best growth.

So I think it's a bit of a con .. There's no evidence that holding separate UK, Europe, Asia, etc. funds gives you any bonus when you rebalance between them, top-slice, etc. because momentum and mean reversion both act counter to each other, and you can be on the right or wrong side of either .. It impresses me how well Lindsell Train IT's Nav has done .. I think that tells you a solid strategy focusing on companies (not where their offices are) is hard to beat
3 users thanked King Lodos for this post.
Tim D on 15/12/2017(UTC), Sara G on 15/12/2017(UTC), Mike L on 16/12/2017(UTC)
colin overton
Posted: 15 December 2017 09:36:48(UTC)
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I have begun to change out of Aberdeen Asia and Emerging markets UTs, after holding for years, as their relative performance has dropped off in the last 6-12 months. I have started buying JPM's UTs (both Asia and Emerging markets) and am satisfied with progress so far. I also bought Baillie Gifford Emerging Markets Growth, but that hasn't done so well after a good start and will not be buying more until better performance materialises. I've never had much success with Baillie Gifford investments but thought the performance charts justified an investment. Perhaps I was wrong?
Your comment on switching is pertinent, like choosing which lane on a motorway in slow traffic. It's one of the reasons I prefer UTs to ITs, in general. You can buy (or sell) small packets largely or even completely without cost. You don't have to invest in larger lumps or hold on (completely) to investments you are unhappy with. No discount or gearing to complicate things, +ve or -ve. NAV = Price. If you're not happy trying to time the market then invest monthly using direct debits. If you're not invested in an ISA you can manage CGT better as well. Life becomes more complicated for a while when you are in the process of moving from one into another UT, but this is manageable.
Investments are supposed to make money not loose it, certainly over 2-3 years. Therefore I have begun to switch with Income UTs as well, selling Woodford's UTs as performance gets worse and worse, buying J O Hambro UK Equity Income, etc. (Artemis Income). as the gap in gains widens to more than double, as least for me.
I have a feeling that the more uncertain last 6 months for investments may persist and making money will become more difficult in the near future. Investments are not like football teams you should consider switching allegiance without emotion. Buying and holding for ever just rewards poor stock picking, Mr Woodford.
2 users thanked colin overton for this post.
philip bowen on 15/12/2017(UTC), laang lee on 16/12/2017(UTC)
Keith Cobby
Posted: 15 December 2017 09:39:55(UTC)
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Hasn't Lindsell Train's outperformance been due to the very large holding in the management company.
Mickey
Posted: 15 December 2017 11:16:14(UTC)
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colin overton;54265 wrote:
Your comment on switching is pertinent, like choosing which lane on a motorway in slow traffic. It's one of the reasons I prefer UTs to ITs, in general. You can buy (or sell) small packets largely or even completely without cost. You don't have to invest in larger lumps or hold on (completely) to investments you are unhappy with.

I agree that switching funds is a lot easier. However, that was the reason I moved into Investment Trusts, I found the fund universe too large and offered too many choices for me. Holding IT's is a much easier job and just as much fun.
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Keith Cobby on 15/12/2017(UTC)
Big boy
Posted: 15 December 2017 11:50:08(UTC)
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PB ......do you have your answer?????..... We all seem to have wondered from the original question.
Tim D
Posted: 15 December 2017 13:22:34(UTC)
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philip bowen;54058 wrote:
I have held Aberdeen Asian income and Perpetual IG Trusts for 5 years hoping for good income and some capital growth. What has gone wrong with them? What alternatives are there? I was keen on an Asian income trust to diversify away from U.K. income and PI and G has always done well long term.


Long term happy holder of Newton Asian Income here (one of my few remaining accumulation unit holdings though), although largely on the basis of its 10-year outperformance (which may all be due to an exceptional 2010&2011). More recently (5 years) it's done no better or worse (total return) than L&G Pacific Index (also a long-term hold; not very income yielding though; 3% yield) or HFEL (not held but semi-interested). Worse still its 1-year performance shows it slipping behind the index fund... a bit worrying as it just got a new manager last year (which got it booted out of HL's 150 list I think). So may well be time to bail out.
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philip bowen on 15/12/2017(UTC), laang lee on 16/12/2017(UTC)
King Lodos
Posted: 15 December 2017 14:00:22(UTC)
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Keith Cobby;54266 wrote:
Hasn't Lindsell Train's outperformance been due to the very large holding in the management company.


I don't know .. looking through past reports, the holding in LT has generally been lower – sometimes only 8 or 9%.

It's also held treasuries, preferred shares, and shifted in and out of its own funds – doing a great job of sailing through the financial crisis .. I'd like to get the reports from 2007-2009 to see what they did there.

I've roughly backtested most of its core portfolio – and (minus Nintendo) it's done around 9% annualised since the 90s, vs 5% from the US index .. Very well run portfolio – not sure whether the premium and performance fee make it a good investment yet, as apart from its holding in LT, you can recreate the other 60% of the portfolio extremely cheaply

philip bowen
Posted: 15 December 2017 15:56:24(UTC)
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Very grateful for all the advice and wisdom. I have to think more carefully about objectives - I might move from AAI to a more growth based Asian IT. Regarding PI&G long-term has been good and that comment that a dip can often be because something is out of fashion struck a chord. I will hold on but review in 6 months. I did note mention of JOHCM equity income and that interests me as an alternative.
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