Unit Trusts, Investment Trusts, ETF's
Fri, 28/03/2008 - 12:28
A Unit Trust is a Collective Fund where investors pool capital into a single fund, which inturn is professionally managed. Other popular types of Collective Fund include OEICS and Investment Trusts. Investemnt Trusts differ from UT & OEICS in that they are structured as a company, close ended (have a restriction on the total number of shares issued)and are quoted on the UK stockmarket. The investment risks associated with IT's are generaally higher than UT & OEICS because the fund is a quoted share and can borrow significantly greater sums. This gearing can add significant volatility in the short term. Although charges are an important consideration they should not be the determining factor in choosing a particular investment vehicle. UT & OEICS are open ended structures with the funds being valued directly to the assets held within them. They are therefore highly liquid and enable switching in/out without any significant delay. I suggest you seek advise from an IFA prepared to work by means of a fee and with the expertise to consider all types of Collective Fund in meeting your needs
Fri, 28/03/2008 - 14:12
hi roraima,
From what I know, I would say investment trusts are a good bet in the current economic climate. Despite them being higher risk than other collective investmens - because they use gearing it means the managers can borrow money to take advantage of stocks that are currently undervalued by buying more of them.
Like you i found financial advisers reluctant to offer them - so i have done my own research. On the website unbiased.co.uk you can find an adviser based on their speciality so might be worth checking that out.
One thing I would say though, given current volatility, is to avoid putting the whole portfolio in one or two funds - try to spread it out to spread the risk. Also, have you heard of 'pound cost averaging? I've read that is a good idea to invest regularly every month to take advantage of this - it means your money will be used to buy fewer shares when prices are high, and more when they are low - which also reduces risk.
Hope that helps!
Wed, 24/12/2008 - 05:17
Many thanks for your advice. I have had three independent reviews of our family portfolio all of differing depth and opinion. I am glad I have held off readjusting the family portfolio as it was pretty much insulated against the market falls in 2008 ! Now we are likely to move our investments away from sterling denominated investments and play safe on the stock market and weight more towards corporate bonds. Thanks again !
Wed, 24/12/2008 - 05:18
Many thanks for your advice. I have had three independent reviews of our family portfolio all of differing depth and opinion. I am glad I have held off readjusting the family portfolio as it was pretty much insulated against the market falls in 2008 ! Now we are likely to move our investments away from sterling denominated investments and play safe on the stock market and weight more towards corporate bonds. Thanks again !
Wed, 24/12/2008 - 05:19
Many thanks for your advice. I have had three independent reviews of our family portfolio all of differing depth and opinion. I am glad I have held off readjusting the family portfolio as it was pretty much insulated against the market falls in 2008 ! Now we are likely to move our investments away from sterling denominated investments and play safe on the stock market and weight more towards corporate bonds. Thanks again !
Wed, 24/12/2008 - 08:09
Thanks for the advice. We have in fact sold up in the UK at the top of the propert market and at a good exchange rate and now bottom fishing in the USA. Have taken on a very good adviser at Merrill Lynch and a stockbroker in Chicago. Diversification seem to be the key in these turbulent times ! I have noted that the charges and fees in the UK are much much higher than in the USA for most investment vehicles.
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I have been reading in the press not only in the UK but also the USA that Unit Trusts offer less value for money and liquidity than investment trust snd ETF's. Are their days numbered ? and which investment vehicle do you consider is the best in the current volatile markets ?
I am currently constructing an investment portfolio with two other trustees of my late father's Estate for the benefit of my mother but Financial Advisers only seem to be interested in Unit Trusts where they get handsome fees.