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Published : 17.04.2014 | Author : admin | Categories : MLB Sport Betting Picks
Cut-price investment trust funds whose performance can put rivals in the shade are being woefully ignored by investors. The greater returns are largely because annual charges are 0.63 percentage points lower than in ordinary funds, according to research from Collins Stewart wealth manager. When most people seek an investment for their Isa, the vast majority pick what are commonly called funds, which are usually open-ended investment companies (OEICs) or unit trusts. In the average ordinary fund investing in the same region, you’d have ?1,429 — a third less of a return on your money. These trusts, of which there are about 400, are also considered much more complex than regular funds, which simply buy shares in a range of companies or bonds with your cash. So when the basket of underlying shares in which the trust is invested isn’t doing well, the clamour for it — and the price — will be reduced.And when demand for the trust’s own shares is less than supply, it creates a so-called ‘discount’.


This is because the companies which run these funds pay hefty commissions and, as a result, are heavily pushed by financial advisers. The big firms into which these investors’ money is flowing include Thai power company Glow Energy, South Korean travel operator Hana Tour Service, electronics giant Samsung, car maker Hyundai and banking giant HSBC, whose shares are listed on the Hong Kong stock exchange.
An investment trust is technically a company, so in order to invest in the fund you need to buy shares in it first. Net asset value v share priceInvestment trust shares can trade at a premium or discount to the value of the assets they hold, known as the net asset value. It is a key part of a trust’s appeal, but requires savers to take a very active part in their fund’s performance.When an investment trust is trading at a discount, it offers investors a chance to benefit from two lots of growth — a possible rise in the trust’s own share price, as well as potential growth in the value of the basket of shares it’s invested in.
But rival investment trusts, which pay no commission, can be much cheaper and give you the same returns — if not much more — for your money.


As the trust itself is listed on a stock exchange it prevents you from being able to dip in and out, as you can with ordinary funds, without selling shares.The lack of promotion has hammered their popularity. The share price is essentially the value the market has put on buying or selling into the trust, while the net asset value represents what it owns (assets) minus what it owes (liabilities).This gives new investors the opportunity to sometimes buy in at a discount, but means existing investors' holdings can be worth less than they should be. Unfortunately, the double whammy can work in the opposite direction when markets are falling.
From January 1, annual commission payments from ordinary funds must no longer be paid to advisers.The Financial Services Authority City regulator hopes getting rid of such a temptation will convince advisers to recommend investment trusts more often.



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