Investment trusts: the advantages and disadvantages

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Investment trusts are often regarded as one of the best-kept secrets in the investment management industry. Traded on the stock market like regular stocks, these collective investment funds enable investors to gain exposure to a broad range of companies or assets in a cost-effective way.However, like any investment, such trusts have their pros and cons. With that in mind, here’s a look at the advantages and disadvantages of them.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…AdvantagesOne of the main advantages of investment trusts is their cost-effectiveness. While you do have to pay trading commissions when you buy or sell (usually around £10 or so), what you avoid are the fund platform fees that investment providers charge when you hold regular open-ended funds. Hargreaves Lansdown, for example, currently charges 0.45% per year on open-ended funds for accounts with balances up to £250,000. Avoiding these kinds of fees can make a big difference to your wealth over time.Investment trusts’ ongoing charges also tend to be quite attractive. For example, the City of London Investment Trust currently has a low ongoing charge of just 0.39%. There are not many open-ended, actively-managed funds with fees that low. Overall, investment trusts can be very cost-effective.Another advantage of investment trusts is that they are closed-ended. This means that the portfolio manager of the trust has a fixed amount of capital to invest (although some trusts can use leverage). This is beneficial for a number of reasons. Firstly, because investors can’t suddenly demand their money back, portfolio managers don’t need to worry about holding cash for redemptions. This can minimise cash drag and potentially boost performance. Portfolio managers can also take a longer-term view. Investment trusts also have advantages when it comes to dividend payments as they are able to retain 15% of the income they receive each year and use the retained income to boost dividends in leaner years. As a result, many investment trusts have outstanding long-term dividend growth track records. City of London, for example, has increased its dividend every year for over 50 years now.Finally, investment trusts are structured so that they have an independent board that is responsible for safeguarding investors. This is advantageous as it protects investors from issues such as poor-performing portfolio managers.DisadvantagesOn the downside, one issue to be aware of with investment trusts is that because of their closed-ended structure, they can trade at premiums or discounts to their net asset value (NAV). This can add complications. For example, a top-performing investment trust may trade at a significant premium, meaning you have to pay extra to acquire the assets in the trust. Similarly, a poor-performing trust may trade at a significant discount, which is not ideal if you’re already an owner of the trust (although it could be beneficial if you’re looking to buy).Gearing (the ability to borrow to invest more) is another issue to consider with investment trusts. Not all of them use gearing, but plenty do. While gearing can boost gains when the market is rising, it can increase losses when markets are falling.Overall, weighing up the advantages and disadvantages, investment trusts have considerable appeal, in my view. For those looking for cost-effective exposure to the stock market, I think they’re a great way to invest. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Sharescenter_img Investment trusts: the advantages and disadvantages Enter Your Email Address Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Edward Sheldon, CFA | Friday, 14th February, 2020 See all posts by Edward Sheldon, CFAlast_img read more

£5k to invest? I’d buy these cheap FTSE 100 shares today

first_img Our 6 ‘Best Buys Now’ Shares TomRodgers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Cheap FTSE 100 shares are out there if anyone is willing to do the hard graft of finding them. And with all the weakness in the stock market right now, there are some super bargains to be had. Now, when we do our research on cheap FTSE 100 shares, we’re looking for value. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Not just bottom-of-the-rung prices, but share prices that are cheap relative to the company’s long-term future prospects. Value, profits, paybackOne standard way of finding good value shares is to compare their P/E ratio. This takes a company’s share price and divides it by earnings per share. It’s not perfect, but it is a quick way of comparing lots of different industries all at once. The average P/E ratio across the whole FTSE 100 is 15.7. Any number below that denotes relatively cheap FTSE 100 shares — but it is up to us to find quality too. So we need to consider profits, how likely a company is to survive another downturn, and long-term growth as well. Let’s begin.Permission to buyWith a P/E ratio of just 9.4 Persimmon Homes (LSE:PSN) looks to be in our sweet spot for cheap FTSE 100 shares. Net cash of £828.9m is certainly a very strong balance sheet for the UK’s largest housebuilder. What about the short-term outlook? Sentiment among construction firms in September 2020 was at its strongest since before the Covid outbreak, with business flying in at its fastest rate all year. This is according to the IHS Markit Purchasing Managers’ Index for the sector. Analysis of the wider market is positive too. Local lockdowns have not impacted the rate of construction, while asset manager Jeffries recently rated the sector “too cheap to ignore”. “We see current share price weakness as presenting a great entry point for our key picks,” said Jeffries, naming Persimmon alongside Berkeley and Barratt Homes. I’d stick with Persimmon for its profitability: the company’s return on capital employed of 22% destroys Barratt and Berkeley and is in the top five of the entire FTSE 100. High-double-digits usually means a company has a strong edge over its competitors. There’s a reason why it’s famed fund manager Terry Smith’s favourite metric. Future perfectAs an investor I’m very interested in the company’s forward order book. This tells me in depth what the company’s strength is likely to be.Half-year results for the six months to 30 June 2020 showed Persimmon’s forward orders 21% ahead of last year at £2.5bn. CEO Dave Jenkinson brought back a “modest” 40p per share interim dividend on the back of this sales strength. This only represents a 1.5% dividend yield, sure. However, the City is expecting Persimmon to reinstate its full dividend of 125p per share: a healthy 5% dividend at today’s prices.And Persimmon has not always had such cheap FTSE 100 shares. Look back to 2016 and the company’s P/E ratio was knocking on the door of 15. So I’d say now is a good time for me to buy.Clearly, the fact that Persimmon shares have rebounded 60% since the Covid stock market crash indicates that there is optimism in the air. Glass-half-full investors are fewer and further between these days with all the threats on the horizon. So with five grand burning a hole in my pocket, these would be my top cheap FTSE 100 shares to buy.  £5k to invest? I’d buy these cheap FTSE 100 shares today Image source: Getty Images I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997”center_img Simply click below to discover how you can take advantage of this. Tom Rodgers | Saturday, 24th October, 2020 | More on: PSN Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Tom Rodgerslast_img read more

Rugby Book Review – Expert Guide to Sevens

first_imgBUY IT AT:  greenstarmedia.net RRP:  £37  PUBLISHED BY:  Green Star MediaGot a rugby book or DVD you’d like us to review in the Armchair Zone? Email [email protected] article appeared in the July 2010 issue of Rugby World Magazine TAGS: Book Review England V Argentina Sevens in Wellington Sevens coaching manuals are somewhat thin on the ground, partly because the majority of amateur players are happy to play the sport off the cuff. Colin Hillman, the policeman who played for and coached Wales Sevens, understood that a few basic principles couldgo a long way and was in the process of writing this expert guide when he died, aged just 46, in July last year.His work wasn’t wasted as Dan Cottrell finished what Hillman had started, delivering a guide that will serve all sevens players well. Many of the leading sevens coaches contribute, with Mike Friday especially prevalent as he offers seven drills to use fora “world-class session in two hours” and his rules for picking a balanced squad.If pure gas is non negotiable, it’s possible to defeat quicker opponents. Indeed, Joe Lydon, another former England Sevens coach, admits that the Manchester Commonwealth Games was a big learning curve for him: “I picked a squad to play sevens. Titch (New Zealand coach Gordon Tietjens) picked a squad to play sevens on a narrow short pitch. They won, we didn’t.”In general, quicker teams should compress their attack to give the speedsters more space, while slower but more physical teams should take contact to create offside lines and suck opponents in.Key skills and techniques, attack and defence, tactics and set-pieces (under Friday, England used a six-man lineout to score from a maul) are all explored in depth. Assimilate all this and even your ragtag sevens outfit from The Dog & Duck will have something about them!RW RATING 4/5 LATEST RUGBY WORLD MAGAZINE SUBSCRIPTION DEALS Do you want to buy the issue of Rugby World in which this article appeared? Back Issues Contact John Denton Services at 01733-385-170 visit http://mags-uk.com/ipcOr perhaps you’d like a digital version of the magazine delivered direct to your PC, MAC or Ipad? If so click here.last_img read more