QuotedData’s weekly news show 8 January 2020.

Thank you to everyone that listened in today, whether you watched the Zoom live, on Facebook or on Youtube.

In this week’s show, James Carthew was joined by Andrew McHattie for a round up of the investment trust sector in 2020:

Watch it again here –

We’ll be back on January 15th where we will be joined by James Robson from RM Secured Direct Lending.

There were some questions that we couldn’t cover in the time available – here are some answers:

  1. Q: looking at discounts are one thing – what about spreads and volume? What are the numbers like here? – A: We haven’t got those numbers to hand but the issue of spreads – the gap between the ask (buying) and bid (selling) price – is something that we’ll aim to return to later in the year. Generally, larger trusts have narrower spreads but there are some exceptions. On most investment platforms you can try setting the price that you want to deal at (a limit order) but it isn’t always possible to deal that way.
  2. I joined the webinar early and you were both talking – sorry, but Andrew can you please mention more detail about your book and how it compares to the annual IT Handbook from Harriman House? – A: Thanks for asking about my book, which is just going to the printers and will be available shortly. It is intended to be a comprehensive guide to investment trusts, from the basics of how they function to the intricacies of discounts, gearing, revenue reserves, corporate action, dealing spreads, and convertible unsecured loan stock. Part 1 covers the structure in detail; Part 2 identifies the players in the industry, from the trade association to managers, directors, stockbrokers and shareholders; and Part 3 discusses the practicalities of dealing, tax, analysis, and where to find the best information. To round it off, an extensive appendix provides an overview of all of the main events in the sector of the past 25 years, including the ‘its’ campaign, the split capital crisis, huge IPOs, the rise of alternative assets, the Woodford scandal, and the response to the Covid-19 pandemic. I think it’s quite different – and hopefully complementary to – the IT Handbook, which is more about dipping into certain subjects and providing topical updates.
  3. Isn’t Asia a good place for dividends as they are growing and have plenty of scope to increase? – A: Some countries in Asia have more of a dividend paying culture than others but, on average, dividends are growing faster than global averages. COVID had a far lower impact on dividends in Asia than it did in the UK and Europe. 
  4. Any thoughts on Vietnam? – A: We like Vietnam – we suggest you read our latest note on Vietnam Holding.
  5. Could inflation take off ( and interest rates too) if we get a significant bounce after Covid recedes further? Roaring 20s again? – A: Here we’d direct you to our notes on Henderson Diversified Income – here is the latest – modestly higher inflation (once the depressive effect of COVID wears off) is possible but governments will run scared of raising interest rates materially we think.
  6. what about Manchester and London????? – A: MNL’s portfolio is dominated by large cap tech, investors took profits on this area in the second half of 2020 and MNL’s NAV went sideways. It made enough in the first half of the year to push it towards the top of the performance table, however.
  7. Do you have thoughts on investing in an asset manager instead of the trusts/funds it manages? – A: Sometimes this can be a great strategy – the asset managers are geared plays on the performance of their underlying funds. This works both ways, however. Also the more diverse an asset manager’s fund range is, the less likely it is that success in one area will translate into higher profits across the board.
  8. Gabelli Merger Plus’s share price has markedly underperformed its NAV. Has it been affected by the bad press from the Gabelli Value Plus debacle? – A: We wouldn’t be surprised by this.
  9. have you mentioned BRWM? – A: No we didn’t have enough time to cover every sector but, in mining, it was all about gold – Golden Prospect was one of the best performing of all funds in 2020. BlackRock World Mining benefited from this too. 

The legal bit

NB: this show was produced by Marten & Co and is for information purposes only. It is not intended to encourage the reader to deal in any of the securities mentioned in it. QuotedData is a trading name of Marten & Co Limited which is authorised and regulated by the FCA. Marten & Co is not permitted to provide investment advice to individual investors. The show’s contents were compiled from publicly available information. The show is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of the show is prohibited.

Please remember that past performance is not necessarily a guide to the future and that the value of shares and the income from them can go down as well as up. Exchange rates may also cause the value of underlying overseas investments to go down as well as up. Marten & Co may publish on companies that use gearing in a number of forms that can increase volatility and, in some cases, to a complete loss of an investment.