Investment trust or specific Shares.

Mapara

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What do people think of the pros and cons between the above two methods of investment,also in Ireland just to clarify are the gains taxed as Cgt on both?
 
Investment TRUSTS are shares that are quoted on LSE. Same rules apply as to other shares, you pay income tax on dividends and CGT on profits
 
Everything I've read suggests that people are terrible at picking individual shares.
And that even funds where they try to beat an index in the long run do worse than the index.

This leads me to believe that one should invest in a low cost index tracking fund.
However in Ireland ETF's and Mutual funds are treated as unit-linked funds and hence get taxed at 41% (exit tax) every 8 years on gains (deemed disposal).
This leads me onto Investment trusts - which have a benchmark of some index (so they perform similar to an index), and some tend to have low enough costs.
Or even better invest in an index or mutual fund through a pension plan.

But investing in specific shares seems to be a no go - but some people do it with their "gambling"/"fun" money.
 
I can’t speak for others but I was terrible at stock picking and gave it up. Hard lessons learned were

- need to understand and know the company and industry really well (a must for Warren Buffett). this takes a lot of time and research.

- it helps a lot if you are in the industry as you hear rumours. Apparently the dogs in the street (in the cafe industry) knew that there was a problem with Patisserie Valerie. Similarly with Woodford (to my cost!).

- Boards, auditors, regulators will not protect you from company shenanigans (and outright fraud). You’re on your own.

- overestimated my own skill.

- listened too much to tipsters (many do not have a clue or are talking their own book )

- it helps a bit if you are an accountant. I’m not.

- personally I think that (in the short term at least) the market is tilted against you. Insider trading is still rife. Some of the carry on is still legal (eg spoofing - May now be outlawed in the US). Then there’s high freq trading etc.

- To reap any possible benefit from individual shares you need to put a substantial part of the portfolio into them. This takes a lot of guts and commitment.

I read Tim Steers book “the signs were there” which frightened the bejaysus out of me and killed off any residual thoughts about investing individual shares.

So in summary the monkey and dart board would do better than me.

I know others on this forum do it successfully but it’s ETFs all the way for me!
 
City of London investment Trust looks good but is overwhelmingly a UK market based trust.

One thing owning the S+P but having all in the FTSE?
 
There is another one called law debenture investment trust, it hasn't had rip roaring performance, but very solid and steady. I think it is mostly UK but also global and low cost. It is widely recommended in UK as part of a portfolio. At this stage I would not be overly concerned with UK concentration, UK stocks did badly over brexit concerns but have outperformed over the last few months. In Ireland we tend to get overly negative vis a vis brexit, at this stage I would be more worried about too much dollar and us markets exposure, a lot of very expensive technology stocks in us which I would not be investing in now.
 
A couple of things to watch re inv trusts.

- They can move from a premium to a discount to NAV and back which is an added source of volatility.

- They can gear up.

- They can be hard/expensive to trade. This is because there is a lot of buy and hold investors so the free float can be small.

I think they have to produce a KID so it’s well worth looking at this before investing. In the UK they have to distribute 85pc (I think) of their income to be tax exempt. So if you are on a high marginal rate this may not suit. You could look at inv trusts with a low dividend yield to minimise this. There is cgt on gains which is better than exit tax.

investment trusts are well worth a look as an alternative to ETFs/unit link funds etc.
 
I'm looking for a long-term, buy and hold solution and for all the reasons Zebedee gave I'd ideally be an ETF investor but the only thing stopping me is the tax situation, so I'm looking at investment trusts as an alternative. The question is, which investment trusts do you choose, how many to buy and is there currency risk?
 
Everything I've read suggests that people are terrible at picking individual shares.
And that even funds where they try to beat an index in the long run do worse than the index.

This leads me to believe that one should invest in a low cost index tracking fund.
There is a mutual fund in the US, Voya Corporate Leaders Trust, that never sells stocks and it has been running since 1935. Its strong performance seems to counter the conventional wisdom that buying individual stocks is loss-making. Do you any academic papers on this buy and never sell strategy?
 
No one has ever said that buying individual stocks is loss-making - a basket of diversified stocks is most unlikely to be loss-making, ever

If you buy just one stock, then yes there is a chance that out of the whole universe of stocks, you picked a bad one and will make a loss
 
There is a mutual fund in the US, Voya Corporate Leaders Trust, that never sells stocks and it has been running since 1935
The Corporate Leaders Trust (aka the "sloth fund") is the poster child for a buy-and-hold strategy where turnover (and therefore trading costs) are kept to a minimum.

And it's true that the sloth fund has marginally outperformed the S&P500 over the last 40 years.

However, the original stocks that made up the sloth fund weren't picked at random. The fund promoters invested in an equal amount of stocks of the 30 largest publicly traded companies at the time by market capitalisation. The idea was that if a company could survive the worst years of the Great Depression, it could survive anything. Financials were excluded.
 
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The Corporate Leaders Trust (aka the "sloth fund") is the poster child for a buy-and-hold strategy where turnover (and therefore trading costs) are kept to a minimum.

And it's true that the sloth fund has marginally outperformed the S&P500 over the last 40 years.

However, the original stocks that made up the sloth fund weren't picked at random. The fund promoters invested in an amount of stocks of the 30 largest publicly traded companies at the time by market capitalisation. The idea was that if a company could survive the worst years of the Great Depression, it could survive anything. Financials were excluded.
Do you think there were many other funds with the same strategy that didn't make it, leading to survivor bias here?
 
Do you think there were many other funds with the same strategy that didn't make it, leading to survivor bias here?
Well, I'm not aware of any other fund that followed this precise strategy and I don't think anybody would try and construct a fund on this basis today.

But survivor bias is definitely relevant in comparing stock picking strategies to a purely passive approach.
 
Well, I'm not aware of any other fund that followed this precise strategy and I don't think anybody would try and construct a fund on this basis today.

But survivor bias is definitely relevant in comparing stock picking strategies to a purely passive approach.
I see. I guess if it is hard to know if many other funds existed like this but fizzled out in the 1940s, 1950s, 1960 etc. What I am trying to understand is if buying a basket of stocks is a reasonable alternative to passive funds. Many diehard passive people would say that not it is not a reasonable alternative, how I feel compelled by Irish taxes to find some kind of alternative.
 
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