"There is no perfect way of picking the best shares. Certain investment styles come into fashion and then fall out again. So, when it comes to choosing investment trusts, it is a good idea to hold a mixture of trusts run by managers with different ..."
Unfortunately I've only just noticed your post, holland44. BTEM is such a safe stock to hold that I rarely look at the bulletin board. The reason for me calling in today is that Money Week has done a double page article on this Trust. Joe Bauernfreund looks to be doing well, concentrating in small stocks as well as medium size ones with high potential for growth and usually at a discount to NAV. He doesn't worry about closing the gap as long as the NAV rises. He is also interested in Japanese stocks that have huge piles of cash, taking their CAPE into single figures.
I already hold a portion of BTEM but have topped up today as well. It stands at 10% discount to NAV itself.
Here's a useful article on the relative performance of BTEM since the new manager Joe Bauernfreund took over at the start of October 2015: https://masterinvestor.co.uk/funds-and-investment-trusts/british-empire-trust
Master Investor also has interesting things to say about the unusual emphases of the portfolio and its potential as a diversifier. I'm new to BTEM: what do longer-term investors think about this article?
Over the past 7-10 years that we have held BTEM it has grown by 95%. Murray Intl which we also hold has grown 105% over the same period, Mercantile by 84%. Alliance by much less (we sold this one). BTEM is in the upper echelons of performance. The managers are to be congratulated.
I notice that the II editor Rebecca Jones as well as the broker Winterflood have been bullish about this trust over the past few months, but on the vague argument that the "deep value" style of BTEM is coming back into fashion. Over the past six months, the share price has increased by ca..6%, whereas the NAV performance is only up ca. 1%, and has continued to lag the sector average. I would suggest that this anomaly is unsustainable in the longer run, and unless the NAV performance increases markedly, the discount to NAV will widen again when the effect of the (mistaken) recommendations have worn off. I sold my remaining holding in BTEM today.
"After an extremely disappointing 2013, the value-oriented LSE:BTEM:British Empire Securities and General Trust is enjoying a change in fortune, outperforming both its sector and benchmark year to date.Since 1 January, the Â£755 million trust has ..."
I would add that the unexciting return over the past 5 years has been accompanied by quite a bumpy ride for investors suggesting that the risk adjusted return has been poor. One problem is that Mr. Penninck and his colleagues to not pay enough attention to the overall economic situation. I note that a large holding in European companies was in place before the financial problems hit Europe and has mostly been retained right through all the trials and tribulations of the potential euro collapse and is still held to this day despite the fact that Europe's financial problems remain unresolved. This partly explains the mediocre performance as the economies of some other areas, notably the US, have recovered but remain under represented in the portfolio. Buying value companies and holding them for ever may have worked for long periods in the past but I think, increasingly, it is necessary to respond to major economic events.
"Tom Tuite Dalton, contributing analyst at Oriel Securities, has downgraded FUND:IO11:British Empire Securities & General from positive to negative due to the investment trust lagging its benchmark and peers.The Â£754.8 million trust is managed by ..."
looks to me like what's happening is they are turning it around as per promise in annual report. the AGM may be worth a visit in a couple of weeks, always an interesting day out and a nice free lunch.
I have been in them since my grandson was born in 2004, invested £250 in his name and put £50 per month in ever since and it is now worth just shy of £10k. Looks like it is in a renaissance right now as the graph in the chart section is trending ever north and long may it last.
a stonking buy if you ask me, especially while on a 10% discount...will move back to a premium if this continues.
But what is wrong with short termism ?
We are not all disciples of Buffet....buy and hold...forever.
I have certainly tended to buy and hold, but I do not believe this remains a credible strategy going foward. I am more prepared to cut my poor performers now.
Also it is too simplistic to assume that past perfomance can be a reliable guide as to future perfomance.
Whilst it can be very reassuring to see a past consistancy of perfomance eg say top quartlile over 8,12,16, 20 quarters etc any investments past perfomance is historical fact.
This doesn't tell you what is happening now and where it might go, the future remains unknown.
Thanks both ricin and daft hare for this advice. I will look into Personal Assets. I also have regular investment in Scottish Mortgage over many years from about £3 a share and am pleased with that performance.
I sold a further tranche of my BTEM. Now have a small holding and will wait and see where BTEM goes this Autumn. If it continues to underperform then I'll sell up completely and move on.
Agree with your comments re Personal Assets - it has been an ideal and safe investment for my elderley mother. She does not need any shoot the lights out excitement.
I also have monies in Trojan and also with Troy Income and Growth Trust.
I regard both Sebastion Lyon and Francis Brooke as safe, reliable and consistant.
Safe hands, not 'hot hands'.
I've been a long term investor in RIT from sub £3 per share days.
Over time it has always had periods of excellent perfomance followed by poor performance/drifting/consolidation - call it what you will. Though this recent period of moving forever sideways seems to have been the longest with no real consolidation.
It will certainly be interesting to see what will happen post the managers departure, this has been quite widely reported eg :- http://citywire.co.uk/money/micky-breuer-weil-to-leave-rit-capital-partners/a607505
I think it is important not to become 'attached' to share holdings and sometimes you need to move on, as with BTEM.
Shares don't know who owns them... we should not get sentimental just because we have been long term investors.
There have always been other interesting opportunities in both trusts and funds and long may that be the case (though I suspect a bit of consolidation in the Investment Trust arena is somewhat overdue - there are too many sub £100m trusts with fairly indifferent perfomances )
If you are looking for a new home for your investments and don't need income, you might consider Personal Assets trust. This is run as a globally diversified asset trust, and currently holds ~ 38% in cash and fixed interest, 14% in gold and the remainder in large cap global blue chips. It is managed by Sebastion Lyon at Troy who seems to have an unfailing knack of getting his asset allocation right on an an absolute return basis. Also, they have a rigourous discount control policy - shares hve been trading at +1 to 2% of NAV for the past couple of years. I wouldn't expect it to shoot the lights out in a bull market, but it has done well in market downturns (of which there could well be more in the near future). I bought BTEM between 10-12 years ago, so I am still sitting on a profit. My fear is that it will turn into a basket case like Calodonia, and trade at a massive discount. I sold ~ 30% of my BTEM shares in Feb of this year and bought Personal Assets, and am thinking about selling more. I also hold RIT shares and have noticed that over the past couple of years, nearly all the share price changes can be accounted for by fluctuations in the discount/premium. However, it seems clear that RIT is regarded as a safe haven from storms, because the premium seems to increase in line with Eurozone crises.
I've been investing monthly in BTEM since early 2006 and reinvesting the divs. For most of that time the share price has been below the price of my first purchase and overall I'm looking at a loss of about 3.75%. I've also invested monthly in RIT. Since 2006 RIT hasn't been a stellar performer but at least its share price has shown a general upward trend over that period and is now 29% above its 2006 level. I'm reluctant to sell BTEM at a loss, but I'm stopping the monthly investment and will hold until I see an improvement, at which point I shall probably sell. Not sure where I'll put my BTEM monthly instead, though. From what you say Caledonian isn't a candidate.
Seems the large share buy back last week was associated with Caledonia selling their final holding in BTEM. Caledonia disposed of their holding in BTEM in several tranches.
(Lets not get into the disaster that is Caledonia for the moment...)
I sold about a third of my holding in BTEM a couple of years or so ago and was glad I did in view of the subsequent perfomance.
I am undecided on the remainder and am considering selling a further 50% or even 100%.
However :- the perfomance this past couple of months has given a slight improvement.
Not sure if this is a start of a recovery trend or something else ?
Is there a logical reason that makes BTEM a buy or hold - I don't see anything to make me think this.
It seems to have reduced its European focus to around 35%, and now hold 25% in Asia and even 12% in Canada (?) mining ?
Looking at the 2011 annual report I cannot get a feel for this trust.
It has repayed its debt and is only a few % geared (I now prefer low/nil geared trusts).
Does the investment world, especially small investors still need BTEM ?
Does any one have a view or thoughts as to where BTEM might be going ?
Worth stating engaged Curious. Penninck is a first class manager with a settled, strong team.
There's another chapter to come in Europe and a leg down. I suspect BTEM will outperform on the eway down and then will be worth buying as Value re-asserts itself in what could be a multi year bull market. Question is what's the downside (30%?) in markets...
The discount is well within the historic range and only just above the average as far as i can see. Gearing is also modest.
There is a lot of money waiting to enter as the asset class is underowned and many pro investors are doing the manager research work now to ensure all they have to do when ready is to write out the tickets. I am in the business and can see this happening all over town.
I'm curious. Why hasn't there been a single post on this board for five months? Could it be that all active contributors have sold their stock and moved elsewhere? I was thinking of selling around Christmas, but was encouraged to hold by "experts" bullish tips, e.g in Money Observer, on the basis that many of BTEM's holdings were on discounts of 40% or more. Many of these are european holding companies where I guess sentiment has worsened. The discount to NAV is now wider than for many years, so now is probably not the time to sell. However, if you look at this logically, since JP took over as manager ~9 years ago? performance has been at best pedestrian, and at worst awful Any ideas?
Although I have sold out of BTEM for CTY I do hold some shares in trust for my grandson and before disposing of them also I just wondered what excuses they used at the AGM last week if anyone out there attended?
Bit late to reply Mr Benn but I too have run out of patience, especially as they have dropped a furthr 20% since I last posted. Probably the worst time to sell but I'm going to do it and planning to split them between Halfords ( good divi) and City of London IT, a sound investment in solid blue chips with many international players and also wth a good divi.
A very sad day as I have long been a fan and have been investing on behalf of my grandson too.
Bit of a late reply - youve probably dumped them already.
Ive held these shares for a while, but Im re-assesing all my shares, and wondfer if anybody can recommend any other similar Investment Trust funds ?
I am a long-term holder of BTEM. I'm a fan of the patient management style and their focus on undervalued assets. I guess I've done reasonably well (50% return since 2004) but compared to my other global growth holdings like Scottish Mortgage, BTEM has consistently lagged. Over the past 7 years, BTEM's comparatives are pretty poor.
So I am finally dumping BTEM next week- a decision which is probably long overdue, and reinvesting elsewhere in the sector. I am planning to put the proceeds into F&C Global Smaller Companies. It's on a wafer-thin discount, but I suppose that's what's happens to trusts that consistently deliver above average returns.
We have a massive gain over 5 or 6 years (135%), however their performance has not been so brilliant for the past 18 months or so. However a period of consolidation was probably inevitable after such strong performance, so we had no thought of selling. I imagine that growth may well resume now - we regard it as a strong hold.
Hi to all holders.
I keep thinking about shipping out but am too emotionally attached which is wrong of course but I do hold my grandson's pension in this and don't intend to change that for a while yet.
Nice to see an all-time high when I had lost some confidence in them so maybe from here we can break out into a new place?
message for cimbom re CDN. I finally lost patience with them and sold out just after xmas and bought into the Aviva story, good dividend and "under priced" so it has worked up to now with CDN down about 7% or so and Aviva up 2% or 3% but was up 10% at one time. I think it will be a long term hold with divi above 5%.
Good to hear from you! You are spot on for BTEM, and I have recently sold all my holding.
On CLDN I decided to hold as the discount, then around 20% could not be justified. As the discount narrows CLDN may become ripe for selling. It is always good to compare NAV as well as price performance. I feel CLDN discount will narrow further, yet BTEM may go up to double figures as they continue to underperform.
BTEM grows essentially by choosing companies, mainly in Europe, on large discounts and hoping the discounts will reduce. I believe, if my memory serves me well, the managers says that BTEM will lag at times like these. In the current European situation I think it has done pretty well and I will continue to hold - its only a smallish part of my portfolio.
I also hold RCP which has been slow but is now picking up anf just broken through £12. Like BTEM it is not just a quoted individual company fund, like Scottish Mortgage.
However, over the long term BTEM and RCP are excellent performers that protect capital.
Time for my annual rant on this one I think. This time last year we were at 400p and now we're virtually at 500p. So not so bad, +25% against a market pushing for almost 10% if you say FTSE 5900 v 5400 this time last year.
Problem is for long term holders ( who are basically captives !) it has been here so often and always falls away when it gets just above 500p so if it is never going to have the legs to break significantly above this hallowed level why not bail out now?
Come on guys I need an argument one way or the other plus some better alternatives otherwise I shall stick the funds in a high yielding blue chip or even one of the income investment trusts.
The same goes for Caledonian who are now stuck at the £18 mark and have rarely been much above £20 in their lifetime so methinks they will both have to go b4 xmas.
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