"In the current climate, with stockmarkets continuing to hold their form, income seekers are facing a greater challenge to source income at a sensible price.Eight years into the bull market, investment trust bargains have become harder to find, ..."
Az, I doubt that the SP drop is due to overreaction. The SP performance over the last year is one of the worst in the UK Equity Income sector. The NAV performance over the same timeframe is even worse.
There would have been some reputational damage from the Provvie unfortunate situation/managerial error of judgement (delete as appropriate) and this may have caused the discount to widen, but removing that from the equation the NAV performance (which IMO is how the fund manager should be judged) has been terrible over the last year.
Investors may have just got fed up with the performance and the Provvie situation may have been the straw that broke the camel's back - it certainly was with me.
I continue to hold MRCH, SHRS and LWI in the sector, all of which have performed far better than EDIN recently. FGT is classed in the same sector by Trustnet and has also out-performed, but I would agree with PIE-EATER that its focus is different and it is not a valid comparison).
IMO Mr Barnett will need to do some portfolio reshuffling to get the fund performance back on track.
I never say "never" in investment and EDIN remain on my watch list, but as things stand the discount to NAV will need to get to double figures before I become interested again.
Competition in the UK Equity Income sector is intense, but for the last few years making a decent gain out of it has been like shooting fish in a barrel. However, IMO this situation is changing and going forward the fund managers will need to earn their fees.
Mark Barnett has significant ground to make up and I am currently content to watch from the sidelines while holding other ITs in the sector.
The truth is I bought EDIN many years ago outside an ISA whilst I use my CG tax allowance each year it could be a long time before I get round to EDIN .
Overall however it has performed decently and is producing an income of around 9% on book cost.I accept at the moment it is very difficult for income funds esp larger ones to find shares to buy that fill their remit with the result that they all tend to buy the same limited basket of shares,some like "The Provy" had very high valuations for what is quite a risky business particularly with increasing regulation.
Recently funds buying overseas shares and/or shares with large overseas earnings eg Nick Train & Fundsmiths excellent offerings have had a fantastic run but the valuation ascribed to their share picks is very high so my feeling going forward is whatever type investment trust we buy performance is going to be more modest;if indeed it actually grows in the short term.
A good balanced assessment. Not surprising about tobacco as that was a house "theme" at IP and lets be honest, Barnett was Woodies understudy for many years so it is to be expected that there was an influence.
At least from your post you are able to make an assessment of whether this trust is appropriate for you rather than just looking at top performers and saying "oh it doesn't compare against..." regardless of which area it invest in
Noting that Provident is currently up 20% today......probably leaving it closer to it's true value.
YES the recent events at Provident are VERY disappointing and it could be that information given to fund managers has not been the truth, the whole truth and nothing but the truth???
What is EQUALLY disappointing is seeing people comparing EDIN with FGT and SMT. Do those people really understand what the objective of each of these funds is and their markets? They are both truly excellent trusts and I hold both in similar proportions to EDIN.....ie they are my (roughly) joint top 3 positions.
FGT is NOT an income fund...it is a balanced growth fund that has a semi-respectable income, (approximately HALF that of EDIN), which grows. Nick Train has said as much. In many ways it is similar to Fundsmith UT but with perhaps a greater UK emphasis..
SMT, is a GLOBAL growth fund, with a yield of a FIFTH of EDIN, which is as near as you are going to get a proxy for future technology.....James Anderson and Tom Walker have said as much....and there was significant gain from the pounds depreciation against the dollar following Brexit.
If people don't like EDIN, then fine....but at least compare apples with apples.
and by the way.....just a thought.....are people annoyed that Barnett didn't ask the right questions, or that they themselves didn't ask the right questions of what Barnett was doing and why they were investing in EDIN after the first profit warning?
I also have some concerns with the very high weighting given to Tobacco shares here;around 20% of portfolio value.Another influence perhaps from Woodies previous days here.
Yes I accept in terms of both income & capital growth these investments have until recently performed well,and in terms of income continue to deliver but I feel we are now going to see a rapid decline in turnover & profits at least in the USA & Europe and the balance sheets of these companies are dire & heavily borrowed once you strip out the goodwill value attributed to their brands.
I retain an investment here bought many years ago but I would not be a buyer at todays valuation.
Totally agree. PLI is in much the same boat - very subdued performance recently, well before the Provident Financial disclosures. Seems Mark Barnett has def gone off the boil. Thank you for the ref to Independent IT; didn't know about them.
Having been an EDIN holder for over a decade I have been selling off tranches for the last 24 months and getting better returns buy reinvesting in SMT, FGT, BNKR, IIT.
The very last, small, holding was sold today.
As noted by other posts today, the management must take responsibility for the latest mega fall (although Woodford was also badly burned by this), but as importantly for the piss poor performance in recent years.
No confidence in the future when there are other, better managed, just as 'safe' and higher performing options available. Very sad, but sit shows that past performance is indeed, no indicator of the future, especially when management changes.
I couldn't agree more. Active funds with large equity stake in companies should be looking at getting members on the board, hence my question mark in the previous post, look how this has positively affected BHP price today.
I cant see much reason other than convenience for investing in these funds. Best do it yourself if you have the time and save on management fees.
Companies hold regular investor days. It should have been down to the investors (fund manager teams) to identify that something was going wrong with one of their larger investments. I suspect there will be some very angry fund managers talking to the Prov Fin directors at this moment, EDIN included.
We invest in ITs to allow the managers to do our hard work. A screw-up like this makes the fund managers look stupid and it makes long term investors like me start to look around at other ITs - the UK Equity Income sector isn't exactly short of funds to swap to...
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