Just doing my yearly review on this one and am amazed to see the discount has disappeared and being replaced by a premium under Mr Woodford. For me, that is a huge exit flag - I invested in this in the early 2000s up to about 4 years ago on the basis the discount was huge and something would change it and that has happened. How do others feel about it?
One thing selling and yes all of us who have been holders for a reasonable period will have made a profit.Same is generally true of most investment trusts over the same time period.
The problem is once you have sold where do you put your money,assuming that people who invest here are looking for a reasonable safe,diversified investment with a yield in as far as “the markets” allow an equity investment to be safe.
Not easy to find an alternative IT that is obviously cheaper,most that are, are cheaper for a reason eg higher risk,more illiquid because in general prices of potential alternatives have risen…
Hi TX2, appreciate the swift response and have just been on trustnet and you are absolutely correct, the whole UK Income and growth sector trades on narrow discounts or premiums. Outside of Edinburgh UK tracker on 5% discount with a 3.3% yield, only way to get bigger discounts is to drift into the more international trusts or move down a notch to the FTSE 250 which as you rightly say does not fit the risk profile of many investors in this.
The dividend is published as a percentage of prevailing price… but what is it to you in comparison to what you paid for the units.
I am yielding 7%…
I will hold onto the ones I have and over time the % dividend I get will grow (not 100% guaranteed I know).
This is not and never should be a trading share, its a long term income stream.
Discounts have narrowed (and in many cases moved to a premium) on all investment trusts that offer a decent yield- both UK and international trusts. With interest on cash deposits so appallingly low, it is hardly surprising.
Logic dictates that these trusts will remain at narrow discounts/premiums until interests rise significantly and cash deposits start returning above inflation returns again.
This is a long way off.
So for me the likes of EDIN, TIGT and MYI trading at a premium is absolutely NOT a sign that it’s time to sell.
Thanks for the replies, chaps. I do see your point about the yield and I am always a long term investor in trusts, but as you both sound sensible investors you probably know yourself sentiment can change quickly and it’s not so many years ago stalwarts like this were always on 15-20% discounts. Mr Woodford is clearly the new Anthony Bolton!
Slightly different risk profile, but aberdeen smaller companies income is currently yielding over 4% and has a 18% discount, so I may investigate that as an alternative with more upside.