Insights on Investment Strategies and Trusts in Q1 2016
Delve into the world of investment with insights on market trends, risk assessment, ideal investments in equities and funds, and a focus on closed-end investment trusts in the UK. Explore expert opinions on long-term strategies, asset value discounts, governance principles, and more, all presented in a lively forum for sharing investment ideas.
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1. Trusts In Focus Up Date Gold: In The Foothills of Recovery What I m Buying Today MARKETS NOW 25thAPRIL 2016 David Fuller, Charles Elliott, Iain Little 1 Q1 2016
What is Markets Now? A Lively Forum for Sharing Investment Ideas 1. 2. Big Picture Strategy (DF, BA) Private client high quality, long term ideas (IL) Our promise: INDEPENDENT, GLOBAL INVESTMENT ADVICE NO SALES, NO HYPE, NO MARKETING NO PRODUCT PUSHING Please contribute with: QUESTIONS CONCERNS IDEAS 2 Q12016
What Is The Perfect Investment (Equities)? LOW HIGH CYCLICALITY HIGH Supermarkets, Convenience Stores, FMCG, Food & Beverage, Fast Food, Branded Retail, Cosmetics Brokers & Consumer Finance Transport Banks & Insurance Property Telecom QUALITY OF Construction / Building Materials / Cement EARNINGS Services Power Technology Shipping and Aviation Software Manufacturing Commodities Textiles LOW FTSE (Large Cap) FTSE (Large Cap) FTSE (Large Cap) 4% 34% 62% Data: 31 October 2009 Source: Arisaig Partners Quality Private Client investments mainly found Top Left Hand Corner: simple businesses, high cash flow, investor friendly 4 Q12016
What Is The Perfect Investment (Funds)? 1. Long-term (does better than ..) 2. Leverage, but only if needed 3. Discounts to real asset value ( Leverage at a discount ) 4. Governance: proper auditing, proper board, transparency 5. Know-How proven over 100+ years 6. Liquid, but (real time trading on SE) 7. Low management costs (1/4 to 1/2 the cost of rivals) 8. New money non-dilutive (if successful /at discount) 9. Global but can be specialist? 10. Daily valuations, daily reporting 11. Yield. Growing dividend stream payable out of Reserves 12. Elected management, retail participation, proper AGMs 13. Information inefficiencies. Hated by brokers Q12016 5
Trusts In Focus (TIF)SERVICE Universe c300 closed end (mainly UK) investment trusts monitored Up to 15 equally-weighted trusts held in Trusts In Focus (TIF) If we sell an investment trust, we must replace it Changes to trusts recorded (1.25% trading costs B/S) Research available to Markets Now attendees 3rd party adviser research referenced FullerTreacy Money one of 20+ 3rd party advisers In-House Cooking/ P&C research Performance review / indecent striptease every Markets Now 6 Q12016
How Are We Doing: Trusts In Focus? Performance So Far (since 7/3/14) Pr/(Disc) NAV Core/ Satellite Price then Price Now GBP Ticker Date Yield (%) Name Sector Performance General equities 1.5% -3.9% -13.8% 0.7% 1.5% -0.7% Scottish American Inv Co BlackRock Income Strategies Tr British Empire Trust Scottish Mortgage Inv Trust European Assets Trust Baillie Gifford Shin Nippon Tr 4.0% 5.5% 2.5% 1.1% 5.3% 0.0% 8.9% -13.2% -4.3% 38.6% 6.8% 65.1% SCAM:LN General, global BIST:LN UK + Rest of Wld BTEM:LN General, global SMT:LN General, global EAT:LN Europe (mid/small) BGS:LN Japanese Small equ Core Core Core Core Core Satellite 2.49 1.40 4.95 1.93 10.25 3.11 2.71 1.21 4.74 2.67 10.95 5.13 09/05/2014 09/05/2014 09/05/2014 09/05/2014 23/02/2015 10/11/2014 Emerging, Frontier, Growth -14.5% -13.1% -10.8% JP Morgan Emerging Mkts Tr New India Investment Trust Aberdeen Asian Smaller Cos Tr 1.0% 0.0% 1.2% 14.7% 59.9% 3.2% Developing markets India Asian smaller cos Satellite Satellite Satellite 5.05 2.00 8.02 5.79 3.20 8.27 JMG:LN NII:LN AAS:LN 07/03/2014 07/03/2014 07/03/2014 Mines, Gold, Res, Hard Assets -13.1% Blackrock World Mining Trust 6.7% -50.2% BRWM:LN Mining companies Satellite 4.92 2.45 07/03/2014 Alternative/ thematic / sectoral 0.5% -6.8% -11.4% Personal Assets Trust Polar Capital Technology Impax Environmental Mkts 1.2% 0.0% 0.9% 3.4% 11.4% 1.5% 14.7% General, gold bias Global technology Water and Ecology Core Satellite Satellite 332 5.85 1.50 370 5.94 1.72 PNL:LN PCT:LN IEM:LN 09/05/2014 08/01/2015 07/03/2014 Average Yield (not inc in perf): % Performance (before dividends): % Estimated performance (after dividends): Q12016 TRUSTS IN FOCUS 12.1% 15.5% 7 % FTSE 100 (7/3/14 to now): -6.0%
Whats Interesting Today Gold & Miners: Where Are We in The Cycle? GOLD In The Foothills of Recovery 8 Q1 2016
Whats Interesting Today (Sorry, last time!) Gold & Miners: Where Are We in The Cycle? Current junior mining bear almost longest ever 96/2001 bear down 70%, lasted 59 mths 2011 bear down now 76%, lasted 55 mths If 59 mths this takes us to January 2016 Average increase +218% after end bear market Likely within 4 mths of start major move up Time to add exposure GDXJ and junior mines? Source: Markets Now November 2015 9 Q12016
Whats Interesting Today (Sorry, last time!) Gold & Miners: Where Are We in The Cycle? 10 Q32015
Whats Interesting Today (25 year view) Gold & Miners: Where Are We in The Cycle? 11 Q32015
Whats Interesting Today (after Q1 2016) Gold & Miners: Where Are We in The Cycle? Description - in GBP Precious Metal shares Junior Gold Mine shares Brazil shares Iron ore LatAm shares Gold - physical Gold ishares Russia MICEX Silver Platinum shares UK Basic Materials FTSE Canada shares Poland shares Global Utilities Euro zone bonds SE ASIA Equities [CR] CAD bonds JPY-GBP FX Rate Global developed sov bonds Mexico shares Global Telecom Copper Emerging market bonds AUD-GBP FX Rate Corn Dubai shares Global Oil & Gas Palladium EUR-GBP FX Rate UK Oil & Gas FTSE Emerging Equity YTD 60% 53% 32% 30% 22% 19% 19% 16% 13% 13% 12% 12% 11% 10% 10% 10% 10% 9% 9% 9% 8% 7% 7% 7% 7% 7% 7% 6% 6% 6% 6% 6% 6% 6% 6% 6% 5% 4% 4% 4% 4% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% -0% -0% -1% -1% -1% -1% -2% -2% -2% -2% -2% -2% -2% -2% -2% -2% -4% -4% -4% -5% -5% -5% -6% -7% -7% -9% -10% -10% -11% -12% -14% -16% Global Materials Netherlands shares CHF-GBP FX Rate UK Equity AIM100 Emerging Markets NetDiv Wheat Global Industrials UK Consumer Goods FTSE USA shares -DJII Global Technology UK gov bonds Global Consumer Goods World AC Equity TR FTSE Global Consumer Services USD-GBP FX Rate World x-UK FTSE UK Utilitieis FTSE UK Corp Bonds Short Dated World AC Equities Net Div World [Dev] x-UK NDR MSCI Qatar shares World Equity FTSE Aluminium World [Developed] xUK MSCI Global hedge funds Australia shares World Equity x-USA Coal UK Technology FTSE France shares UK Bonds Short Dated UK Corp Short bonds China Equity World AC xUSA MSCI Japan shares Europe Equity X-UK Sweden shares Europe Equity UK shares (w/NDR) MSCI Oil (WTI) Spain shares Germany shares UK Share - FTSE100 Euroland shares UK Consumer Servces FTSE UK Equity FTSE 350 UK Equity FTSE All Share UK Industrials FTSE UK Commercial property UK Telecoms FTSE Global Financials Greece shares HK shares Global Health Care UK Equity AIM100 Switzerland shares UK Health Care FTSE UK property shares Italy shares China shares Rice UK Financials FTSE Uranium Natural Gas 12 Q32015
Whats Interesting Today (after Q1 2016) Gold & Miners: Where Are We in The Cycle? 13 Q12016
Whats Interesting Today Gold & Miners: Where Are We in The Cycle? 14 Q32015
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Whats Interesting Today Gold & Miners: Where Are We in The Cycle? 30 Q12016
Whats Interesting Today (BUT CARE) Gold & Miners: Where Are We in The Cycle? 31 Q12016
Whats Interesting Today Gold & Miners: Where Are We in The Cycle? After historic valuation lows in late 2011, you then lost 80% of your money in gold shares! 32 Q12016
Whats Interesting Today Gold & Miners: Where Are We in The Cycle? ALAMOS GOLD Gold US$ Gearing on Gold = 4.5 X Gold explanation = 83 % 4 460 450 3.5 440 430 3 420 410 2.5 400 390 2 380 1.5 370 14-Jun-04 28-Jun-04 12-Jul-04 26-Jul-04 01-Nov-04 15-Nov-04 29-Nov-04 03-May-04 17-May-04 31-May-04 26-Jan-04 09-Aug-04 23-Aug-04 04-Oct-04 18-Oct-04 05-Apr-04 19-Apr-04 13-Dec-04 27-Dec-04 08-Mar-04 22-Mar-04 06-Sep-04 20-Sep-04 09-Feb-04 23-Feb-04 33
Whats Interesting Today Gold & Miners: Where Are We in The Cycle? Only ONE thing mattered. The gold price. Not Earnings forecasts, analysts opinions Technology/ techniques New discoveries Depreciation policies Management changes Royalty and tax regimes Takeovers Rumours and chit chat Political factors 34 Q12016
What Im Buying Today BlackRock Gold & General Fund 35 Q12016
Important Notice This document has been issued in a private capacity by Iain Little, an employee of European Wealth (Switzerland) SA, a member of the European Wealth Group Limited, for the information of experienced investors only. It is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Iain Little, an employee of European Wealth (Switzerland) SA, has based this document on information obtained from sources he believes to be reliable but which he has not independently verified; European Wealth (Switzerland) SA therefore makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. 36 Q12016
