For many years I have invested in Investment Trusts rather than OEICs (Unit Trusts).  The choice 30 or so years ago was fairly simple for me – the idea of paying a 5-6% bid offer spread and annual charges of 1.5% or so made it a clearcut decision – even though Unit Trusts were always promoted to the exclusion of Investment  Trusts by financial consultants, due of course to their high upfront commissions and subsequent trailing commission.

During the last decade, a decision based on higher fund charges would be less valid as for most OEICs their is no bid-offer spread and annual charges have reduced considerably, in many cases below that of comparable ITs.

The recent hiccups with Woodford Income which highlighted the problems of liquidity with OEICs where managers are forced sellers when investors wish to redeem units and the memory of closed for business OEIC property funds during the 2008 crash will make many investors favour ITs over OEICs for this reason alone but for me, it is their far greater transparency and availability of long term data.

My investment preference is for income growth and my portfolio has for many years been biased in this direction.  As such at the time of the 2008 crash, my portfolio was mainly comprised of Income ITs and dividend-oriented shares.  My dividend income increased surprisingly well from 2006 to 2018 although the share price declines were a little worrying at times – to say the least!  The 2008 crash provides an excellent opportunity to analyse IT dividend performance during difficult market conditions so I decided to undertake an analysis of my ITs.

The dividend and share price data for the period 2006-2018 was for the majority of my IT holdings pretty easy to come by – for the most part from Stockopedia but failing this from the relevant IT´s Annual Report and Accounts.  The majority of IT´s have downloadable reports going back 10 years or more and most give a 10-year history of share price, NAV and dividends.  So it is possible to obtain a 20-year performance history.  On analysing the data if there are discrepancies such as a sudden jump in yield or decline in share price – perhaps due to a change in policy or a share split the relevant annual accounts explain all.  For instance a recent jump in yield of the JP Morgan Global Growth and Income IT was not due to any underlying portfolio income improvement but to a manager´s decision to use capital to boost yield – an important factor in selecting an income trust.

The results of my analysis are in a separate post.  As I do have a few holdings of OEICs I tried to retrieve the same data for them.  I am sure this information is available somewhere but certainly not for the amateur investor. The OEIC sites only had the most recent annual report and none of my OEICs published historical data going back more than 5 years some only had 2 years of historical data.

So irrespective of IT’s better liquidity and better performance compared with their OEIC siblings their greater transparency makes them a preferred choice for me.

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