Switching From OEICS to Investment Trusts


Thanks for letting me joining this forum. I have a portfolio of £400-500k in OEICS which I intend moving into investment Trusts as I am fed up with the high platform fees charged by my provider. I am using the Trustnet performance tables as a guide and fully understand the differences between OEICS and Investment trusts. I do however find the wide range of different trusts somewhat confusing. For example many of the best performers are private equity funds, are these particularly risky ? Also there are split capital trusts such as the Rights and Issues Trust, what are peoples views on this one? Any advise would be welcome


Hi @shetland and welcome to the forums, people are friendly here!

When considering what investments are best to you I would start with what outcome you expect, and for long you can keep it invested.

Private equity trusts fall in to two categories, for the most part. One’s that are fund of funds, and ones that invest directly, which means they buy companies and invest in growing them/turning them around/ building them up etc.

I’m a big fan of private equity because it performs terrifically over the long term, but they can be volatile over shorter time periods. I don’t care about the volatility because I’m holing it for 5-10 years, and it doesn’t matter about the day to day, month to month etc volatility.

A lower risk way of investing in it if you’re concerned about short term volatility is Caledonia Investment Trust. They are controlled by the Cayzer family, the trust represents most of their wealth, so they’re fairly conservative.

It would be useful to know more about why you’re investing (for retirement, income etc) and for how long you can keep the money invested.


Hi @shetland, great to have you here.

I really agree with everything @jonno has said to you in terms of the reason to invest, but also his comments about PE (private equity), and Caledonia which is a great trust, another is RIT Capital, the Rothschild family investment trust, which also has some PE style invstments.

Cost is really, really important when it comes to investing but performance is important too. If you really want low fees then passive is the way to go, but I hesitate with passives because it gives you today’s stock market, which can mean you’re getting yesterday’s winners, not tomorrow’s. What I like about investment trusts is there are a lot of really good fund managers who stay for decades, whereas that’s not so common with OEICs, I think because they’re more difficult to manage.

PE can form a small or large part of your portfolio depending on how long your investment horizon is, and financial circumstance, and attitude to risk.

How long can you remain invested for?


Many thanks to Jonno and Harjinder for their replies.
I am 63 and have a 5-7 year horizon. I am not planning to put the whole of my portfolio into private equity but I would like some exposure. I started by wanting to move portfolio away from OEICS into IT’s because of the high platform charges imposed by my provider but when I started looking at which IT’s to invest in I saw some spectacular growth figures for some non standard IT’s. As well as PE I am also looking at Rights and Issues IT. I also saw a recommendation for Electra Private Equity Trust and Std Life European Private Equity. Where is the best place to go for research, I am using Trustnet to compare OEICS and IT’s but the information available on PE seems to be limited. Any comments would be gratefully received.


I think @james_pigott is your Rights & Issues expert, and maybe @arkwelder for private equity @shetland.

Although you have a five to seven year investment horizon, when you start drawing on the money, you will do so slowly over a number of years I would expect. I’m stating this because I think of private equity as a 5-10 year investment, because the PE firms often own businesses for this length of time, and enjoy most benefit when they come to sell or flout the business.

I’m a big fan of PE trusts because performance has been amazing, for so long, but I would avoid Electra, it used to be great but an activist investor has sadly brought that to an end.

I’m a big fan of HgCapital and PIP (Pantheon International Participations).

Good luck!


I have been an investor in PE (private equity) trust for a many years @shetland, and it has been the best performing part of my portfolio. I agree with @citygirl, you should avoid Electra. HgCapital is good, as is PIP, I also like Princess.

Rights and Issues changed their structure to try and deal with their high discount to NAV, which was more difficult to deal with in a split cap structure. Unfortunately the split cap structure has gone out of favour. It doesn’t harm the performance, it’s got a great management team who are very good stock pickers.



Many thanks Citygirl and Londoner for your extremely useful replies. I have had a quick look at the trusts you mention. All look interesting in different ways.

HG capital is my favourite at the moment no current NAV seems to be available but in June the discount shareprice to NAV was 22.76%. 51% invested in UK and 42% Europe.

Pantheon is 100% invested overseas which means much of the performance over the last 6 months and 1 year comes from the collapse of sterling following the referendum. If (when) sterling recovers these figues are likely to suffer. 16% discount to NAV

Princess. The discount to NAV value is difficult to asses but I suspect it is around 13%. 51% invested in Europe and 34% USA.

The other trust which I have seen recommended is Std Life Euro Private Equity, any thoughts on that one.

I am finding info on some of them difficult to find, I usually use Trustnet but it has limited info on some of them, is there a better source ?

Many thanks


@Shetland - I would advice anyone looking for advice on Investment Trusts to subscribe to a monthly magazine - Money Observer (is my preferred one), but What Investment is also ok - they regularly cover the Private Equity trusts and will include them in their recommendations.
Other useful sources are quoteddata and Edison - this is paid for research on individual trusts but they do in depth analysis including on Private Equity. Morningstar (good for current stats) and CityWire are also good sources. The individual trust web-sites also generally have at least quarterly (if not monthly) updates.

With regard to the trusts you mention - Rights & Issues is no longer a split cap and sits in the UK Smaller Company sector - I’m a great fan and the long term performance is fantastic. The discount has shrunk hugely so I would concentrate on the NAV performance (the web site and reports are particularly poor though - though the very low running costs may explain some of this!)

From a private equity perspective-
HG Capital (HGT) - the Nov 2016 factsheet has the discount at only 7.5% so I would be cautious on this one - good long term performance
Pantheon - is usually good value especially if you consider the redeemable share class (PINR), Nov 2016 factsheet has the ordinary shares (PIN) on a 18% discount, and redeemable on 28%.
Princess Private Equity (PEY) - this pays a high yield (partly from capital) and is quoted in Euros, Nov 2016 factsheet has 15% discount - good recent performance
Std Life Euro Private Equity (SEP) - worth checking the news on this, as it is going worldwide and rebasing the dividend

I sold HGT earlier in the year but own the others. I also own and you might consider Harbourvest (HVPE), F&C Private Equity,

Private Equity is higher risk but generally the trusts have leant the lessons of 2008 (and are less over-committed), and many are still on reasonable discounts and some pay meaningful yields (3%+).


OK - 321 days late, but never mind…

The prices of many private equity trusts got hammered during the Credit Crisis, so some of the performance after then is going to be flattered by their recovery. Some trusts are also in the process of winding up and are able to sell their assets at prices that favour sellers - so boosting their NAV in the process, and boosting their returns to shareholders. Not a process that will continue indefinitelty. And soon, the nadir of the Crisis will fall further out of the 10-year returns, flattering those returns further. So some caution is required when looking now at those historic returns.

Personally, I have more of a 10+ years’ outlook for PE. They can be volatile, and subject to large drawdown during a recession - and ‘ordinary’ recessions, not just the Great Recession. So having the time to ride out those periods, rather than needing to sell, is paramount.

I’ve held several PE trusts in the past, but the only one that I hold now is HgCapital. I wanted to reduce the number of funds that I held and it was a toss-up between HGT and Pantheon. I decided on the former because I saw the concentration of holdings (and the perceived, more hands-on approach) as offering the greater potential, albeit with greater risk. Somehow, it’s managed to become my largest holding…!

But for a first step into private equity, then a fund-of-funds might be a steadier option. I have been quite lax, recently, with keeping up-to-date with funds that I don’t hold but which might otherwise be of interest, so I can’t really comment on potential holdings. But I will say that the Pantheon’s redeemable shares (PINR) are no more, and onle the ordinaries exist.


As a retired person, anything I earn over my £3,500 allowance, gets taxed at 20%
In order not to WORRY about this 20% off of my gross,
I need to make above average returns.
My £150 tax free pension from the State comes Off my tax free allowance.
So you as a non pensioner, can earn £11,500 before tax.
Me, I have to earn above average returns, but this years winners rarely repeat their outperformance the next year.
How much capital do I need to earn a measly £23,500 to live on.??