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How to compare unit and investment trusts?

Investment | Investment Trusts Helpful? 9

Asked by dhariwaln, submitted 04 December 2010.

Open Quote Where can I find performance comparisons of unit trusts vs investment trusts?

For example, M&G Global Basics vs RIT Capital Partners (Global Growth). That is what I need as a private investor. Most comparisons are between unit trusts themselves or investment trusts themselves or unit trust vs investment trust run by same manager. Is there a site I can use?
End Quote

Answered by Justin on 05 December 2010

I don't know of any sites that show direct comparisons, but it's pretty straightforward to gather performance data for each and then compare yourself.

I find Bestinvest and Trustnet the two most user friendly sites for reviewing unit and investment trust past performance, just note down returns over the same period for the funds you're interested in then compare manually.

However, be careful you're not trying to compare apples with oranges, as the objectives, investments held and risk taken can vary widely between funds. For example, M&G Global Basics currently invests in global stockmarkets with a high weighting towards commodities and consumer goods, whereas RIT Capital Partners invests in a much wider range of assets, including private equity, hedge funds, bonds and money markets - so they're quite different funds with RIT Capital Partners proving the less volatile of the two in recent years.

You might find it helpful to compare fund performance and volatility with an appropriate benchmark index, allowing you to determine whether the fund has outperformed a standard basket of investments and how much risk it's taken along the way (investment nirvana is high outperformance with low risk - seldom happens!). This can be measured by a calculation called an 'information ratio' - used by Citywire and Bestinvest to measure fund manager success or failure (take a look at our trackers page for more info on this ratio).

Simply comparing funds can be misleading as while fund A might have performed better than fund B, it could have taken significantly more risk in doing so which suggests greater potential for losses in future if things go wrong. That's not to say you should avoid fund A, but it helps to understand the inherent risks before investing so you're comfortable with the risk being taken across your portfolio as a whole. And don't forget an investment trust can be more risky than an identical unit trust due to borrowing to invest ('gearing') and share price movements independent of underlying asset value.

Perhaps also look at year on year (discrete) performance rather than a simple cumulative 3 or 5 year figure, as this will give a clearer idea of volatility and how consistent the manager's been. And if the performance looks good make sure there's not been a recent change of fund manager - in case the decent performance is due to a manager who's no longer running the fund.

Finally, give some thought as to how a fund will fit alongside any existing investments you own. For example, if your existing funds have a high weighting towards sectors such as commodities or financial stocks then choosing a fund with little/no exposure to these sectors could help hedge your bets and create a better overall balance.

Good luck with your research.


Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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Readers' Comments (3) - To post a comment please register or login .


Comment by rafferty at 11:17pm on 06 Dec 2010:

You could use Hargreaves Lansdown for charts at www.h-l.co.uk/funds, (powered by Financial Express). Pull up the chart for a fund and then you can compare with other funds, equities (including ITs), IMA sectors and market indices.


Comment by BernieB at 11:00pm on 10 Dec 2010:

I'll second that. I find the H-L site useful for comparing funds with funds, ITs, shares or ETFs - I think you can compare up to 7 at a time - the graphs get a bit messy at that level. You can compare by 1,3 or 5 years using either unit / share price or total return. H-L don't yet publish the discount level on Investment Trust NAV to share price (Bestinvest and Trustnet do) which can be relevant when you are buying or selling. If only past performance related to future performance, I have to remind myself!


Comment by dhariwaln at 6:21pm on 11 Dec 2010:

Thank you both,I have tried and succeeded in getting the comparisons I wanted.It is more informative than writing numbers down to compare.Of all sites I use this one is most informative and relevant to my needs.Thank you Justin.