Investment Trust Update from Allianz Global Investors
Investment Trust Update from Allianz Global Investors
A warm welcome
Welcome to the latest
Investment Trust Update
from Allianz Global Investors,
containing dedicated content
for you, our email subscribers.
Tel: 0800 389 4696
Allianz Global Investors
199 Bishopsgate London EC2M 3TY
In this issue, we are pleased to share with you:
- What’s new
- ISAs – the clock is ticking...
- Inflation-busting Investment Trusts
- And the award goes to… Allianz Technology Trust (again)
- The rise of platform investing – and how to choose
- In the news
We hope you will enjoy reading our latest update and
we welcome your views and ideas for future editions.
Please send your comments or suggestions to
Melissa Gallagher, Head of Investment Trusts
The beginning of a new calendar year is always a hectic time for the AllianzGI Investment Trusts team. One of the key tasks is to prepare and publish the statutory annual reports for each of our Trusts. We dedicate substantial time and resource to making these as accessible, informative and interesting as possible. This year, the reports carry new case studies as well as expanded profiles on their largest holdings. All registered shareholders receive a copy of the annual report. If you’re a Brunner or Allianz Technology Trust (ATT) investor, your copy will arrive any day now. Merchants investors will receive theirs in April. Of course,
if you prefer you can view reports online.
Historically, the annual report has always been the ‘shop window’ for each of our Investment Trusts. In terms of statutory information that remains the case but times – and trends – have changed so that the Trusts’ dedicated websites are now an additional ‘go to’ destination for the very latest information. That’s why we have relaunched the sites to make them ‘fit for purpose’ for our investors’ needs. Whether you’re using your mobile phone, hand-held tablet or desktop computer, you now have access to information on the Trusts in a way that works best for you.
The redesigned sites feature fresh and greatly enhanced content, including our Video Hub where you’ll find ‘face to face’ news and views with the Portfolio Managers and a Literature Library that includes an archive of historical material as well as the very latest documents. There’s also new ‘Education Centre’ and ‘How to Invest’ sections, plus all the latest investment performance information. We hope you’ll take time to log on and visit the new sites!
Walter Price, Portfolio Manager of ATT, has been in the UK recently. During a hectic schedule, Walter met with existing and potential shareholders as well as members of the press. Technology is a true source of innovation and Walter and the team’s office base in San Francisco is very much at the heart of the action – and therefore the press is always keen to hear their views. Lots of press coverage followed the visit, including the Mail on Sunday and Sky News, where Walter makes regular appearances when he visits London.
Both Brunner and Merchants are recognised by the Association of Investment Companies as ‘Dividend Heroes’ because of their track records of increasing dividends year-on-year. Merchants has increased its dividends year-on-year for 35 consecutive years whilst Brunner’s record goes back even further;1 its fourth and final dividend is proposed to be paid on 29 March and will mark Brunner’s 46th year of successive dividend increases. Income is, of course, a hot topic for investors and you can find out more about our free Investing for Income guide in this edition.
In other news linked to income, at the end of 2017 Merchants announced its plans to refinance a loan taken out in 1987 and replace it with new borrowing at much lower interest rates. More recently, on 14 February 2018, Brunner published its annual results in which it confirmed that it has repaid a £27 million secured loan which had been taken out many years ago when interest rates were much higher. There are many reasons why these loan repayment announcements could be potential game-changers for both Trusts, saving money and giving both more investment options, such as the flexibility to grow the dividend faster.
1 A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
ISAs – the clock is ticking...
The clock is ticking…
The Easter Bunny will be arriving early this year as Easter Sunday is on 1st April. Whether you’re hunting for eggs or just taking some time out with the family, the long weekend may just present you with some free time to review your finances and consider making a last-minute Individual Savings Account (ISA) investment before the 2017/18 tax year ends. Human nature being what it is, March and April is peak time for ISA investments – call it a ‘last chance saloon’, if you like.
If you don’t use your ISA allowance for this tax year, it’s gone for good – you can’t carry it forward to next year. And, this really is a very generous tax allowance, so let’s recap the key points:
- An ISA is a tax-efficient ‘wrapper’ in which you hold investments rather than an investment itself.
- Anyone over the age of 18 can invest in an ISA, provided they are a UK tax-payer.
- An ISA is taken out in sole names only – so you can’t open one jointly with someone else. And you must invest using your own money.
- The ISA allowance is a generous £20,000 for both the current (2017/18) and the next (2018/19)
- Allianz Technology Trust, Brunner and Merchants all qualify as ISA investments, meaning that your investments in our Investment Trusts have the potential to grow free of any liability to income tax and capital gains tax.
But should I be investing right now?
Whilst an ISA makes total sense for tax-free investing, your decision to invest needs careful planning. There’s little point in buying shares by 5 April purely because that’s when the tax year ends. Stock markets were buoyant throughout 2017, but there’s no guarantee that they will continue to forge ahead, as February’s market correction demonstrated. If you’re investing a lump sum, then timing is crucial. You also need to think about your long-term investment objectives.
If you have cash available but are uncertain about your choice of investments (or the timing) it’s a very good idea to consider taking advice from an expert that will be able to steer you. If you don’t already have one, you can find a directory of local advisers by visiting www.unbiased.co.uk
Spreading your risk
Whether you’re using the services of an adviser or making your own investment decisions, diversification matters – don’t put all your eggs in the one basket. You should aim for a portfolio that offers you exposure to a range of different types of asset classes. And, as already highlighted,
your ISA is just the wrapper in which you hold your investments, so remember that you can diversify your portfolio by holding multiple investments within the one account.
If you’re still uncertain, consider regular savings
It’s wise to be aware of the generous tax breaks that ISAs offer but it’s just as vital that you invest in the right investments at the right time. If you’re uncertain about the timing of your share purchases, it could be worthwhile considering investing on a monthly basis – and riding out the peaks and troughs of the market. Many platforms offer a regular savings facility, some from as little as £50 a month.
Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information.
Inflation-busting Investment Trusts
The Association of Investment Companies (AIC) has recently launched a campaign to celebrate the strengths of Investment Trusts in this, the 150th anniversary year of the first trust being launched. Amongst the AllianzGI range, The Merchants Trust has the longest heritage and, having launched in 1889, it will celebrate its 130th anniversary next year. Merchants is one of 389 investment trusts in existence currently and total industry assets under management reached a record high of £174 billion at the end of December 20171.
As part of its campaign, the AIC will, once again, focus on the impressive dividend records of Investment Trusts in the coming months. An elite group of 15 investment trusts, which include both Merchants and Brunner, have increased their dividends for thirty years or more. Although past performance is no guide to the future, Merchants has paid a rising dividend for the last 35 years. Brunner, which launched in 1927, has an even longer record, with an impressive 46 consecutive years of dividend increases due to be confirmed imminently.
Merchants belongs to the AIC’s UK Equity Income sector. This sector has delivered an inflation-busting 4.6% annual dividend growth and a doubling of capital value over 20 years1. The AIC has noted that 4.6% is considerably higher than the annualised Retail Prices Index inflation figure of 2.8% over the same 20-year timeframe.
Investing for Income Guide
Merchants has one of the highest dividend yields of its UK Equity Income peers – 5.0% at 31 January 20181. Both Merchants and Brunner (2.1% dividend yield) could be worth considering as a source of income, particularly with interest rates likely to remain low by historic standards.
The Merchants Trust has produced its own Investing for Income guide, which explores the different options for generating an income and explains the potential advantages of investment trusts.
The guide is available here.
1Source for figures: Association of Investment Companies, 31.01.2018. Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information.
And the award goes to… Allianz Technology Trust (again)
In our autumn 2017 update, we announced that Allianz Technology Trust (ATT) had been chosen as one of the ‘Investors Chronicle Top 100 Funds’, for the fifth consecutive year. Investment performance played a big part in this achievement and Investors Chronicle noted that, at the time of its selection, the Trust was one of the best performing technology funds over one, three and five years, both in terms of its Net Asset Value and its share price performance.
Now that 2018 is well underway and we can look back on 2017 in its entirety, we can appreciate what a fantastic year ATT had in terms of its performance. In fact, it was one of the very best performing UK-listed investment trusts for the year as a whole. So, it’s no surprise that other awards have followed, with the most recent highlighted below:
Investment Week Investment Company of the Year Award 2017, Specialist category:
ATT won this coveted award in November 2017, having also been victorious in 2015. This award recognises excellence in closed-ended fund management and highlights the Trust’s consistent performance over time. The judging panel comprised some of the UK’s leading researchers and investors in investment trusts, as well as several senior board members with many years’ experience in the industry.
Money Observer Rated Fund 2018:
ATT has been included in Money Observer’s Rated Funds list for 2018. The list recognises open-ended funds and close-ended investment companies that have demonstrated consistent outperformance or that have been chosen as ideal routes into specific markets and sectors, reflecting the current investment environment.
These high-profile awards reflect the Company’s long-term investment performance track record and are instrumental in raising awareness of ATT’s specialist investment theme and its profile as a whole. Here’s to what 2018 has to offer!
A ranking, a rating or an award provides no indicator of future performance and is not constant over time. Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information.
Melissa Gallagher, Head of Investment Trusts receives ATT’s Investment Week ‘Specialist’ Investment Company award from John McCarthy CBE (November 2017)
The rise of platform investing – and how to choose
In recent times, there has been something of a revolution in the way that you can buy Investment Trust shares.
- In-house savings schemes have become something of a rarity as investment houses have accepted that investors prefer ‘one stop shop’ trading platforms.
- Investors have found the opportunity to consolidate their investments in a single online ‘home’ irresistible – no more multiple accounts, no more excessive paperwork and no more longwinded application procedures that result in delayed dealing.
- Now it’s possible to hold all your investments on one platform and, better still, competition between providers is keen so that charges are usually very competitive.
DIY or advice?
Investment trading platforms are often known as ‘fund supermarkets’ as they are online shops where you can buy and sell a comprehensive range of investments, including Investment Trusts, Open Ended Investment Companies (OEICs) and Unit Trusts - as well as in the shares of listed companies.
Of course, many investors don’t want to go truly ‘DIY’. You can use a financial adviser to open and look after your platform account, as well as your underlying investment decisions. You will pay a fee for this service, determined by the scope of the service being offered.
Many online platforms allow you to deal in shares in ‘real time’ and some offer an option to invest regularly each month as well as lump sums. Many providers allow you to buy and hold your shares within an Individual Savings Account (ISA), Junior ISA or Self Invested Personal Pension (SIPP), all of which have potential tax advantages. Or you can simply deal in your chosen shares without the tax advantages but also without any limits on how much you can invest.
Platforms can be cost-effective, but…
The decision on which platform to use is an important one: make sure to consider the overall level of fees as well as the range of services available from your chosen provider. Don’t forget that cheapest is not always best - and that some platforms have flat fees while others levy percentage-based charges.
Typically, you will also pay a fee every time you buy and sell shares, so you need to bear in mind these costs too if you are trading frequently.
Research, research, research
Before your make your final platform decision, remember to do your homework and bear in mind the following points:
- Do you need advice or are you happy to make your own investment decisions (DIY)?
- General investment plan or an ISA or SIPP?
- Lump sum investing, regular savings or both?
- How much are you likely to invest (as the level of charges will vary)?
Pick of the Platforms
Visit ‘How to Invest’ on our Trusts’ websites where you’ll find links to a number of leading platforms. You may also want to visit the Association of Investment Companies website as they have produced excellent research on choosing the best platform, based on different criteria. You can access the research here.
And, finally, don’t forget that taking financial advice may be the most sensible way forward in the long run.
Press comments and other media coverage is at the heart of our efforts to promote the AllianzGI Investment Trusts. Not only does positive coverage have the potential to attract new investors but it can also benefit existing investors, by reducing discounts between a trust’s share price and its underlying Net Asset Value. Ultimately, discounts may become premiums at which point an Investment Trust may decide to issue new shares, thereby spreading costs across a wider shareholder base; this, in turn, reduces the impact of ongoing running costs for the benefit of all investors.
The latest coverage can be found on the Trusts’ websites, under ‘News & Announcements’.
Click below to view a sample of recent coverage:
If you have any queries regarding our investment trusts, please contact our Investor Services team.
Allianz Global Investors GmbH,
199 Bishopsgate, London, EC2M 3TY
Freephone (UK calls only): 0800 389 4696
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This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date. A ranking, a rating or an award provides no indicator of future performance and is not constant over time. Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors may not get back the full amount invested. Investment Trusts are quoted companies listed on the London Stock Exchange. Their share prices are determined by factors including the balance of supply and demand in the market, which means that the shares may trade below (at a discount to) or above (at a premium to) the underlying net asset value. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer and/or its affiliated companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been or will be made or concluded shall prevail.
This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, D 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, which is subject to limited regulation by the Financial Conduct Authority (www. fca.org.uk). This communication has not been prepared in accordance with legal requirements designed to ensure the impartiality of investment (strategy) recommendations and is not subject to any prohibition on dealing before publication of such recommendations.