الأربعاء، 3 أبريل 2019
How NATO Works
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How NATO Works
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TaxSlayer Review | Has the Dragon Met Its Match?
If you were doing your taxes in 1990, you probably did them with little more than a couple of sharp pencils, a pot of coffee, a bottle of aspirin, and a calculator.
One year later, the first tax prep software hit the market. It was very crude by today’s standards—little more than a PDF version of a 1040 form—but the technology quickly grew into the online, user-friendly tool it is today.
One of the top tax software programs which has improved the game drastically is TaxSlayer. In this review, we’ll take a look at TaxSlayer’s key features and fees to help you decide how it compares to the competition.
Should You Choose TaxSlayer?
There are a lot of great tax apps on the market now. How do you choose among them?
You’ll want to make sure that the app you use has the features you need. So if you have some business profits, you’re self-employed, or you receive dividends or earn capital gains, you’ll want to make sure the package you buy has the schedules you’ll need to handle those issues.
You should also take a look at the guarantee the package offers. Does the software come with a maximum refund guarantee? Does it guarantee accuracy? Does it offer audit support?
The whole point of doing taxes online is that it’s supposed to be easier—so you’ll want to consider how easy your tax prep app is to use. And it probably goes without saying, but you should consider reputation and price.
TaxSlayer—The Modern Way to Do Your Taxes
TaxSlayer’s History
The product that does all these things is called Tax Slayer. Though the company’s name sounds like something out of today’s Marvel Comics Universe, TaxSlayer has actually been around since 1965.
Based in Augusta, Georgia, the company has grown a lot since in the last half-century and today handles over 10 million tax returns a year.
Would you like to use the tax prep company that the IRS has hired to provide online assistance to taxpayers? Do you want to use the tax prep company that over 90,000 tax professionals use? If so, then TaxSlayer is for you.
Key Features
TaxSlayer incorporates the best features of today’s tax prep applications. The app uses a conversational interface—it asks you questions in plain language (not IRS jargon) and you fill in the answers.
It allows you to save your work as you go and takes into account all the latest changes to the tax code. Best of all, it allows you to file your taxes electronically. And that often means a faster refund.
Of course, there are still situations where seeing a licensed tax preparer or a Certified Public Accountant is preferable to relying on an app.
For example, you might want to deal with a live human being:
- if your taxes are especially complex
- if you operate your own business or own rental properties
- if you’re dealing with inheritance issues
- if you have income from more than one state or country
- if you have money in some of the more exotic investment vehicles
For most of us, though, today’s tax prep applications are more than sufficient to sort out what we owe the government.
A Word About TaxSlayer’s Guarantees
One of the best features of TaxSlayer is its guarantees.
- Refund: First of all, TaxSlayer guarantees you will receive the maximum legal refund. If you don’t, TaxSlayer will refund the purchase price of the software.
- Deducted cost: Second, the company guarantees taxpayers that it will deduct the cost of using TaxSlayer directly from your tax refund. For many people, using TaxSlayer won’t require any out-of-pocket expenses.
- Accuracy: Third, the company guarantees accurate calculations. It will refund to you any penalties and interest charges that you have to pay as a result of an error or missing data.
TaxSlayer Plans
TaxSlayer is available in six different editions and price points:
Simply Free – $0 (state returns included)
You can’t beat free, right? As long as your taxes are simple and can be done on a basic 1040 form, you can use TaxSlayer without charge. What’s really amazing is the free live support via phone or email.
Plus, if you’ve got student loans, TaxSlayer will make sure you get all the education tax credits and student loan interest deductions coming to you.
Here’s a quick overview of the benefits of the free version of TaxSlayer:
- Free
- Prepares, prints, and e-files simple tax returns
- Phone or email support from a real person without charge
- Student/education tax benefits
- 100% accuracy guarantee
- Upload a prior tax return, even one from another tax service
- Compares return to previous year’s return to minimize taxes
- Best for singles, students, and couples with no dependents
File your taxes for free with TaxSlayer>>
Classic – $17 (plus $29 each for state returns)
This is TaxSlayer’s most popular edition and is an outstanding value at just $17. However, most people file both a federal and state return, which bumps the total cost up to $46.
One of the coolest features of the Classic edition is that when you upload your W2s, the software grabs all the relevant information from it and uses it to automatically fill in your tax form.
This saves some typing—but more importantly, it prevents human error from creeping into your return.
Key features:
- Prepares, prints, and e-files most tax returns
- Assistance with IRS tax notices for 1 year
- 100% accuracy guarantee
- W2 form upload autofills return
- Handles dependents, homeowners’ deductions, retirement income, interest, dividends, investments and more
- Best for those with dependents
Military – $0 (plus $29 each for state returns)
TaxSlayer offers its Classic edition to all active duty servicemen and women without charge for the preparation of a federal tax return. However, it still charges $29 for each state return.
MIlitary plan features:
- Prepares, prints, and e-files federal taxes for free
- Available to active duty military personnel
- All features of TaxSlayer Classic (above)
- Best for active duty servicemen and women
Premium – $37 (plus $29 each for state returns)
The Premium edition is for people whose tax returns are especially complex. At this level, you get unlimited live chat support with tax professionals—and you get bumped to the head of the line on phone and email queries.
Because people with complex taxes may be more likely to be audited, TaxSlayer offers audit assistance for three years after filing.
Here’s what you need to know about the Premium package:
- Prepares, prints and e-files complex tax returns
- Audit assistance for 3 years
- Tax pros on call for unlimited help with complex questions
- Priority email and phone support
- Live chat support
- Best for those with complicated income and tax situations
Self-Employed – $47 (plus $29 each for state returns)
Because people who are self-employed have a unique set of tax forms to complete, TaxSlayer puts out an edition of its software specifically tailored to their needs.
Not only does the software complete the required self-employment schedules, but it also includes tutorials year-round on how you can minimize and plan for your taxes.
Here’s what the self-employed package offers:
- Prepares, prints, and e-files returns and associated documents for self-employed people
- Live support from experts in self-employment tax
- 1099 and Schedule C support
- Finds all applicable deductions
- Includes educational materials on self-employment taxes
- Income and tax tips sent year round
- Best for freelancers, side hustlers, and the self-employed
Ultimate – $57 (plus $29 each for state returns)
At the top of the line of TaxSlayer’s offerings, the Ultimate edition is geared toward people whose taxes are complex and who want to be updated about new tax laws and regulations.
To sweeten the deal, TaxSlayer Ultimate plan includes identity theft protection and (more significantly) restoration. If you get hacked, TaxSlayer will help you minimize the damage.
Take a look at what you’ll get with the Ultimate plan:
- All the features of the Premium edition
- Includes identity theft protection and restoration
- Features educational materials on new tax rules
- Best for people who pay close attention to IRS rules and have complicated tax situations
What are Customers Saying? How Does TaxSlayer Stack Up?
TrustPilot rates TaxSlayer #1 in its category of tax prep software. People who post comments about the company generally rave about how easy and fast it is to use—which is exactly what tax prep software should be.
It’s also reassuring to see that TaxSlayer actually pays attention to consumer comments and responds to them—even to those from people who are unhappy.
The BBB gives the company an A.
The FTC filed a complaint against the firm in 2017 after some tax returns were hacked, but in that case only 0.09% of the company’s customers were affected. And since then, the company has further enhanced its security procedures.
Bottom Line
Regardless of how complicated your taxes are, TaxSlayer is an outstanding choice.
Its prices for people with simple tax returns and for military members are tough to beat. The company provides live support to all its customers—even to those using the free edition.
It has a great reputation and a loyal customer following. It guarantees accuracy. And even if you’ve never used tax prep software before, its remarkably easy to understand.
Get started with TaxSlayer today>>
The post TaxSlayer Review | Has the Dragon Met Its Match? appeared first on Good Financial Cents®.
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Investment trusts: the basics
In the dark about this type of investment? We explain what they are and how they work
Investment trusts have been around for 150 years, but they still divide opinion among investors.
While those in favour point to an impressive track record of delivering returns, others argue they’re not always the cheapest fund options and can be volatile.
However, most agree they possess unique qualities that make them worth considering by anyone investing over the longer term.
What are investment trusts?
They are companies that are listed and traded on the London Stock Market in the same way as normal shares.
In fact, they are also commonly referred to as ‘investment companies’, because their business is investing assets on behalf of their shareholders.
Run by dedicated managers, investors’ cash is pooled and put to work across a wide range of areas, including other companies and alternative asset classes.
Their ability to get access to more specialist areas of the market, borrow money to invest and smooth out returns sets them apart from other investment products.
According to Patrick Connolly, a chartered financial planner at Chase de Vere, their structure means they are easy to understand.
“Every investment trust has an independent board of directors, which is responsible for looking after shareholders’ interests,” he says. “It will, for example, ensure the trust is run according to its investment remit and that the correct governance procedures are in place, as well as setting dividends to be paid to shareholders.”
The directors on these boards meet several times a year and monitor the trust’s performance. If it is not up to scratch, they can replace the fund manager.
How do they work?
Investment trusts are known as ‘closed-ended’ because there will only ever be a set number of shares available to buy – irrespective of demand. Unlike open-ended funds, they cannot automatically create and cancel units in response to the amounts being invested.
This means the demand for a trust will influence its share price.
When a lot of investors want shares, the ‘share price’ will exceed the valuation of the underlying assets. This is known as trading at a premium.
Conversely, when demand is low the share price will fall below the valuation of the underlying assets. At this point, the trust will be trading at a discount.
For Adrian Lowcock, head of personal investing at Willis Owen, this can be a blessing or a curse.
“You run the risk of overpaying, but there’s also the opportunity of buying them cheaply,” he says.
He argues that trusts in popular, trendy sectors can get expensive.
“They’re potentially more volatile than the market and can fall further than their underlying investments during big sell-offs,” he explains.
What do trusts invest in?
They can put their money into a wide variety of areas and their ‘closed-ended’ structure enables them to invest in more specialist areas. These include less liquid asset classes, such as private equity, commercial property and infrastructure, that are not easily accessible to other fund types.
This liquidity issue is important. For example, if someone wants their money back from an investment trust, they can simply sell the shares. If they are in an open-ended fund, such as a unit trust, the manager may have to sell some of the underlying holdings to redeem units. In areas such as commercial property, this can take some time.
Not having to worry about dealing with lots of redemptions in troubled times enables managers of trusts to take a longer-term view on potential investments.
Other qualities
An interesting feature of trusts is the fact they can use gearing, points out Mr Connolly at Chase de Vere.
“They can borrow extra money to invest, and this gives an added boost to returns if the underlying investments perform well,” he explains. “This is why investment trusts usually outperform similar open-ended investment funds over the long term.”
However, gearing isn’t a guaranteed route to success.
“If the underlying investments perform badly, then investors will have more money exposed to this bad performance and must pay interest on the money borrowed,” he adds.
Another benefit is that trusts can hold back up to 15% of the dividends from the underlying portfolio, says Mr Lowcock. “This helps them smooth the income paid out as they can use these reserves to ensure the dividend is maintained and grows even in poorer years,” he explains. “A consistent income is essential for long-term investors.”
Popularity of investment trusts
Investment trusts have been around a long time. The first was the F&C Investment Trust that launched back in 1868 – and it’s still going strong today. It now boasts nearly £4 billion of assets under management and invests in more than 500 companies across 35 countries.
Today, there are more than 400 trusts across sectors as diverse as emerging markets and Japanese smaller companies to infrastructure, financials and environmental.
They are also increasingly available on investment platforms, says Martin Bamford, managing director of financial planners Informed Choice.
“Since commission on investment products was abolished at the end of 2012, investment trusts, which don’t typically pay fees to advisers, have operated on a more level playing field with unit trusts and open-ended investment companies,” he says.
The whole investment trust area is thriving now, agrees Annabel Brodie-Smith, communications director for the Association of Investment Companies (AIC).
“Assets under management were close to an all-time high of £184 billion at the end of January 2019,” she says.
Who are they suitable for?
An investment trust is worth considering by anyone wanting to invest over the longer term – at least five to 10 years.
The sheer number of trusts available, each with their own aims and objectives, means there is a good chance of finding at least one to meet your needs. For example, younger investors seeking to maximise growth may be drawn to a trust that focuses its attention on the emerging markets, which are riskier economies with higher growth potential.
Others may want exposure to specialist areas, such as commercial property, as a part of their broader portfolio, while those approaching or in retirement may need a reliable trust that can deliver income.
Mr Bamford suggests investment trusts tend to favour the long-term investor, who is looking for exposure to a specific sector or theme.
“They often appeal to more experienced investors who take an active interest in the management of the trust and its approach,” he says. “Investors should be comfortable with the closed-ended pricing features and any use of gearing within the trust.
“Like all investments, a trust can fall in value, so investors need to have sufficient capacity for losses before making an investment.”
If you need advice choosing investments, you should seek the help of an independent financial adviser.
How have they performed?
As with all types of investment, there have been winners and losers. Success depends on a variety of factors, including the skill of the management team at the helm and whether the area in which it invests is in favour.
A look at the performance figures over the past decade illustrates the point with the best performers enjoying double-digit annualised returns – and the worst losing money.
Lindsell Train, which aims to maximise long-term total returns with a minimum objective to maintain the real purchasing power of Sterling capital, has been one of the standout names. If you had invested £100 in this trust 10 years ago, you would now have £1,118.02, according to AIC/Morningstar data to the end of February 2019.
However, trusts at the other end of the performance table tell a different story. A £100 investment at the same time into Golden Prospect Precious Metal, which is in the Commodities and Natural Resources sector, would now be worth -£26.72.
How much do they cost?
People can buy shares directly from an investment trust company or from a DIY investment platform or stock broker.
Costs will be a vital part of the decision-making process. In its simplest form, the higher the charges levied, the better your investment needs to perform to make you money.
The costs you might incur will depend on how you buy your investment trusts. For example, if you opt to go via a platform or stock broker the charges for their services will vary. If you hold shares through an individual savings account (Isa) wrapper, there may be fees attached.
Costs have changed in recent years and this is a consideration for investors, points out Justin Modray, founder of Candid Financial Advice.
“Investment trusts used to benefit from generally lower charges than unit trusts, but with the abolition of sales commissions, prompting cheaper unit trust versions, they are broadly similar these days,” he says. “In fact, unit trusts are typically cheaper if anything.”
Although many trusts provide a low-cost route to active management, this isn’t always the case.
“Some of the more specialist equity trusts can be relatively expensive, usually because the impact of fixed running costs are exacerbated on relatively small funds,” adds Mr Modray.
“We only recommend active managers over lower-cost trackers when we believe they have the ability and strategy to outperform, after charges.”
Making your choice
Deciding which is suitable for you will depend on your aims and objectives, as well as your attitude to risk.
“Investors should look at the history of the investment trust to understand its performance and trading history, including whether current levels of discounts or premiums are typical or unusual,” says Mr Bamford.
Ms Brodie-Smith believes there is something for everyone. “We have everything from traditional global investment trusts to more exotic asset classes,” she says. “You just need to make sure you’re happy with the investment risk being taken.”
As part of our First 50 Funds for beginners, Moneywise has selected 10 investment trusts that investors could consider buying and stashing away for the long term (see table below).
Investment trusts in Moneywise First 50 Funds for beginners (ranked by yield)
| Name | Discount/premium %* | Gearing %* | Ongoing charges figure %* | Yield % | Five-year return % |
|---|---|---|---|---|---|
| F&C Commercial Property (FCPT) | -11.1 | 26 | 1.22 | 4.9 | 28.9 |
| The City of London Investment Trust (CTY) | 1.7 | 12 | 0.41 | 4.5 | 30.9 |
| Murray International Trust (MYI) | 4.7 | 12 | 0.64 | 4.4 | 47.7 |
| Picton Property Income* (PCTN) | -4.11 | 37 | 1.2 | 3.74 | 94.19 |
| Henderson Smaller Companies Investment Trust (HSL) | -7.5 | 11 | 0.98 | 2.6 | 54 |
| Witan Investment Trust (WTAN) | -2.8 | 15 | 0.86 | 2.5 | 70.1 |
| Finsbury Growth & Income Trust (FGT) | 0.2 | 0 | 0.67 | 1.9 | 72.1 |
| Jupiter European Opportunities (JEO) | -5.1 | 6 | 2.5 | 0.9 | 64.2 |
| BMOGlobal Smaller Companies | -1.9 | 6 | 0.6 | 1.2 | 58 |
| Scottish Mortgage Investment Trust (SMT) | 2.2 | 8 | 0.37 | 0.6 | 145.2 |
Note: Discount /premium, and all other data sourced from the AIC/Morningstar, 7 March 2019 * Picton Property Income data, FE Trustnet, 14 March 2019
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Moneywise Investment Trust Awards 2019
Whether you are saving a nest egg for your future or putting money aside for offspring, an investment trust could be the right product for you. Our winners have proved they perform consistently well
Investment trusts can be a great way of getting access to a diversified portfolio of shares at low cost.
Managed on your behalf by an expert fund manager, investors can enjoy stock-market returns without the hassle and expense of researching, buy and selling the shares themselves.
Although performance isn’t guaranteed, if you’ve chosen wisely your money should grow at a faster rate than it would in a cash account and be protected from inflation.
This makes investment trusts a practical option if you want to save for the future – whether it is for your own nest egg or one you want to build for a child or grandchild. They can also be a savvy choice for investors who need an income from their savings.
In addition to the fact that investment trust managers can ‘gear’, that is borrow to invest, to boost returns in rising markets, they can also hold back as much as 15% of their income in their strongest years to help them deliver a rising income over time.
However just with conventional funds, there is a plethora of choice with trusts investing across different assets, regions, company types or themes and they will all have a different approach to risk. Some trusts will, of course, perform better than others too.
To help you make the right choices, Moneywise has teamed up with a panel of expert judges to hand-pick the best options across a number of popular sectors in the Moneywise Investment Trust Awards 2019.
These are not just the trusts that have performed best over the past year or so, instead we have selected winners and runners-up that have demonstrated they can perform consistently well and have the resources in place to carry on doing a good job for their investors.
UK ALL COMPANIES
Winner: Fidelity Special Values
Trust provider: Fidelity
Fund manager: Alex Wright
Total assets: £833.7 million
Market return over five years: 48%
Share price: 255p
Discount/premium: +0.7%
Yield: 2%
Ongoing charges: 1.05%
Highly commended: Mercantile
“While the UK faces a number of headwinds, not least regarding uncertainty surrounding Brexit negotiations, the UK All Companies investment trust peer group is trading at one of the tightest discount levels in its history. The current peer group average discount is 8.6%, compared with a 20-year average of 10.2%,” says Emma Bird, judge and research analyst at Winterflood Investment Trusts.
This means that investors have to pay more to access the sector. However, our winner, Fidelity Special Values – which takes this award for the third year in a row – is so popular among investors that it is actually trading a premium of 1.5%. Nonetheless, our judges agreed it was worth paying extra to buy shares in the trust, with all but one voting it the top trust in the sector.
Commenting on our winner, Jason Hollands, judge and managing director at online investment service Best Invest and Tilney Wealth Management Group, says: “Alex Wright has done an outstanding job with Fidelity Special Values since being handed the portfolio in 2012. The trust invests across the market-cap spectrum – with significant exposure to small and medium-sized companies – and does so with an unambiguous, value-oriented, contrarian approach. In a period where large companies have outpaced small and mid-sized ones, this has not impaired the performance of the portfolio, which is testament to very strong stock selection.”
For the second consecutive year, our highly commended award goes to Mercantile, which has a discount of 8.6% – the average for the sector. This was the preferred choice of Ms Bird.
“Mercantile offers well-managed, low-cost, diversified exposure to UK mid- and small-cap companies through one of the largest and most liquid UK-focused investment trusts. Furthermore, its quarterly dividend offers an attractive yield of 3% and the progressive dividend policy has seen its dividend grow by 6.3% a year over the past 10 years. Its ability to continue to grow its dividend is supported by significant revenue reserves,” she explains.
UK EQUITY AND BOND INCOME
Winner: City Merchants High Yield
Trust provider: Invesco Asset Management
Fund managers: Rhys Davies, Paul Causer, Paul Read
Total assets: £179 million
Market return over five years: 29%
Share price: 182p
Discount/premium: -0.6%
Yield: 5.5%
Ongoing charges: 1%
Highly commended: Henderson High Income
This is the smallest of the sectors we analysed in these awards, nonetheless it can be a helpful choice for investors wanting a combination of UK equities and fixed interest to manage risk. However, without any geographical diversification, the sector cannot be described as a home for ‘one-stop shop’ funds.
This year, our winner is City Merchants High Yield.
Patrick Connolly, judge and a certified financial planner at Chase de Vere, says: “This trust utilises the UK equity expertise of Invesco together with two of the most distinguished fixed-interest managers in Paul Read and Paul Causer. It pays a yield of over 5% a year, and the management team adopts a fairly flexible approach in terms of asset allocation. It should be a comparatively safe haven for those who want a high level of income.”
Henderson High Income takes runner-up position. Its second consecutive year in this position, after two years at the top of the pack, highlights it as a consistent and reliable choice for investors.
Ms Bird says: “Henderson High Income offers an attractive yield of 5.8%, which is fully covered by revenue. Its revenue reserves mean that shareholders have a reasonable degree of certainty that the dividend will be maintained or increased in the future.”
She does point out, however, that the level of gearing – around 27% of net assets – does increase its risk profile, but says this is mitigated to a certain extent by the level of diversification, both among bonds and equities, of the trust.
UK EQUITY INCOME
Winner: Finsbury Growth & Income
Trust provider: Frostrow Capital
Fund manager: Nick Train
Total assets: £1,519.5 million
Market return over five years: 70%
Share price: 805p
Discount/premium: +0.6%
Yield: 1.9%
Ongoing charges: 0.67%
Highly commended: Lowland
“This is an important sector for both income- and growth-orientated investors and it boasts some of the best equity managers in the UK,” says Mr Connolly. “Investors are very much spoilt for choice as the sector has many top-quality investment trusts.”
It is Finsbury Growth & Income, however, that takes top spot for an impressive nine years in a row.
David Holder, judge and senior analyst at investment research firm Morningstar, says: “Finsbury Growth & Income is a standout choice for investors comfortable with a highly concentrated portfolio that can look markedly different from the FTSE All Share Index. It is run by an experienced manager Nick Train, who has shown a disciplined adherence to a well-structured approach since launch.”
“The crux of Mr Train’s investment philosophy lies in the belief that a highly concentrated portfolio of high-quality, cash-generative, strong, and easily understood business franchises will outperform the market and reduce volatility over the long term.”
He adds that investors do need to be comfortable with periods of short-term volatility, but points out that with Mr Train holding more than one million shares in the fund himself, his priorities are the same as his investors.
Taking runner-up position for the second year in a row is Lowland, another trust with an objective to deliver growth and income to investors.
Ms Bird says: “Lowland has a strong long-term performance record, with the fund benefiting from an experienced management team and a bias to mid- and small-cap companies. Indeed, it is this bias and a willingness to invest in recovery situations that differentiates it from its peers.
She adds: “Its value and mildly contrarian stance have proven a headwind in recent years; however, we believe that these same biases should see the fund perform strongly in the event of greater certainty surrounding the Brexit process, assuming that the UK economy remains on a reasonable footing.”
UK SMALLER COMPANIES
Winner: Henderson Smaller Companies
Trust provider: Janus Henderson Investors
Fund manager: Neil Hermon
Total assets: £735.3 million
Market return over five years: 66%
Share price: 853p
Discount/premium: -7.3%
Yield: 2.5%
Ongoing charges: 0.41% (0.98% incl. performance fee)
Highly commended: BlackRock Smaller Companies
“This is a high-risk sector but one where long-term performance has been very strong,” remarks Mr Connolly.
“It is likely that smaller companies will continue to outperform over the long term, although there are some potential headwinds in the short term, not least the implications of the UK’s withdrawal from the EU.”
For investors who are able to take the higher degree of risk, our judges put Henderson Smaller Companies at the top of the pile for an impressive fourth year.
Mr Hollands says: “The Henderson Smaller Companies IT, managed by veteran Neil Hermon, has consistently delivered the goods, using a “growth at a reasonable price” approach. Mr Hermon looks for companies with strong cashflow generation and earnings momentum, while avoiding those more speculative situations where it is difficult to arrive at a sensible assessment of the valuation.”
Coming a very close second is BlackRock Smaller Companies for the third year in a row. This was the preferred choice of Adrian Lowcock, head of personal investing at Willis Owen.
“The investment process is rigorous and established,” he explains. “Initially the universe is screened for suitable liquidity (minimum market cap will generally be around £100 million) and then four key measures (model, management, money and momentum) are applied to the remaining stocks. Company meetings and broker input, together with a valuation and macro sanity check, complete the process.”
PROPERTY DIRECT UK
Winner: Standard Life Investments Property Income
Trust provider: Aberdeen Standard Investment
Fund manager: Jason Baggaley
Total assets: £369.3 million
Market return over five years: 61%
Share price: 87.7p
Discount/premium: 3.6%
Yield: 5.4%
Ongoing charges: 1.8%
Highly commended: F&C Commercial Property
An investment trust can be ideal way to invest in commercial property: whether it’s a trust that buys office space, warehouses or retail and entertainment spaces. Such properties are not quick to sell, which can see managers of open-ended funds in hot water if too many investors want to cash in their holding.
Ms Bird says: “Given its inherent liquidity, commercial property is ideally suited to the closed-ended fund structure [investment trusts]. The benefits of the structure become particularly apparent during times of market stress, such as the aftermath of the EU referendum in 2016 when a number of open-ended property funds suspended redemptions.”
The award this year goes to Standard Life Investments Property Income, last year’s runner up.
Mr Connolly says: “This is a diversified ‘bricks and mortar’ property fund from an experienced and well-resourced management team. It is a core diversified holding paying an attractive income and investing across industrial, office, warehouse and retail property. It should continue to provide consistent returns.”
F&C Commercial Property – a favourite of Mr Hollands – came a close second.
He says: “F&C Commercial Property Trust gets my vote based on a combination of the tenant quality, unexpired lease profile of portfolio and the fact it pays monthly income. The portfolio is skewed to London and the South East, with the biggest development being the St. Christopher’s Place complex of restaurants, bars and shops close to [London’s] Oxford Street.”
GLOBAL
Winner: Scottish Mortgage
Trust provider: Baillie Gifford
Fund managers: James Anderson and Tom Slater
Total assets: £7,980 million
Market return over five years: 145.42%
Share price: 499p
Discount/premium: +2.9%
Yield: 0.6%
Ongoing charges: 0.37%
Highly commended: Edinburgh Worldwide
Global investment trusts, which are able to buy companies all over the world, have become a popular choice for smaller savers seeking a diversified portfolio of shares. And with the sector including some of the most successful and long-standing investment trusts, competition in this category is always tight.
The winner this year is Scottish Mortgage. A regular in the Moneywise Investment Trust Awards, this is the sixth year the trust has topped this category since 2011.
Mr Hollands is a big fan of the trust.
“Scottish Mortgage really is the poster child for the modern investment trust sector, despite its venerable brand. Unconstrained in approach, with holdings from the US to China, it scours the globe for fast growth companies.
“I also like the fact is has a meaningful exposure to unquoted companies. Despite a very active and selective investment trust, Scottish Mortgage also has very low ongoing fees. Over the long run, these will more than compensate for the small premium investors typically have to pay for Scottish Mortgage’s shares.”
By contrast, Edinburgh Worldwide makes its first appearance in the awards, coming in second place. However, while performance is impressive, our judges warn its focus on smaller companies means it’s not for the faint-hearted.
Mr Lowcock explains: “This is a higher-risk, smaller companies trust. The process is bottom-up and focused on initially immature companies with a market cap of less than $5 billion. In addition, given where it is in its evolutionary development, around a third of the portfolio is in companies that are not yet making a profit.”
GLOBAL EMERGING MARKETS
Winner: JP Morgan Emerging Markets
Trust provider: JP Morgan Asset Management
Fund manager: Austin Forey
Total assets: £1,219 million
Market return over five years: 85%
Share price: 895p
Discount/premium: -9.4%
Yield: 1.2%
Ongoing charges: 1.02%
Highly commended: JP Morgan Global Emerging Markets Income
Trusts in this sector give investors exposure to emerging economies, such as China, India and Latin America. Yet although growth potential is good as middle classes develop in these regions, investors must be prepared for plenty of ups and downs as they will have discovered over the past year.
Mr Hollands says: “Emerging markets have certainly provided investors with a rollercoaster ride in recent years. After posting stellar returns in 2017, 2018 was something of an ‘annus horribilis’ for the sector, battered by Dollar strength, the escalating US-China trade war and the impact of overzealous measures to curtail Chinese credit growth.”
Our winner, JP Morgan Emerging Markets, scored maximum points with our judges and scoops up the award for the third year on the bounce.
Mr Hollands says: “JP Morgan Emerging Markets is a great core option for investors, which benefits from an extensive team able to put boots on the ground across these disparate regions.
“The trust has had a sizeable overweight to India, one of the brightest spots in the emerging markets firmament for some time, but has also progressively increased its exposure again to China. That could prove very timely with China once again ratcheting up stimulus measures and apparent progress being made in US-China trade negotiations.”
Proving its strength in the region, JP Morgan’s Global Emerging Markets Income fund takes runner-up position.
Mr Holder says: “This fund is attractive for those seeking income-oriented exposure to emerging markets. The manager is supported by the well-resourced wider team. The structured approach of assessing five-year growth, dividends, change in valuation, and currency allows fund managers to select stocks based on drivers that are appropriate for their particular product.
“This flexibility of investing in stocks with different yield characteristics gives the manager a better chance of achieving the dual objective of income and capital growth. This fund has always offered a genuine yield premium versus the index. The strength of resources and robust process continue to make this an attractive offering.”
EUROPE
Winner: Fidelity European Values
Trust provider: Fidelity
Fund manager: Sam Morse
Total assets: £1,133 million
Market return over five years: 62%
Share price: 223p
Discount/premium: -9.9%
Yield: 0.9%
Ongoing charges: 0.93%
Highly commended: Jupiter European Opportunities
“The ‘doom and gloom’ sentiment surrounding European investments has been largely replaced with one of cautious optimism, although there are still headwinds including the possible fallout from Brexit, stunted economic growth, and high unemployment and debt in some countries,” says Mr Connolly.
A good choice for navigating these challenges is our winner Fidelity European Values.
Mr Connolly says: “This is a genuine stock-picking trust, where the manager seeks good value, cash-generative companies which are able to grow their dividends in the medium term. This approach produces strong long-term returns and also provides a good degree of protection in difficult market environments, which may be a useful characteristic as Europe faces some uncertainty ahead.”
Coming a very close second is last year’s winner Jupiter European Opportunities – the preferred trust of Mr Hollands.
“In this category, I feel there is a standout winner in Alex Darwall’s Jupiter European Opportunities Investment Trust. The manager pursues an unconstrained approach to selecting a concentrated portfolio of quality, growth businesses.
Mr Darwall looks for ‘special’ companies that offer superior, differentiated products and services that can deliver sustainable growth and retaining strong pricing power, throughout the economic cycle.”
ASIA PACIFIC EXCLUDING JAPAN
Winner: Schroder Asian Total Return
Trust provider: Schroders
Fund manager: King Fuei Lee, Robin Parbrook
Total assets: £319 million
Market return over five years: 119%
Share price: 354p
Discount/premium: +2.2%
Yield: 1.4%
Ongoing charges: 0.97% (2.68% incl. performance fee)
Highly commended: Fidelity Asian Values
“Last year was an incredibly challenging period for Asian markets which faced the perfect storm of a deceleration in Chinese growth, pressure from a strengthening US Dollar and the escalating US-China trade war,” explains Mr Hollands. However, he notes that the category has a number of very strong contenders, which are well placed meet those challenges head on.
His favoured trust is our winner.
“In my view, the Schroder Asian Total Return edges it because of the very distinctive strategy it pursues of using a tactical derivative overlay to help protect capital. This has proved beneficial to investors during the turbulence of 2018, especially given the sizeable underlying exposure to mainland Chinese stocks.”
Taking runner-up position is Fidelity Asian Values.
Mr Lowcock says: “Manager Nitin Bajaj has an unconstrained approach to investing in the region and makes good use of the vast Fidelity Asia Pacific resources. His process involves identifying well-run companies in attractive industries at appealing valuations.”
Given the risks involved in this and other sectors that invest in emerging markets, Mr Connolly adds that investors should ensure they don’t become too exposed to the region.
“Investors need to be wary that they don’t duplicate exposure if investing in Asia alongside emerging markets trusts, particularly as both may have their largest weighting in China.”
NORTH AMERICA & NORTH AMERICAN SMALLER Cos
Winner: North American Income
Trust provider: Aberdeen Standard Investments
Fund managers: Ralph Bassett, Douglas Burtnick, Fran Radano, Charles Tan
Total assets: £445 million
Market return over five years*: 105%
Share price: 1430p
Discount/premium: -0.2%
Yield: 2.8%
Ongoing charges: 0.98%
Highly commended: JP Morgan US Smaller Companies
“Despite a short-term pull back, the US stock market has been an ongoing story of success and long-term investors have been well rewarded. The US boasts the largest stock market and economy in the world and is home to many of the most successful and innovative companies, including the likes of Apple, Microsoft and Amazon,” says Mr Connolly.
This category combines two small AIC sectors – North America and North American Smaller Companies.
Our winner is the North American Income Trust, which takes the award for the third time since 2015.
Mr Connolly is a big fan.
He says: “This trust, which is managed by Aberdeen Standard, has performed superbly in recent years as its focus on large-cap, dividend-producing companies has been in demand from investors.
“This trust should be positioned to provide consistent long-term returns and pays an income of 2.8%, which is reasonable for the US market, although there is a danger that some of the underlying holdings are quite expensive and could be subject to shorter-term falls,” he says.
It was a very close call for runner-up, but JP Morgan Smaller Companies edged it for the second consecutive year.
Mr Lowcock says: “The philosophy of the team is to invest in companies that have a sustainable competitive advantage and are run by good and experienced management teams with a proven record of success. They look for companies that are trading at a discount to their fair value. The team is willing to run their winners and continue to hold them as they grow.”
MONEYWISE INVESTMENT TRUST GROUP OF THE YEAR
WINNER: JP Morgan
JP Morgan retains the award this year, winning the accolade for the fifth time since 2009.
Mr Connolly says: “JP Morgan is a very well-resourced investment company with strength in a wide range of areas and which is committed to their investment trust products.
“Its track records are usually based on consistency rather than ‘flash in the pan’ performance and so it should be well-placed to continue to perform well for investors in the future.”
Methodology
The Association of Investment Companies provided Moneywise with the top performing investment trusts for 10 popular sectors, ranked over three years with five- and seven-year data also supplied. We then aggregated this data to create shortlists for each category. These shortlists were then passed over to our panel of independent judges. We asked them to vote for their top three in each category, taking into account factors such as value for money and suitability for Moneywise readers, in addition to performance.
The judges:
Patrick Connolly, chartered financial planner, Chase de Vere
Emma Bird, research analyst, Winterflood Investment Trusts
David Holder, senior analyst, Morningstar
Adrian Lowcock, head of personal investing, Willis Owen
Jason Hollands, managing director, Best Invest and Tilney
• All data supplied by the AIC correct as of 8 March 2019 except performance data, which ran to 31 January 2019.
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The Financial Wisdom of Rob Gronkowski
While I’m not a particularly big football fan, I have been in a variety of fantasy football leagues (including a long-running dynasty league) with several friends for many years. For the last decade, one of the best players in the game has been Rob Gronkowski, a tight end for the New England Patriots who has consistently been one of the best players in the league at his position. He recently chose to retire from the game, hopefully with his health intact.
So, why am I telling you about Rob Gronkowski? He’s on my short list of professional athletes who have been incredibly smart with their finances and lifestyle (along with one of my favorite baseball players, Daniel Norris). In short, Gronkowski has saved his entire NFL salary for his whole career, never spending a dime of it. He has lived entirely off of endorsement contracts and, in the end, has spent only a small fraction of what he has earned.
Pretty impressive for someone who had a reputation of being a bit of a “meathead.”
In this article from CNBC, Gronkowski lays out some of the details of his financial planning and the advice he gives to other players:
Although he was one of the highest-paid tight ends in the league, the 29-year-old had not touched a dime of his NFL money. As he revealed in his 2015 book, “It’s Good to Be Gronk,” he lived off his endorsements instead.
Gronkowski […] says that as a veteran on his team, there is one piece of advice he would always gives his rookie teammates about managing their money.
“Financially, I just say: Keep it simple,” he tells CNBC Make It.
Unlike many other professional leagues where athletes’ contracts are fully guaranteed, NFL players’ are not. That’s why Gronkowski says he would always tell his young teammates to “get what you need to live comfortably but don’t go crazy with splurging until you feel comfortable in the league.”
When he got his first NFL paycheck, Gronkowski said he put it all in the bank. And he spent his endorsement money carefully too. It wasn’t until recently, after eight seasons of being frugal, that he finally decided to splurge.
While I was unable to find any hard numbers on this, Gronkowski had a $54 million contract in the NFL, and NFL analyst Darren Rovell estimated Gronkowski’s lifetime endorsement earnings at $3.5 million. That equates to somewhere above a 90% savings rate. I’m impressed.
“When I signed my incentive deal last year, my friend had a chain and I was like, ‘Dang, man, that’s a nice chain,’” Gronkowski told entrepreneur Maverick Carter on an episode of UNINTERRUPTED’s “Kneading Dough” last year. “I never had jewelry in my life. He let me wear it last year at a party and it made me feel good.”
After a successful 2017 season that included a Super Bowl appearance, Gronkowski decided to treat himself and buy a nice chain.
So, Gronk’s one big splurge for himself after playing in the NFL for seven years, having a huge contract, and appearing in (and winning) several Super Bowls was to buy himself a necklace.
The article goes on to give a big nod to another NFL player, Kirk Cousins:
Gronkowski wasn’t the first or only well-paid NFL player to be open about his frugal spending habits. Minnesota Vikings star Kirk Cousins, who is the first quarterback to have a multi-year, fully guaranteed deal and so can count on $84 million coming his way, nonetheless drives a dented GMC Savannah van that he purchased from his grandma for $5,000.
Cousins also revealed to GQ that, after being drafted into the league in 2012, he and his wife still spent their summers living in his parents’ basement to save on housing costs.
In a 2016 interview with the Wall Street Journal, Cousins explained, “You don’t know how long you’re going to play. You’ve got to save every dollar even though you are making a good salary.”
There are a lot of valuable lessons in these stories. Here are a few of the key lessons that stood out for me that also resonate in my own life.
You can never be sure of your future salary or your future self. Both of these guys nod strongly to the idea that they don’t know what the future holds for their income. All they know is that they’re earning quite a bit now and that they can live quite happily well below that income level.
The same principle applies to everyone. Your future income is never secure. Your future self is not reliable. Instead, you should be looking at your current life and asking yourself if you can live a happy life spending significantly less than your income. Aim for the minimal spending that brings you a happy life and bank the rest for a future when you can’t earn as much. Ideally, you will keep earning a nice income for a while and then you’ll have so much in the bank that you can retire early.
Fancy items don’t bring lasting happiness. An NFL starting quarterback on a multi-million dollar contract drives a used GMC Savannah he bought from his grandmother. Why? A fancy car won’t bring him lasting happiness. On the other hand, financial security will bring him that happiness.
Gronkowski spent several years in the NFL, earning millions in salary, before deciding to splurge on a chain. Why? He realized that he was going to be a lot happier in life knowing that his whole future was taken care of rather than owning a bunch of stuff.
Stuff doesn’t bring happiness most of the time. Money itself doesn’t bring happiness. What does bring happiness is good relationships, life-affirming experiences, challenging yourself, and building a strong foundation upon which those things can rest.
When you do splurge, give it some thought and make it meaningful. As noted earlier, Gronkowski spent a long time thinking about buying that chain as a splurge of his. He didn’t just go out and buy it for giggles. He considered it carefully and when he made the purchase, it wasn’t disruptive to anything in his life and it was something he had wanted for a long time.
That’s a good model to adopt when it comes to splurges. If you decide that you really want something that’s not a necessity, give it time. Let it rest and decide if you really do want it. If you give it reasonable time (and I don’t just mean “five minutes”) and decide you do want it, then do a bit of homework and indulge. Make it a meaningful, powerful indulgence that provided some blissful anticipation and is something that you’re going to really enjoy.
Be spontaneous with your time and energy, not your money. Many people balk at being financially responsible because they don’t want to lose a sense of spontaneity in their life. The problem with that is that financial spontaneity is just one flavor of spontaneity – you can be spontaneous with your time and energy without throwing your money to the wind.
Go run across the yard barefoot. Make an amazing dinner that your family didn’t expect. Spend an afternoon reading a great book instead of scrubbing behind the toilet. Tell someone you love them.
Gronkowski built a bit of a reputation in his NFL career as being a bit of a goofball and a partier, but if you look closely, it was clear that he was just spontaneous and gregarious with his time and energy, not his money. That’s a great approach to have with your life.
There are infinite ways to be spontaneous in life without just spending money frivolously.
Keep things simple. Financial planning doesn’t have to be complicated and loaded with decisions. If you have two household incomes, bank one and live off the other one. Automate as much of your saving and bill paying as possible. Invest in target retirement funds if your goal is retirement. Automatically put a little money each week into a savings account for an emergency fund – just set this up once and let it sit. Buy late model used cars and drive them for many years. Live in a relatively small house or apartment. Buy store brands. This doesn’t have to be complicated or difficult.
In other words, channel your inner Gronk.
Good luck.
Read more by Trent Hamm:
- Planting Seeds for the Future
- The Happy Life on the Path to Your Financial Goals
- 10 Little Lifestyle Tweaks and How Much Money They Save
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10 Tips for Getting the Biggest Tax Refund
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10 Tips for Getting the Biggest Tax Refund
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Where to Find Christian Work-at-Home Jobs
Every week I receive tons of emails from women who are looking for legitimate jobs they can do from home. When I ask them about their passions, skills, and prior experience, a large percentage of these women mention their Christian faith. Because faith and religion play such an essential role in the lives of so many, […]
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