Forum Archive Index - May 2001

["Dannie Hawkins" <dannie@es.co.nz>]

As usual a good posting.

I think you were a little too positive on listed trusts and a little harsh on unit trusts though. For one thing unit trusts should always trade at asset backing, the same cannot be said of investment trusts, which often trade at huge discounts to asset backing. This is fine if you are buying, but can be a double whammy if you are selling. Listed trusts can also trade at a premium to asset backing, if you buy then and sell at or below asset backing you can take a real hiding.

 

Another consideration is brokerage. Buying and selling listed trusts can be expensive and may outway the costs of entry/exit of unit trusts for smaller investors.

 

A third consideration is taxation. In my opinion it is naive to expect that the government will continue to offer taxation advantage to those who invest with offshore managers. Dr Cullen has already acknowledged that this is "unfair". If they retrospectively change things, there could be a lot of back tax. There should be no nasty taxation surprises for unit trust investors.

 

Disclosure

I have and do own and have given advice on a wide variety of investments including shares, listed investment trusts and unit trusts.

 

Dannie Hawkins