Money: Buy shares in the bargain basement

Act now if you want to buy bargain-basement shares. Many investment trusts are being sold for less than their true worth because there is little demand for their shares.

But a pounds 16m advertising campaign in the autumn - the Association of Investment Trust Companies (AITC) is organising the spree - will almost certainly push up prices.

And as soon as the investing public twigs on to the hidden bargains, the discounts will drop. Those in the know are moving in now.

It has happened before, says Simon Crinage, at investment trust managers Flemings: "In 1993/1994 a raising in awareness of investment trusts closed the discount to near zero."

The reason we have not heard more from investment trusts in the past is also the reason why they are a good deal for investors: they are cheap. Because charges for managing your money are low, the funds pay little or no commission to financial advisers who are more likely to recommend a more expensive alternative.

The management fees can be as much as a third less than those for unit trusts. Jeremy Tigue, at Foreign & Colonial, gives an example of how much you can save by buying investment rather than unit trusts: "Annual management fees on unit trusts are 1.5 per cent, while for the F&C Investment Trust, the fees are 0.3 per cent."

Investment trusts also give greater scope than unit trusts for investing in markets outside the UK. Mr Crinage says: "In general, investment trusts have more of a bias towards emerging markets, including the Far East, and smaller companies." This bias is useful if you are looking for a global portfolio or want to try your luck on emerging markets.

Investment trusts are currently trading at an average true worth, or discount of 13 per cent to their Net Asset Value. There is a huge choice of investment trusts, but for first-time investors Tom Tuite-Dalton, of Credit Lyonnaise, recommends a global spread of shares: "The Alliance Trust offers investors unmatched value for money in gaining exposure to world markets."

Mr Crinage agrees Alliance Trust and F&C are good buys for first-time investors. He makes some more adventurous choices from his own portfolio: Flemings Overseas, which has only 4 per cent invested in the UK, and Flemings Chinese: "People believe in the long-term growth potential of the greater China region. This perhaps could add a bit of spice to a well diversified portfolio."

The rule changes when PEPs were scrapped in favour of individual savings accounts (ISAs) have also favoured investment trusts. You can now buy almost any trust, with shares from around the world, as a tax-free ISA. During the 1999/2000 tax year you can invest up to pounds 7,000 in an ISA investment trust.

n Websites:; See `Investment Trust Managers Directory' for trusts' phone numbers.


How pounds 100 would look if invested one, three, five or 10 years ago

One Three Five 10

Low risk

Foreign & Colonial 113 123.6 138.4 364

The Alliance Trust 115.3 147.9 163 404.9

Average risk

Fleming Continental 119.4 166.2 168.5 412.7

High risk

Fleming Chinese 61.3 46.6 27.8 -

Foreign & Colonial Pacific 86.3 53.6 60.3 140.8

Source: AITC Monthly Information Service

Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Arts and Entertainment
British author Howard Jacobson has been long-listed for the Man Booker Prize
Life and Style
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Louis van Gaal watches over Nani
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
New Real Madrid signing James Rodríguez with club president Florentino Perez
transfersColombian World Cup star completes £63m move to Spain
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Business Analyst - Banking - Scotland - £380-£480

£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

Risk Analyst - (Multi Asset class) £70k - £80k

£70000 - £80000 per annum: Harrington Starr: My client is a leading financial ...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn