AyG
Crazy Mango Extraordinaire
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Post by AyG on Jun 24, 2016 15:06:23 GMT 7
So, Sterling is currently down around 7% against the Dollar, 5% against the Euro and similarly down against many other foreign currencies. Surely this means that prices in Sterling for non-UK investments should be up.
However, if I look at a few of my holdings (all Investment Trusts), Henderson European Focus is down 7.5%, JP Morgan Emerging Markets is down 2.5%, JP Morgan European Smaller Companies is down 7.9%, Pacific Assets is down 4.2%.
Taking into account the currency loss, the actual values have fallen some 12% or so, despite virtually no exposure to the UK economy.
Has the world gone mad? Or am I missing something?
(Oh, and Aberdeen New Thai is up 1.3% in Sterling terms, bucking the trend.)
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Post by Fletchsmile on Jun 24, 2016 17:48:58 GMT 7
Been a very interesting day. Looking at Europe: GBP/EUR down around 5% EuroStoxx50 down around 9% So if someone replicated the Euro index in GBP terms as you say that should be around ball park 4% loss in sterling terms I suspect some of the factors missing for your investment trusts are the supply and demand for the investment trusts themselves, the discount to net asset values (NAV) and the underlyings of the actual funds which could vary substantially vs the index. I like some of the features on investment trusts. This is one of those days though I think some of their disadvantages surface. Pricing of the ITs will be based on supply and demand. No surprise there are very few buyers today. So supply of sellers outweighs the demand of buyers. The result could well be widening discounts. So in addition to the loss on NAV there's the chance of a double whammy on the discount widening. This happens time and again for ITs: in downturns the discount widens. One of the annoying features of ITs is often I can't get the volume I want on the buy or sell side at a reasonable price, particularly on smaller trusts, the liquidity just isn't there. On a day like today that liquidity is even less so if you want to sell. The upside though is that discount to NAV could well close when things pick up and the gains may well exceed expectations  Also worth looking at the content of your ITs and seeing the actual holdings. BTW although positive Aberdeen New Dawn has probably suffered from the same thing. GBP/THB down around 8% So there should be a currency gain of around +8% on GBP losing vs THB, but SET down -2% ball park |
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Post by Fletchsmile on Jul 5, 2016 17:02:58 GMT 7
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