Balanced View: Intelligent Discussion of Market Trends

fse

Investment trusts are amongst the most illiquid stocks on the London market, the spreads are too wide and the market makers are vicious in marking down (or up). Try dealing in decent size when markets are moving - even in the top twenty stocks it is not easy to deal in blocks of £100,000 or even £50,000 at the quoted price. They are useful for the medium term - buying at a large discount then selling after the discount has narrowed, so long as the underlying assets at least perform in line with the market. IMHO there is little value in the sector at present, and the narrow discounts are normally associated with a change in trend. In a bear market they are amongst the very worst investments to own, of course. So I'm not against the sector, and made very useful gains in JII, JFR, FCL, MLW and REI this year. At the moment I feel it is a sector to avoid apart from some special situations and specialist markets.