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How I use investment companies: Nicholas Palmer FCSI

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1 May 2014

Chartered Wealth Manager - Investment Manager, 1st Port Asset Management.

Nicholas started his career in financial services in 2006 and joined 1st Port Asset Management in 2008. Nicholas works alongside the other partners, Paul and Melissa, advising on portfolios and researching funds. Nicholas holds the CISI Diploma, which was achieved by completing the Private Client Investment Advice and Management Certificate (PCIAM), Portfolio Construction and Theory, and Regulation and Compliance. Nicholas also holds the Investment Management Certificate.

Funds under management 
£50m with 95% on a discretionary and 5% on an advisory basis.

What was your percentage of investment trust business in 2013?

About 2% of total business and growing.

How do you use investment trusts?

For diversification and to manage risk in bespoke client portfolios.  We can access different investment areas, such as alternatives.  We take a predominantly top-down view then add some bottom-up overlay if appropriate.

Do you use model portfolios?

No, all of our portfolios are bespoke. We do run models however, to help monitor risk and have been asked by some independent financial advisers to manage model portfolios for them.

What do you like about investment trusts?

We can use investment trusts to hold illiquid investments.  Because they are transparent and the shares are liquid, we can access these areas of the market with ease.  We also like the fact that we can buy at a discount to the net asset value.

Do you favour certain geographical regions when thinking about investment trusts for clients?

Not particularly, but we do like Fidelity European Values Plc at the moment.

And what do you dislike about investment trusts?

Institutions hold large amounts in some investment trusts. This makes us nervous because at some point they will start to offload some of these shares and there is potential for the discount to widen.  Also, the smaller funds which are geared can be difficult to trade in times of market stress.

What could boards or the AIC do more of to help advisers understand investment trusts?

I think that the AIC and boards do a decent job in raising awareness and giving us updates.  I feel that more could be done to promote investment trusts to the public so they become generally more aware of them.  I am happy to watch online updates and debates from managers rather than having them continually on the road talking at seminars.  I would prefer that fund managers spend time managing their portfolios than presenting at seminars.

Are there any tips or thoughts you could pass on to other advisers to help them understand or advise on investment trusts more frequently?

Attend the AIC events and get on the list to receive regular updates too. Learn how they differ from other collectives, including the advantages and disadvantages.  Advisers need to continually be doing this and staying up-to-date.  Some advisers say that they will learn more about investment trusts and other products when they have some quiet time, but in our experience there isn’t any!

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