I must admit to considering this trust when the news first broke. Run by Keith Ashworth-Lord (KAL), the Buffettology open-end fund has been a star performer since its launch in 2011.
The chart below compares the main Buffettology fund to my portfolio and the FTSE 100 since the start of 2015:
The outperformance by Buffettology is even greater than the chart suggests, as dividends are excluded from the fund’s performance but are included in my performance and that of the FTSE 100.
Attractions to backing KAL and the new trust:
- Excellent track record;
- Sensible ‘business perspective’ approach to investing, and;
- Invests in UK smaller companies (as I do).
This new IT could perform even better than the main Buffettology fund. The trust will look to invest in shares with market caps of £20m-£500m, and calculations by KAL indicate the Buffettology investments that met that market-cap criteria at the time of purchase outperformed the main fund significantly:
The IT Investor article reminds me the trust could trade initially at a small premium (initial price 100p/share less 2p/share launch costs = 98p/share nav) when similar-ish trusts trade at a discount.
“I’ve got three trusts in this space already, all of which have recently been trading on double-digit discounts, as do many other UK-focused investment trusts.
Admittedly, the discounts on all three of my holdings (Henderson, BlackRock, and Acorn Income) have narrowed considerably over the last week.
Even so, it’s hard to justify loading up on a new trust that’s immediately going to be at a small premium, assuming it begins trading close to its issue price.”
Also, the trust “intends to invest in between 30 and 50 portfolio companies (with a maximum of 60).”
The main Buffettology fund has 31 holdings and the Free Spirit sister fund has 27. So this new IT will be relatively diversified, which perhaps is not the typical Buffett way of investing.
The article also mentioned the 1,000%-plus gains from Liontrust and Games Workshop, which may have had a sizeable influence on the performance of the main Buffettology fund.
I would argue neither LIO nor GAW offered true Buffett-type attractions at the time of their original purchases. But perhaps KAL saw something me and most others did not. Finding the ‘next GAW’ may be tricky as well.
Applications (at least via AJ Bell) must be in by this Friday (23 Oct).
Part of me thinks I should be handing some money over to KAL as he is most likely a better stock-picker than me (at least during the last five years).
But part of me thinks there are multi-baggers such as Tristel out there waiting to be bought that would easily outpace a 50-share fund.
Is anyone investing in this new Buffettology IT? Your thoughts would be welcome.