Friends Ivory & Sime Investment Trusts (FISIT) is hosting a series of seminars for IFAs early this m...
Friends Ivory & Sime Investment Trusts (FISIT) is hosting a series of seminars for IFAs early this month, focusing on the impact of technology.
The speakers will include David Harris, the former director of IFA Services at the AITC, along with Glen Nimmo, manager of the group's Smaller Companies Trust, and Stephen Grant, manager of its Discovery Trust.
On 9 May a seminar will be held in Plymouth. The following day the venue moves north to Glasgow and then on 11 May the group hosts a seminar at Haydock Park. The roadshow will also be held in London and Guildford on 16 May. On 25 May it will be held in Leeds and Birmingham.
Nimmo and Grant will speak about how technology over the longer term will have an impact on the whole economy.
Grant said: "The Discovery Trust favours what we call second-tier growth stocks, those companies that are using technology to reduce costs and improve services but which are not technology companies."
The £71m trust's exposure to technology stocks was reduced at the start of the year in anticipation of a slowdown or a correction in the sector.
In light of the correction which took place in late march and early April, Grant thinks there are now some attractively priced companies in the market.
The group had tracked Keystone, a US legal software provider, for some time but thought it was slightly expensive.
The share price peaked at 142.95p in February. In the aftermath of the technology shake-out the price has fallen to 73.5p.
Grant said: "We have bought into the company due to its price and the fact that its fundamentals are attractive.
"The company should benefit from the merger between its two main rivals. Customers always like to have an alternative, which is where keystone should benefit."
Over the short term, Grant has increased the trust's exposure to cyclicals. On a fundamental basis these companies are not attractive but their valuations cannot be ignored, according to Grant.
He has recently bought shares in Hampson Industries, an aerospace component manufacturer.
Grant said that if he were to buy the entire company now, on a cash flow basis, the original investment would be made back in three years indicating that its price is far too low.
The shares are priced at 40p and the company trades on a P/E of 5.6 times.
Discovery Trust's share price advanced by 73.9% for the three years to 19 April. The shares are currently trading at a discount to NAV of 18.6%.
One reason for the seminars is to promote FISIT's Isable and Pepable Twenty20 investment portfolio which is equally split between shares in the AIM, Discovery and UK Smaller Companies trusts.
Along with Discovery the AIM and UK Smaller Companies trusts have performed well over three years. The share price of the £165m AIM trust, managed by Bill Brown, rose by 283% during the 36 months to 26 April. While the share price of the £56m UK Smaller Companies trust rose by 54.4%.
Intermediaries can receive up to 4% initial commission on the product until 30 June 2000, with it then falling to 3%, paid from the client's investment. IFAs can also receive 0.5% renewal each year. The minimum lump sum investment is £5,000 and the minimum monthly contribution is £150.
Investors can opt to receive quarterly income from the portfolio which will be paid direct into nominated bank accounts in January, April, July and October of each year.
The level of income taken can be fixed at any level between 0% and 10% a year of the initial investment.
Payment of the higher levels of income may consist of a combination of dividends and capital. Any surplus over the £7,000 Isa limit can be invested outside the product and can be switched automatically into an Isa the following year.
The product also offers a lifetime guarantee providing investors with capital protection against a fall in the value of their investment in the event of death.
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