Weekend reading: the UK investor’s unlisted edge

What caught my eye this week.

Robinhood is planning to launch a publicly traded fund to enable US investors to gain exposure to unlisted companies like SpaceX and Stripe.

It reminded me that this is one area where we UK investors actually have it better.

Similarly, the news of another soon-to-be listed venture fund in the US from an outfit called Powerlaw. It’s an investor in the likes of OpenAI and bleeding-edge weapons maker Anduril.

These kinds of risky but potentially revolutionary startups are meat and potatoes for Baillie Gifford, the Scottish manager that runs investment trusts like Scottish Mortgage and Edinburgh Worldwide.

And to my mind the investment trust structure is the ideal vehicle for holding private companies for the long term. It sidesteps the liquidity issues you inevitably get with open-ended funds that hold illiquid assets. And a trust’s transparency requirements and independent board of directors mean – at least in theory – extra safeguards for ordinary shareholders.

Ironically though, a big reason the investment trust sector has been under pressure for the past few years is precisely because some trusts have large holdings in unlisted companies!

Even storied RIT Capital still trades on a discount to net assets of over 25%, largely on account of its private holdings.

And this despite a track record of private investments previously delivering good returns for the fund.

Trusts worthy

The absolute amounts managed by such trusts is tiny in the grand scheme of things. Mighty Scottish Mortgage – by far the biggest – has an asset base of just £15bn. Many others – such as titchy Augmentum – manage only a fraction of that.

It wouldn’t take much new money flowing in for such trusts to grow. In an ideal world I think they would be gently expanding, not facing existential pressures for survival.

Of course they must deliver returns that make holding the trust worthwhile in the long run. Discount risk is a headache for many everyday investors, too.

But the trusts do offer genuinely different exposure (compared to say a trust that owns FTSE 100 stocks) and I think we take them for granted.

Investing in private assets is not for everybody today. But there’s an argument to be made that one day it could be. Public markets globally are shrinking. We’ve also seen the rise of multi-hundred billion dollar unlisted ‘start-ups’ that most investors have zero exposure to – and hence do not benefit from.

Hopefully we’ll still have a vibrant investment trust sector to serve private investors if and when we need them!

Have a great weekend.

From Monevator

Returns aren’t average – Monevator

Investing in the face of AI: beauties or the beasts? – Monevator [Mogul members]

From the archive-ator: Gagadom and The Grim Reaper – Monevator

News

Lower food and fuel prices drive inflation down to 3% – BBC

Record-breaking budget surplus as government’s tax income rises – Sky

Household energy bills forecast to fall by £117 a year – Guardian

UK unemployment hits highest rate for nearly five years – BBC

Small investors in Brewdog reeling as brewer put up for sale – This Is Money

Man receives £42,000 bill for data roaming charges in Morocco – Guardian

Supreme Court rules Trump’s ’emergency’ tariffs are illegal… – CNN

…and Trump announces immediate 10% global tariff after the rebuke – Sky

UK flat prices fall after sharp drop in London [Paywall] – FT

Record number of buy-to-let limited companies set up in 2025 – This Is Money

Products and services

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Are you ready for HMRC’s Making Tax Digital self-assessment shakeup? – Guardian

Natwest offers £150 switching bonus and a 7% savings rate, with a catch – This Is Money

Should you use a mortgage broker to get a mortgage? – Which

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

The best auto savings hacks and apps – Be Clever With Your Cash

Tides of tax drive high-earners to offshore bonds [Paywall] – FT

Banks slash mortgage rates for first-time buyers with small deposits – This Is Money

Password managers’ promise that they can’t access your vaults isn’t necessarily true – Ars Technica

Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

Tembo HomeSaver review: 5.75% if you’re saving for a house [Catches!] – B.C.W.Y.C.

Five ways that AI could be reshaping your relationship with money – The Conversation

Does your car insurance really cover stolen possessions? – Which

Homes for sale with luscious lawns, in pictures – Guardian

Comment and opinion

The brutal hunt for low-paid work: “It’s like the Hunger Games” – Guardian

Inflation matters more than returns to retirees – White Coat Investor

“Why I’m telling my kids to saddle themselves with student debt” – This Is Money

Is it better to rent or buy when you retire? [Paywall] – FT

Young Britons on why they’ve left to work abroad – Guardian

AI comes to FI – FIRE v London

Don’t major in minor things – A Teachable Moment

The best strategies for boosting starting withdrawals in retirement – Morningstar

US equities are still 40% more expensive than non-US equities – Apollo

Escaping the permanent underclass may not be necessary – Financial Samurai

Active managers keep losing as passive investing grows – Larry Swedroe

Naughty corner: Active antics

The eternity of intelligent investment – Kingswell

How to be one of the less terrible retail investors – Morningstar

Fund beating 99% of peers says few software firms will survive AI – Bloomberg via Yahoo

Let’s talk about the new Berkshire Hathaway – Brooklyn Investor

Mad money and the big AI race – OM

Bayes and base rates [Nerdy, PDF] – Morgan Stanley

Kindle book bargains

The Wealth Ladder by Nick Maggiulli – £0.99 on Kindle

How to Work Without Losing Your Mind by Cate Sevilla – £0.99 on Kindle

Million Dollar Weekend by Noah Kagan – £0.99 on Kindle

The Retirement Handbook by Ted Heybridge – £0.99 on Kindle

Or choose an investing classic – Monevator shop

Environmental factors

Plug-in hybrids use three times as much fuel as claimed, analysis finds – Guardian

China is killing the fish – Noahpinion

Environmental groups sue Trump’s EPA over repeal of climate finding – Guardian

The curse of dead coral – Biographic

Robot overlord roundup

Why AI writing is so boring and dangerous: semantic ablation – The Register

The AI disruption we’ve been waiting for is here – NYT [h/t Abnormal Returns]

AI takes a swipe at the online dating scene – PitchBook

Video game experts says Google’s Project Genie isn’t an industry killer – Sherwood

The AI productivity takeoff is finally visible [Paywall] – FT

Not at the dinner table

The UK’s trade after Brexit: not pretty – Klement on Investing

How Brazil stopped a Trump-style authoritarian in his tracks – Vox [h/t Abnormal Returns]

Trump’s new world order is real and Europe is having to adjust fast – BBC

The grift economy is going mainstream – Your Brain on Money

Trump’s relentless self-promotion fosters an American cult of personality – NYT

Office versus work-from-home mini-special

The end of the office – Andrew Yang

Younger companies and leaders embrace more remote work, study finds – Sherwood

The worse-case scenario for white-collar workers – The Atlantic

US office market is as K-shaped as the US economy – Bloomberg via A.P.

Off our beat

Why Europe doesn’t have a Tesla – Works in Progress

The biggest myths about attraction, debunked by science – Next Big Idea Club

Cringeworthy in the future – Kevin Kelly

And finally…

“I had thought the destination was what was important, but it turned out it was the journey.”
– Clayton Christensen, How Will You Measure Your Life?

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