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Multiple HYP Portfolos

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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pkparks
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Multiple HYP Portfolos

#206064

Postby pkparks » March 6th, 2019, 9:38 pm

Is everyone staring a new portfolio with a different self select ISA when you reach 15 or so shares? Or does anyone keep adding shares to the same self select account?

Currently I have 2 completed portfolios with different providers, and am now constructing a third.

Thanks,

Grumpsimus
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Re: Multiple HYP Portfolos

#206072

Postby Grumpsimus » March 6th, 2019, 10:25 pm

I have two portfolios for my wife and myself, in order to use all our ISA allowances each year. They have over twenty shares in each, with some overlap.

To keep starting new portfolios seems rather like too much hard work for me. What is wrong with adding new shares to your existing portfolio?
I think most people stick to one portfolio, far easier to manage.

monabri
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Re: Multiple HYP Portfolos

#206078

Postby monabri » March 6th, 2019, 10:40 pm

If you split the HYP over many accounts your dividends will also be split over those accounts. This might be acceptable if you are in drawdown mode but if you are building your portfolio you will end up waiting a long time for the dividend in each individual account to build up to an economic value to buy more shares.

Itsallaguess
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Re: Multiple HYP Portfolos

#206092

Postby Itsallaguess » March 7th, 2019, 4:42 am

As monabri has said, splitting a HYP over an unnecessarily large number of ISA accounts runs the risk that you may need longer periods of time to generate useful levels of internal-dividends to be economically sensible for further purchases or top-ups during the building phase.

Depending on the expected overall level of HYP capital that you're expecting, I think it's absolutely sensible to split a HYP across a number of ISA accounts (split in the FSCS 'institution' definition..) to potentially take advantage of the FSCS investment-protection scheme if it's ever needed (https://tinyurl.com/y2l2vzy6 - this is a relatively old article to explain this approach, so you should confirm current levels or per-institution investment protection..), but beyond that, then to split into new accounts just for the sake of it seems to be an unnecessary approach in my opinion.

You'll also need to keep an eye on any relevant charges that different self-select investment-ISA providers are charging, both for your current uses and for any potential future investment approaches (investment trusts / funds / etc...), as this could become significant if you want to continue to 'collect' ISA providers for relatively small levels of split-capital. Don't assume that your current HYP investment approach is the only one you'll ever consider - we're hopefully talking about lifetime-investment strategies here, so don't paint yourself into a corner in terms of potential charges, as you might seek to modify your current strategy at some point in the future....

Personally, I take a pragmatic approach to this issue, and will split into a new account when I've topped over the current FSCS limit, and won't go on a 'collecting spree' just for the sake of it. Whilst this may introduce a slight element of provider-risk, I'm content to do that in the view that I'm maximising my internal-dividend generation into a smaller number of isolated accounts, to enable me to re-invest as quickly as possible, and it also helps to keep admin processes to a minimum, and helps me to cherry-pick the most desirable brokers in terms of charges etc.

Finally, If you split into new accounts unnecessarily then it's likely that you'll start to fish in areas of the provider-pool that others already stay away from, for what might be a variety of valid reasons. Have a read of the Brokers Board (https://www.lemonfool.co.uk/viewforum.php?f=26) and ask on there to see which ones are popular for a HYP-like approach (I'm with AJ Bell and III, although there may be other cheaper providers available).

If you are not currently with AJ Bell, and you think it might be a good option at any time, then they run a 'recommend a friend' offer of a £100 thank-you (https://www.youinvest.co.uk/our-service ... endafriend) which people may be willing to give to charity if it's agreed by both parties - again, you could ask on the Brokers board if this is something that might interest you.

Cheers,

Itsallaguess

idpickering
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Re: Multiple HYP Portfolos

#206094

Postby idpickering » March 7th, 2019, 5:05 am

pkparks wrote:Is everyone staring a new portfolio with a different self select ISA when you reach 15 or so shares? Or does anyone keep adding shares to the same self select account?

Currently I have 2 completed portfolios with different providers, and am now constructing a third.

Thanks,


For me, over the years I’ve just continued building my HYP in one account held with Halifax. I’m now at 32 holdings, and am happy that they’re all in one place as it’s the easiest to manage rather than having to concentrate on more than one HYP imho. But each to their own.

Ian.

Dod101
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Re: Multiple HYP Portfolos

#206095

Postby Dod101 » March 7th, 2019, 6:55 am

I have accounts split between II and ATS, and the ATS one is split between an ISA and a SIPP, but I run them as one. I do not want all my eggs in one basket. Not sure what this has to do with HYP Practical mind you. We are in danger of discussing the merits of one platform or more than one.

Dod

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Re: Multiple HYP Portfolos

#206100

Postby Darka » March 7th, 2019, 7:39 am

Like Itsallaguess I will only open a new ISA once the existing one has just exceeded the FSCS limits (which for investments will be £85,000 from April).

I currently have a SIPP with YouInvest and ISA's with Halifax, Interactive Investor and Hargreaves Lansdown.

I would prefer to have all the ISA investments in a single account to be honest, however I'm not willing to risk it so the additional charges I just write off as a form of insurance.

Of course over time each account may grow (hopefully) over and above the FSCS limits and I'm fine with that.

moorfield
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Re: Multiple HYP Portfolos

#206150

Postby moorfield » March 7th, 2019, 9:44 am

I run two HYP(ish) portfolios, one inside a SIPP (which I report here), the other across 2 ISAs (Mr + Mrs), all on the same provider. The thinking behind two is I could start drawing income from the ISAs portfolio immediately if needed, whereas I could not from the SIPP portfolio for at least another 15 years.

The accounts contain 19 (soon to be 20) holdings altogether and get added to at different times and somewhat lumpily. To try and maintain a balance I apply my same broad boundary conditions to each portfolio separately, and also to both combined (ie. <=10% overall capital and income per sector, <=20% overall capital and income per industry). Regardless of how holdings are split across each account, I find it quite easy to construct aggregate views of the 2 ISAs, and SIPP + 2 ISAs, using Microsoft Money and Excel.

daveh
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Re: Multiple HYP Portfolos

#206151

Postby daveh » March 7th, 2019, 9:52 am

pkparks wrote:Is everyone staring a new portfolio with a different self select ISA when you reach 15 or so shares? Or does anyone keep adding shares to the same self select account?

Currently I have 2 completed portfolios with different providers, and am now constructing a third.

Thanks,



I have a single high yield portfolio split across two brokers*. Most is in ISA's now, also split across the same two brokers. The ISA used to be at one broker, but I decided I had too many eggs in one basket so last year opened an ISA at my second broker and bed and ISA'd a lot of the unsheltered holdings at that broker. I'll keep some holdings unsheltered as I still have a CREST sponsored account so that gets me a lot of the company info and chance to vote at General Meetings etc without having to go through my broker(s). I don't think I'd go much beyond two to three brokers as it then starts getting to be more hassle than its worth for the safety of not being with a single broker.


I treat everything as one portfolio and try and not split shares across brokers too often, but it does happen and if the money is in one ISA but the share I want to top up is already held in the other I won't let that stop my buying the share I think needs topping up.
I'm up to 36 holdings (but I can't tell you what they are here as ITH will tell you its not a HYP, but its constituents +TRIG can be found here viewtopic.php?f=56&t=15487 if interested).


* I have a small certificated holding of Lloyds bank for historical reasons due to how I set up my first broker

Alaric
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Re: Multiple HYP Portfolos

#206160

Postby Alaric » March 7th, 2019, 10:15 am

Darka wrote:Like Itsallaguess I will only open a new ISA once the existing one has just exceeded the FSCS limits (which for investments will be £85,000 from April).


We've been there before, but that's just risk aversion for the sake of it. Outside of cash, your assets are held by custodians and apart from a recently discovered exception aren't at risk of being seized by a liquidator if the provider goes under. Even in the case of the exception only a handful of people lost out and from the context, their total holdings were well in excess of £ 85,000.

To summarise, it's only cash deposits where you need to pay practical attention to concentration risk.

Darka
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Re: Multiple HYP Portfolos

#206171

Postby Darka » March 7th, 2019, 10:56 am

Alaric wrote:We've been there before, but that's just risk aversion for the sake of it.


Completely agree and I'm not keen on having so many accounts and have been thinking of reducing the number of ISA's from 3 down to at least 2.

As mentioned in my original post, I'd prefer just the single account but would be uncomfortable with that as it would be significantly above the compensation limit.
Last edited by Darka on March 7th, 2019, 11:06 am, edited 1 time in total.

tjh290633
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Re: Multiple HYP Portfolos

#206174

Postby tjh290633 » March 7th, 2019, 11:01 am

I had to set up a separate portfolio when ISAs replaced PEPs, the PEP having got to about 20 holdings by then. I decided not to duplicate anything in the PEP so had an iinitial six holdings, which I spent the next three or four years bringing up to a similar level to those in the PEP

When Gordon Brown graciously allowed us to amalgamate them I breathed sigh of relief. Having money in the wrong jam jar was a perpetual problem.

Unless you think you are with a dodgy broker, I see no point in running multiple accounts.

TJH

Alaric
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Re: Multiple HYP Portfolos

#206191

Postby Alaric » March 7th, 2019, 11:40 am

Darka wrote:As mentioned in my original post, I'd prefer just the single account but would be uncomfortable with that as it would be significantly above the compensation limit.


What we are saying is that provided you are holding shares, the practical compensation limit is well, well above £ 85,000.

Gengulphus
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Re: Multiple HYP Portfolos

#206256

Postby Gengulphus » March 7th, 2019, 3:34 pm

pkparks wrote:Is everyone staring a new portfolio with a different self select ISA when you reach 15 or so shares? Or does anyone keep adding shares to the same self select account?

Neither in my case. Starting a new portfolio in a new self-select ISA each time I got to 15 or so shares would have resulted in a ridiculous number of accounts, while the amount I was able to add grew very enormously at one stage as a result of a huge capital gain in the 1999/2000 tech boom - by many times the ISA allowance, so the possibility of putting it all into one self-select ISA was a complete non-starter. Even now, and using a SIPP as well as ISAs, I've been able to get well under half of it tax-sheltered... These are very special circumstances, of course, but there are other potential reasons besides a stockmarket bubble why someone might be in such a position - e.g. a Lottery or Premium Bond jackpot, or an inheritance from a wealthy relative.

But keeping everything with one provider is definitely a too-many-eggs-in-one-basket case as far as I'm concerned. I've retired early and my investments are my only significant source of income until the State Pension kicks in, which is a few years off yet. Having essentially all of my income at risk from problems at a single financial provider isn't acceptable to me, even if that risk is just that the investments producing it get frozen for a few months while the problems are sorted out.

For my circumstances, I reckon 3-4 different providers spread the risk adequately. I actually have four, and the fact that some of the HYP is in ISAs, some in a SIPP and some in normal trading accounts means that I hold six different accounts with them: 3 normal trading accounts, 2 ISAs and a SIPP. As indicated above, the unsheltered part of my HYP is well over half of it, so it isn't a balanced 6-way split of the HYP: the biggest account holding the HYP is a bit more than a quarter of it, so it's probably more like a 4-way split of it than a 6-way split as far as the practical risks are concerned.

I do however manage it as a single HYP, by making the basic decisions about what to do with it on the basis of a spreadsheet that (among many other things) takes separate listings of my holdings in the six accounts and produces an overall portfolio listing for the sum of all the holdings. I decide what to top up, what to top-slice, how to deal with corporate actions, etc, mainly on the basis of that combined listing, not of what the individual accounts hold. Though sometimes the individual accounts do help me determine how I put those decisions into practice. E.g. if I decide to top-slice a particular holding by selling 20% of it, and the share is actually held split between five of the six accounts, I'll probably look to see which account's holding I can sell completely to reduce it to being held in four of the six accounts: that will reduce the dividend-tracking admin a bit (not much, of course, but it slowly mounts up over the years), and still keep the holding very acceptably split between providers from the point of view of reducing risk.

Doing things this way does have some cost in terms of holding more cash than I strictly need to. E.g. if each of the accounts were to hold £500 cash, I wouldn't regard any of them as holding a cost-effectively-investable amount - but I would regard the same £3,000 all in the same account as cost-effectively-investable. How important this is does however depend on how big one's HYP is: in a £30k HYP, £3k of cash held means 10% of it isn't being used productively, which is really quite significant; in a £300k HYP, it's 1%, which is a lot less significant; in a £3m HYP, it's 0.1%, which is pretty insignificant! I'll keep the size of my HYP private, but don't mind saying that the cash holdings are rarely of any real significance - and so I'm not very worried about them being split.

The net result is that while I've described what I do here and am happy that it fits my circumstances, it's only for information and interest - NOT advice! What others should do is highly dependent on their financial circumstances, and mine are almost certainly very much an outlier among HYPers.

Or much more briefly, your question does not have a one-size-fits-all answer!

Gengulphus

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Re: Multiple HYP Portfolos

#206261

Postby Gengulphus » March 7th, 2019, 3:50 pm

Alaric wrote:What we are saying is that provided you are holding shares, the practical compensation limit is well, well above £ 85,000.

No. What you are saying is that providing you are holding shares, the risk that you will need to be compensated at all is negligible. If that risk does nevertheless materialise, the FSCS compensation limit applies - and it is in fact well below £85,000.

Whether people regard specific risks as negligible varies hugely from person to person, both for subjective reasons (risk-averseness varies a lot) and for objective reasons (the person whose HYP provides a bit of an income bonus on top of perfectly adequate pension provision and the person whose HYP provides essentially all of their retirement income are objectively in very different positions with regard to this particular risk). So it's not really very helpful to others to make blanket statements about the risk being negligible...

Gengulphus

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Re: Multiple HYP Portfolos

#206262

Postby Breelander » March 7th, 2019, 3:52 pm

Gengulphus wrote:...keeping everything with one provider is definitely a too-many-eggs-in-one-basket case as far as I'm concerned... Having essentially all of my income at risk from problems at a single financial provider isn't acceptable to me, even if that risk is just that the investments producing it get frozen for a few months while the problems are sorted out.

For my circumstances, I reckon 3-4 different providers spread the risk adequately...

...I do however manage it as a single HYP, by making the basic decisions about what to do with it on the basis of a spreadsheet that (among many other things) takes separate listings of my holdings in the six accounts and produces an overall portfolio listing for the sum of all the holdings...


Ditto, and for the same reasons. In my case the HYP is spread across two ISAs and (for historic reasons) a handful of certificate/Crest holdings. It's managed as a single HYP though, both in my spreadsheets and as a DigitalLook Portfolio. With the current uncertainty for DL's continuing availability, it's duplicated as an FT portfolio.

Breelander
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Re: Multiple HYP Portfolos

#206264

Postby Breelander » March 7th, 2019, 3:58 pm

Gengulphus wrote:...the FSCS compensation limit applies - and it is in fact well below £85,000.


Only until April when new rules will apply....
We have also made rules to increase the FSCS compensation limit for investment provision, investment intermediation, home finance and debt management claims to £85,000, also from April 2019.
https://www.fca.org.uk/publications/con ... ion-scheme

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Re: Multiple HYP Portfolos

#206265

Postby Alaric » March 7th, 2019, 4:00 pm

Gengulphus wrote: If that risk does nevertheless materialise, the FSCS compensation limit applies - and it is in fact well below £85,000.


You don't agree then that unlike deposits, there isn't a risk of losing the lot, so splitting at £ 85,000 is pointless.

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Re: Multiple HYP Portfolos

#206272

Postby Gengulphus » March 7th, 2019, 4:24 pm

Alaric wrote:You don't agree then that unlike deposits, there isn't a risk of losing the lot, ...

Certainly I don't agree with that - it's quite obvious that there is such a risk. But what people have been saying is not that there isn't such a risk, but that the risk is negligible, and I disagree with that only in a limited sense: I do not regard that risk as negligible for me. Others' mileage can easily differ, and for many, it will differ!

Breelander, thanks for pointing out the forthcoming compensation limit change - a bit of news I'd missed.

Gengulphus

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Re: Multiple HYP Portfolos

#206273

Postby Alaric » March 7th, 2019, 4:28 pm

Gengulphus wrote:Certainly I don't agree with that - it's quite obvious that there is such a risk.


Are you claiming that the system of having assets in the name of a custodian can break so totally that there's a risk of forfeiting the entire value?


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