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How many shares in a HYP?

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SDN123
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How many shares in a HYP?

#217721

Postby SDN123 » April 27th, 2019, 1:42 pm

An interesting article in a link I found today on https://monevator.com ...

https://intrinsicinvesting.com/2019/04/22/how-many-stocks-should-you-own-in-your-portfolio/

The article is about general stick picking and concludes:

If you seek market returns, own everything in the market via index funds. This is a perfectly reasonable approach to investing. If you seek to outperform the market, own 20-25 stocks (or we’ll allow for as many as 50 if you think the additional stocks are really critical to the success of your strategy). But do not end up with a portfolio that is stuck in the middle.


I think that fits well with the typical size of HYPs reported here.

FWIW I’m currently at just under 30 shares in my own HYP. I’d be uncomfortable with anything much smaller and would have no problem growing to the mid thirties over time as and when appropriate shares come into the “HYP frame”.

SDN

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Re: How many shares in a HYP?

#217782

Postby 88V8 » April 27th, 2019, 8:22 pm

The minimum is reckoned to be fifteen.
But it's hard to stay at fifteen. Sweetshop syndrome and diworsification creep in.
I have over thirty.
That includes a lot of Fixed Interest - Prefs etc.
If you stick to 'the usual suspects', the more you have the more the yield will decline towards the FTSE mean.
Risk/reward vs sleep at night.

V8

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Re: How many shares in a HYP?

#217784

Postby Lootman » April 27th, 2019, 8:31 pm

88V8 wrote:If you stick to 'the usual suspects', the more you have the more the yield will decline towards the FTSE mean. Risk/reward vs sleep at night.

The Vanguard UK tracker symbol VUKE has an expense ratio of 0.08% a year, no stamp duty and a negligible spread. It yields about 4%.

I wonder what percentage of people who willingly take on the extra complications and work of a HYP, in order to prise out a few extra basis points of yield, would not be better off putting the lot into VUKE and then just ignore everything?

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Re: How many shares in a HYP?

#217795

Postby tjh290633 » April 27th, 2019, 9:01 pm

My view is that 20 is a good minimum number, the average weight is 5%, and you can easily set 10% as the maximum levels for key parameters, like weight, share of income and share of cost. Inevitably it will grow beyond 20, thank to demergers, takeovers, etc. Since you are aiming for higher income, then it makes sense to have an absolute limit between 40 and 50.

I don't see the point of investing in the whole index, when you want the higher yield part. The FTSE350HY index, HIX, covers this in its own way, but may contain some less desirable shares. Anybody who starts out with an equally weighted portfolio of higher yield shares is likely to end up with a spread of weights and a range of yields different from what they started with. Do you spend your time rebalancing, or do you choose a fund or IT with the initial desired properties and let the manager do the work?

Despite Vanguard's apparently low cost, it cannot beat the market because of its costs. If that is what you want, then a broad fund is not what you want. You need something more focused on the higher yields. If you are happy with minimal management, then a DIY HYP will do the job. If you want to be hands off, then one or more suitable ITs are your answer

TJH

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Re: How many shares in a HYP?

#217814

Postby IanTHughes » April 27th, 2019, 10:44 pm

Lootman wrote:The Vanguard UK tracker symbol VUKE has an expense ratio of 0.08% a year, no stamp duty and a negligible spread. It yields about 4%.

I wonder what percentage of people who willingly take on the extra complications and work of a HYP, in order to prise out a few extra basis points of yield, would not be better off putting the lot into VUKE and then just ignore everything?

The answer to your question would surely depend on the percentage of people that would correctly identify the error contained in the above statement, which should of course read:

I wonder what percentage of people who willingly take on the extra complications and work of a HYP, in order to prise out close to 200 basis points of yield, would not be better off putting the lot into VUKE and then just ignore everything?


What do you reckon?


Ian

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Re: How many shares in a HYP?

#217820

Postby Lootman » April 28th, 2019, 12:06 am

IanTHughes wrote:
Lootman wrote:The Vanguard UK tracker symbol VUKE has an expense ratio of 0.08% a year, no stamp duty and a negligible spread. It yields about 4%.

I wonder what percentage of people who willingly take on the extra complications and work of a HYP, in order to prise out a few extra basis points of yield, would not be better off putting the lot into VUKE and then just ignore everything?

The answer to your question would surely depend on the percentage of people that would correctly identify the error contained in the above statement, which should of course read:
I wonder what percentage of people who willingly take on the extra complications and work of a HYP, in order to prise out close to 200 basis points of yield, would not be better off putting the lot into VUKE and then just ignore everything?

What do you reckon?

I "reckon" that if your portfolio yields 6% when the market yields 4% then you would need to have a clear sense of the extra risk that implies. How do you compute that risk? What factors do you take into account when you accept that alleged free lunch?
Moderator Message:
Whilst these are perfectly valid questions, they should be discussed over on strategies because this board is intended for those who have accepted one of the HYP set of strategies rather than for those still undecided. Thanks, Chris.

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Re: How many shares in a HYP?

#217828

Postby idpickering » April 28th, 2019, 7:00 am

As I like to have two viable shares per sector in my HYP, Shell RDSB and BP. etc, I have found it easy, and preferable, to exceed the 15 shares or so suggested by Stephen in his opening HYP articles. I now have 31 different shares in my HYP. I'm unlikely to go higher perhaps.

Ian.

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Re: How many shares in a HYP?

#217921

Postby pyad » April 28th, 2019, 1:53 pm

idpickering wrote:As I like to have two viable shares per sector in my HYP, Shell RDSB and BP. etc, I have found it easy, and preferable, to exceed the 15 shares or so suggested by Stephen in his opening HYP articles. I now have 31 different shares in my HYP. I'm unlikely to go higher perhaps.

Ian.


For a long time now Ian I have been defining diversification in an HYP by the number of sectors rather than by the number of individual shares in order to avoid the confusion sometimes created when people refer to the number of shares without explaining whether or not they are all in different industries.

That, I think, makes it much clearer so I'd refer now to a minimum of 15 sectors rather than 15 shares, in order to cover multi-holding sectors. All the HYPs I've constructed for some years now have had more shares than sectors due to some of the latter having more than one holding.

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Re: How many shares in a HYP?

#217978

Postby idpickering » April 28th, 2019, 5:33 pm

pyad wrote:
For a long time now Ian I have been defining diversification in an HYP by the number of sectors rather than by the number of individual shares in order to avoid the confusion sometimes created when people refer to the number of shares without explaining whether or not they are all in different industries.

That, I think, makes it much clearer so I'd refer now to a minimum of 15 sectors rather than 15 shares, in order to cover multi-holding sectors. All the HYPs I've constructed for some years now have had more shares than sectors due to some of the latter having more than one holding.


Thank you very much for your ever welcome and invaluable input Stephen. I get where you’re coming from, and as of now my 31 share HYP is spread over 18 different sectors.

Ian.

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Re: How many shares in a HYP?

#218073

Postby Arborbridge » April 29th, 2019, 9:23 am

pyad wrote:
idpickering wrote:As I like to have two viable shares per sector in my HYP, Shell RDSB and BP. etc, I have found it easy, and preferable, to exceed the 15 shares or so suggested by Stephen in his opening HYP articles. I now have 31 different shares in my HYP. I'm unlikely to go higher perhaps.

Ian.


For a long time now Ian I have been defining diversification in an HYP by the number of sectors rather than by the number of individual shares in order to avoid the confusion sometimes created when people refer to the number of shares without explaining whether or not they are all in different industries.

That, I think, makes it much clearer so I'd refer now to a minimum of 15 sectors rather than 15 shares, in order to cover multi-holding sectors. All the HYPs I've constructed for some years now have had more shares than sectors due to some of the latter having more than one holding.


Well, that's an interesting slight swerve in the narrative - and a welcome one in my view.

--00--

As to the question about how many shares: I reckon 20 minmum but 30-40 about right for me. This would bring the number up to something like a "conviction" IT - and that might be regarded as fairly high risk owing to the low number of shares. Since I can have very little convinction in my decision making (being by definition an "ordinary" investor, for whom HYP was designed), I wouldn't presume to go against the practice of professional managers in this respect.

Arb.

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Re: How many shares in a HYP?

#218079

Postby pyad » April 29th, 2019, 9:49 am

It follows from my previous comment that the original poster was asking slightly the wrong question. It should be "How many sectors?", not "How many shares?", and my answer is a minimum of 15 as I said.

This is a much clearer way to define the crucial diversification requirement of the strategy, especially for newcomers asking this sort of question. Some sectors may comprise more than one share but the defining diversification characteristic should be sectors, not shares, as the initial part of the design.

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Re: How many shares in a HYP?

#218090

Postby idpickering » April 29th, 2019, 10:07 am

pyad wrote:It follows from my previous comment that the original poster was asking slightly the wrong question. It should be "How many sectors?", not "How many shares?", and my answer is a minimum of 15 as I said.

This is a much clearer way to define the crucial diversification requirement of the strategy, especially for newcomers asking this sort of question. Some sectors may comprise more than one share but the defining diversification characteristic should be sectors, not shares, as the initial part of the design.


Thank you once again Stephen. For me, I tend to run a screen each time I'm planning my next purchase, to see if any new possibilities surface. For months now, nothing new has arisen, so I've stuck with what I've got. It seems the HYP share universe doesn't change much. I do however make monthly top ups to the HYP. My latest posting of my HYP on this board is here; viewtopic.php?f=15&t=17344

Ian.

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Re: How many shares in a HYP?

#218136

Postby MDW1954 » April 29th, 2019, 12:45 pm

idpickering wrote:
pyad wrote:It follows from my previous comment that the original poster was asking slightly the wrong question. It should be "How many sectors?", not "How many shares?", and my answer is a minimum of 15 as I said.

This is a much clearer way to define the crucial diversification requirement of the strategy, especially for newcomers asking this sort of question. Some sectors may comprise more than one share but the defining diversification characteristic should be sectors, not shares, as the initial part of the design.


Thank you once again Stephen. For me, I tend to run a screen each time I'm planning my next purchase, to see if any new possibilities surface. For months now, nothing new has arisen, so I've stuck with what I've got. It seems the HYP share universe doesn't change much. I do however make monthly top ups to the HYP. My latest posting of my HYP on this board is here; viewtopic.php?f=15&t=17344

Ian.


Ian,

The last I heard, you still didn't have anything in the IT sector, although Micro Focus ticked all the boxes a while back.

I'm not needling you on this: I'm just pointing out that opportunities for useful diversification should be welcomed. Ditto with some of the REITs we were talking about last week.

Remember: pyad's 15 is a minimum.

MDW1954

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Re: How many shares in a HYP?

#218143

Postby PinkDalek » April 29th, 2019, 1:05 pm

MDW1954 wrote:The last I heard, you still didn't have anything in the IT sector, although Micro Focus ticked all the boxes a while back.


IT = Information Technology in these circumstances. :)

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Re: How many shares in a HYP?

#218151

Postby idpickering » April 29th, 2019, 1:24 pm

MDW1954 wrote:
Ian,

The last I heard, you still didn't have anything in the IT sector, although Micro Focus ticked all the boxes a while back.

I'm not needling you on this: I'm just pointing out that opportunities for useful diversification should be welcomed. Ditto with some of the REITs we were talking about last week.

Remember: pyad's 15 is a minimum.

MDW1954



Thanks for your input MDW1954, and PinkDalek for reminding me that your reference to IT was not Investment Trusts, which would be off topic here IMHO. Back to Micro Focus though, they're not one I've had a close look at thus far. On looking at the info via Hargreaves Landsdown (which I uses nowadays) here; https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.10 It seems I might've missed the boat maybe? The 6% yield on offer even now is attractive I grant you. As for the REITs, I was considering doubling up my exposure by buying Land Securities. Something for me to Pickering over, thank you. :D

Ian.

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Re: How many shares in a HYP?

#218154

Postby MDW1954 » April 29th, 2019, 1:47 pm

Land Securities own much the same sort of stuff as British Land, which I think you already hold.

BBOX, PHP, ESP et al don't.

MDW1954

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Re: How many shares in a HYP?

#218155

Postby PinkDalek » April 29th, 2019, 1:48 pm

idpickering wrote:Back to Micro Focus though, they're not one I've had a close look at thus far. On looking at the info via Hargreaves Landsdown (which I uses nowadays) here; https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.10 It seems I might've missed the boat maybe? The 6% yield on offer even now is attractive I grant you. ...


I'd be very wary of that quoted 6%, based on prior dividends, when they are in the midst of a "Return of Value" and their was a change in year end I think and HL are counting an additional divi as against https://www.dividenddata.co.uk/dividend ... ?epic=MCRO

More detail in the parallel thread, where the last post is presently here viewtopic.php?f=15&t=16032&start=40, and probably the best place to discuss further.
Last edited by PinkDalek on April 29th, 2019, 1:52 pm, edited 1 time in total.

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Re: How many shares in a HYP?

#218156

Postby Itsallaguess » April 29th, 2019, 1:51 pm

idpickering wrote:
Back to Micro Focus though, they're not one I've had a close look at thus far. On looking at the info via Hargreaves Landsdown (which I uses nowadays) here; https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.10

It seems I might've missed the boat maybe?

The 6% yield on offer even now is attractive I grant you.


I'm not going to comment on MCRO specifically, other than to ask that if a 6% yield is currently available on a HYP share, where exactly was the boat going to that you missed?

Cheers,

Itsallaguess

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Re: How many shares in a HYP?

#218174

Postby Arborbridge » April 29th, 2019, 3:23 pm

Itsallaguess wrote:
idpickering wrote:
Back to Micro Focus though, they're not one I've had a close look at thus far. On looking at the info via Hargreaves Landsdown (which I uses nowadays) here; https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.10

It seems I might've missed the boat maybe?

The 6% yield on offer even now is attractive I grant you.


I'm not going to comment on MCRO specifically, other than to ask that if a 6% yield is currently available on a HYP share, where exactly was the boat going to that you missed?

Cheers,

Itsallaguess


My own thought too. But apart from that, there some further confusion about whether the yield is 3.3% or 4.1% or 6% depending which site you check!

Arb.

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Re: How many shares in a HYP?

#218188

Postby idpickering » April 29th, 2019, 4:29 pm

Thanks all. My comment regarding missing the boat was aimed at the fact that the sp has gone up 26% in the last three months, which I don't trust will continue. OK they're maybe offering 6% yield currently, and we should focus on the income, but I'd hate to buy any share and have it drop like a stone. It seems rather fickle to me. I think I'll have another look at the other shares Malcolm kindly mentioned, but I'm not writing off Micro Focus either.

Ian.


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