My HYP as of 21 Aug 2019.

[idpickering]

Prompted by comments posted in the Greene King sold thread, here's my HYP as of now. All shares are equally weighted in capital value terms;

Admiral Group
AstraZeneca
Aviva
BAE Systems
BHP Group
BP.
BT Group
British American Tobacco
British Land
Diageo
Direct Line Group
GlaxoSmithKline
HSBC
Imperial Brands
Legal & General
Lloyds
Marston's
National Grid
Phoenix Group
Rio Tinto
Shell
Smith DS
Standard Life Aberdeen
Tate & Lyle
Taylor Wimpey
United Utilities
Unilever
Vodafone
WPP

It's not life threatening only having 29 holdings, but thoughts/suggestions welcome.

Ian.

[IanTHughes]

Prompted by comments posted in the Greene King sold thread, here's my HYP as of now. All shares are equally weighted in capital value terms;

It's not life threatening only having 29 holdings, but thoughts/suggestions welcome.

In all seriousness your portfolio has more than a sufficient number of different holdings. However, if you are hell-bent on adding a new 30th holding, how about Land Securities Group (LAND)?


Ian

[Gostevie]

Hello Ian,

That's a very impressive HYP.

When you say all holdings are equal in capital terms, do you mean at the time of purchase or do you regularly add and trim to keep them equal?

Either way, that is a cracking set of HYP shares you own there.

Gostevie

[pyad]

Far too many insurers Ian. I make it five: Admiral, Aviva, Direct Line, Legal & General, Phoenix. Assuming you put the same equal amount in each as you have in your other shares, that's over concentrated I'd say. However you may have taken your unit investment and divided it by five, thus not overweighting the sector in which case okay.

For an addition you might consider financial markets bookmaker IG Group on a forecast yield of around 8% at 542p. It's a 250 share rather than a 100 but still big with a cap of about £2bn. No guarantees of course.

[idpickering]

Far too many insurers Ian. I make it five: Admiral, Aviva, Direct Line, Legal & General, Phoenix. Assuming you put the same equal amount in each as you have in your other shares, that's over concentrated I'd say. However you may have taken your unit investment and divided it by five, thus not overweighting the sector in which case okay.

For an addition you might consider financial markets bookmaker IG Group on a forecast yield of around 8% at 542p. It's a 250 share rather than a 100 but still big with a cap of about £2bn. No guarantees of course.

Thank you very much for your comments guys. I’m ok with 29 shares, and am keen to address Stephens point that I have to many insurers, of whatever ilk. I have mulled dropping Aviva for something different, and I’ve toyed with bringing IG Group on board. I don’t mind that it’s from the lower index.Hmm?

By the way, in capital value terms, I meant monetary value, and I add new monies to ensure it stays that way, ish. I rarely, if ever trim.

Ian.

[idpickering]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen). I have looked at IGG a number of times, but there always seemed something better about. My action today is hardly in keeping with my hands off attempt, and not very HYP of me. I've had excitement enough this week, what with Greene King, so now I'm going to do as I've gobbed off about, and leave my HYP alone.

Ian.

[MDW1954]

It's not life threatening only having 29 holdings, but thoughts/suggestions welcome.

Ian.

Only one REIT? ESP, PHP, BBOX, WHR et al all offer specialist REIT exposure and mostly decent yields.

Others may disagree, but even beaten-down NRR and HMSO could be worth a look.

MDW1954

[Hypster]

Looks like I’m too late but I was going to suggest Micro Focus.

[idpickering]

Thank you to you both. Micro Focus I've toyed with buying before, and never did. Regarding real estate, you've mentioned them to me before, so thanks, but with BLND and TW. on board already, I'm exposed enough to the overall sector for my liking.

Ian.

[MDW1954]

I'm not sure that I would conflate a house builder with an owner of doctors' surgeries, student accomodation blocks, and warehouses. But each to their own, as the saying goes.

MDW1954

[idpickering]

I'm not sure that I would conflate a house builder with an owner of doctors' surgeries, student accomodation blocks, and warehouses. But each to their own, as the saying goes.

MDW1954

Fair play, and thank you once more. I shall certain check them out.

Ian.

[TUK020]

Adding to the pile of ideas:

Asset management Schroeders SDRC
Infrastructure IT HICL
Double up Housebuilders Galligord or Persoimmon
Double up real estate Land Securities

[pendas]

Even though I reinvest the majority of dividends, I'd struggle to keep my holdings anything like balanced on capital values if I wanted to.

Capital gains range from minus 96% on RBS to plus 149% on Money Supermarket.

[Alaric]

By the way, in capital value terms, I meant monetary value, and I add new monies to ensure it stays that way, ish. I rarely, if ever trim.

I'm not sure we are any the wiser. By monetary value, are you referring to book cost, in other words the price originally paid, or market value, the current price? If you get a real winner, that's going to dominate by market value unless you trim. Equally if get a real loser, you continue to pour money into it if using balancing market value.

[idpickering]

By the way, in capital value terms, I meant monetary value, and I add new monies to ensure it stays that way, ish. I rarely, if ever trim.

I'm not sure we are any the wiser. By monetary value, are you referring to book cost, in other words the price originally paid, or market value, the current price? If you get a real winner, that's going to dominate by market value unless you trim. Equally if get a real loser, you continue to pour money into it if using balancing market value.

I normally let my winners run, and top up losers if viable. Greene King was a total sale, taking the profit on offer, my first total sale in those circumstances. In short I meant, monetary value, meaning market value. I try to keep the shares to an average capital value of the HYP, but some are slightly higher, and some lower. It ain't perfect, but what is?

Ian.

[Gengulphus]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen). I have looked at IGG a number of times, but there always seemed something better about. My action today is hardly in keeping with my hands off attempt, and not very HYP of me. ...

I don't know about that - it's a good question whether it's more HYP to live with the consequences of an earlier failure to live up to HYP guidelines (i.e. having bought too many companies in the same sector) or to 'tinker' to correct that earlier failure. I've faced similar issues myself in the past, e.g. I had too many banks before the 2008 financial crisis, which I had been sort-of-aware of even then, but I failed to correct it (*). There's no entirely satisfactory answer to such questions, but what I've ended up with is basically that I should correct severe failures by tinkering, and milder ones by measures such as directing top-ups elsewhere and taking care to choose the replacement from outside the sector if one of the companies is taken over.

I would personally regard four insurers as still being too many in a 29-share roughly-equally-weighted HYP. They'll be somewhere around 14% of the HYP, which is well above my 10% per-sector limit - but not as severe a mistake as five insurers, which would make the sector about 17% of the HYP and pretty massively above the limit. So I would definitely have been considering selling the insurer I was least happy about - which is basically what you've ended up doing. But I would also be considering a further correction, though probably not by selling another holding: there is the alternative of directing top-ups elsewhere with the aim of keeping each of the four insurers down to 3/4 of the usual current value target per holding, so that they aim to end up only using about three normal holdings' worth of that value before becoming eligible for top-up again. To do that, one basically just needs to count each insurer's holding as being 4/3 times its actual size for the purpose of determining which holdings to top up (though obviously not for other purposes such as telling you what the current value of your portfolio actually is!).

Not saying that that's definitely what I would do - I'd have to study the four insurers properly before I decided what course of action I would take - but it's definitely the first direction my thoughts would go. And even if it was what I would do, there is of course no obligation for you to do the same! But it seems worth suggesting as a possible course of action you (or others in a similar sort of position) might want to consider.

(*) And indeed I made it worse by topping them up :-( - I've been more disciplined about excluding overweight companies and sectors from top-ups since the crisis gave me a sharp reminder of the error of my ways!

Gengulphus

[idpickering]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen). I have looked at IGG a number of times, but there always seemed something better about. My action today is hardly in keeping with my hands off attempt, and not very HYP of me. ...

I don't know about that - it's a good question whether it's more HYP to live with the consequences of an earlier failure to live up to HYP guidelines (i.e. having bought too many companies in the same sector) or to 'tinker' to correct that earlier failure. I've faced similar issues myself in the past, e.g. I had too many banks before the 2008 financial crisis, which I had been sort-of-aware of even then, but I failed to correct it (*). There's no entirely satisfactory answer to such questions, but what I've ended up with is basically that I should correct severe failures by tinkering, and milder ones by measures such as directing top-ups elsewhere and taking care to choose the replacement from outside the sector if one of the companies is taken over.

I would personally regard four insurers as still being too many in a 29-share roughly-equally-weighted HYP. They'll be somewhere around 14% of the HYP, which is well above my 10% per-sector limit - but not as severe a mistake as five insurers, which would make the sector about 17% of the HYP and pretty massively above the limit. So I would definitely have been considering selling the insurer I was least happy about - which is basically what you've ended up doing. But I would also be considering a further correction, though probably not by selling another holding: there is the alternative of directing top-ups elsewhere with the aim of keeping each of the four insurers down to 3/4 of the usual current value target per holding, so that they aim to end up only using about three normal holdings' worth of that value before becoming eligible for top-up again. To do that, one basically just needs to count each insurer's holding as being 4/3 times its actual size for the purpose of determining which holdings to top up (though obviously not for other purposes such as telling you what the current value of your portfolio actually is!).

Not saying that that's definitely what I would do - I'd have to study the four insurers properly before I decided what course of action I would take - but it's definitely the first direction my thoughts would go. And even if it was what I would do, there is of course no obligation for you to do the same! But it seems worth suggesting as a possible course of action you (or others in a similar sort of position) might want to consider.

(*) And indeed I made it worse by topping them up :-( - I've been more disciplined about excluding overweight companies and sectors from top-ups since the crisis gave me a sharp reminder of the error of my ways!

Gengulphus

Thanks for your input Gengulphus. My intention is to not add to my insurers, and direct new monies elsewhere. I have no intention of selling anything else currently, and hopefully for some time to come.

Ian.

[moorfield]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen).

And as monabri has just pointed out, six months later they are back in ?

Edit: This isn't a personal attack Ian, but your decision making is hard to understand, and certainly not LTBH.

May I humbly offer some advice:
1 For the rest of 2020, do nothing except regular top ups.
2 At the end of 2020, tot up your overall portfolio income for the year, and multiply by 1.072 (if you are building) or 1.02 (if you are drawing) - that is your overall portfolio income target for 2021.
3 For the rest of 2021, do nothing except regular top ups.
4 At the end of 2021, tot up your overall portfolio income for the year. If that is less than your target (see #2), consider tinkering. Otherwise, rinse and repeat.

Follow those steps and you should not need to do any pickering/tinkering/selling until January 2022 at the earliest, and I'm willing to wager at least another year after that. The results of doing nothing and sitting on your hands for the next two years may surprise you.

[IanTHughes]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen).

And as monabri has just pointed out, six months later they are back in ?

Edit: This isn't a personal attack Ian, but your decision making is hard to understand, and certainly not LTBH.

First of all, you should not fall into the trap of believing that, just because a post detailing a trading decision is made on this the HYP Practical board, the post is about an HYP portfolio.

Secondly, the HYP Strategy makes a point about aiming for income and not worrying directly about the capital value of one's portfolio. By selling Aviva PLC (AV) on 21 August 2019 at a price that must have been around 360.00p, and subsequently buying back the same shares yesterday when the price was higher - at around 405.00p plus 0.5% stamp duty - do you not see what is a simple demonstration of a devil-may-care attitude to capital value?

No, I would not have done it, but each to their own as they say


Ian

[Bagger46]

Being a man of my word I've taken action. Aviva I've held on and off for years, and never felt comfortable with them. As of two minutes ago they are no longer in my HYP, and IG Group are in (thanks Stephen).

And as monabri has just pointed out, six months later they are back in ?

Edit: This isn't a personal attack Ian, but your decision making is hard to understand, and certainly not LTBH.

May I humbly offer some advice:
1 For the rest of 2020, do nothing except regular top ups.
2 At the end of 2020, tot up your overall portfolio income for the year, and multiply by 1.072 (if you are building) or 1.02 (if you are drawing) - that is your overall portfolio income target for 2021.
3 For the rest of 2021, do nothing except regular top ups.
4 At the end of 2021, tot up your overall portfolio income for the year. If that is less than your target (see #2), consider tinkering. Otherwise, rinse and repeat.

Follow those steps and you should not need to do any pickering/tinkering/selling until January 2022 at the earliest, and I'm willing to wager at least another year after that. The results of doing nothing and sitting on your hands for the next two years may surprise you.

I am sorry, but 1.072 and 1.02 are unbelievably low targets. I explain below.

But first note that the target for portfolio income growth, for pot builder, will depend on the overall portfolio value anyway. For example a £20k yearly ISA capital input will make a vast difference to a youngster eventual Divis, but for mature portfolios, negligible difference. So you can’t use fixed figures anyway to apply to all.

Now for your suggested figures. On say a 5% yielding portfolio, (1.02 or 1.072)would mean that your divi per income unit growth would not even match RPI. For the last five years, looking at some data on a few steady income portfolios I have read access to, their Divis per unit has increased by 5.72% on average, and their portfolio income at over 10%, as I would mathematically expect. My own ISAs Divis per income unit has increase by 7.83% on average, portfolio income by much more of course, as I reinvest, although in my case the £20k injection has negligible effect on near max contributions since PEP days.

I strongly suspect that your 1.072, looking back at your own posts in some detail, arises by u=your using acc units and Divis per acc unit to build a model target income, which inherently to the unitisation method, misleads. I will be happy to explain why in detail, by PM, if you wish.

Regards


Bagger

PS I am not LTBH, never done me the slightest harm overall, as far as I can see. Getting rid of TSCO at £3.84, or CNA at 2,45, etc...all these years ago are the type of decision I won’t likely ever regret.