What was your portfolio churn in 2019?

[moorfield]

Further to my recent thread which describes how I test Portfolio Churn ...

viewtopic.php?p=415260#p415260

... I thought I would post up a poll which lets folk contribute their numbers anonymously if they don't wish to identify themselves there.
If you are willing to take the time to contribute it would be appreciated, and I hope useful. Can I also ask any discussion to continue on the other thread, rather than duplicating it here. Accordingly, perhaps the mods can lock this one for me?

Putting the Covid pandemic to one side, which may have skewed several folks' portfolios last year, the question is deliberately:

What was your portfolio churn in 2019?

Going forward, I may run the same poll again in future early each year after most folks' updates are done.

It's difficult to know what bucket size to use, so finger in the air I have gone for sizes of 10% and a feeling that anything over 30% (*) each year is probably beyond the remit of what the guidelines mean by:

It is stressed, however, that HYP investing was always intended to be a LTBH strategy.

Thanks vm
M

(*) @Mods - happy to hear your views on that ...

[daveh]

I'd have gone with some more choices within the 10% bracket. I'm not sure how many options you are allowed in a poll but I think I would have gone <1%; 1-5%; 5-10% and then the rest as set out in your poll. I was 0.9% in 2019 for all sales.

[moorfield]

I'd have gone with some more choices within the 10% bracket. I'm not sure how many options you are allowed in a poll but I think I would have gone <1%; 1-5%; 5-10% and then the rest as set out in your poll. I was 0.9% in 2019 for all sales.

Thanks daveh. Initially it's a finger in the air effort as I wrote.

Depending on number of respondents and if it looks like most post 0-10%, then we can refine for the 2021 poll next year!

[Gengulphus]

I'd have gone with some more choices within the 10% bracket. I'm not sure how many options you are allowed in a poll but I think I would have gone <1%; 1-5%; 5-10% and then the rest as set out in your poll. I was 0.9% in 2019 for all sales.

You're allowed ten options in a poll - this is explained in the "Poll creation" tab when you start a new thread. I would tend to use as many of them as one reasonably can without making the poll more difficult to answer, since using fewer just means you get less detailed information for the same amount of everyone's effort. In a case like this one that involves calculating a figure and reporting which of a number of ranges it falls in, that means I would come up with ten ranges.

The way I would think about the question of what the range should be is that portfolio churn is really about the "Long Term ... Hold" part of "Long Term Buy & Hold". If I churn N% of my HYP per year, a randomly-selected share in my HYP has an N/100 chance of being sold in the year and can statistically be expected to be held for 100/N years before it ends up being sold. So in essence, regarding a churn rate of N% as satisfactory corresponds to regarding an average holding period of 100/N years as enough (or more than enough) to count as a policy of long-term holding.

Personally, I think of average holding periods of 10 years or more as clearly enough to count as long-term holding, and average holding periods in the 5-10 year range as arguably enough to count as long-term holding. That means that I would think of churn rates in >20% = not LTB&H, 10-20% = arguably LTB&H, <10% = definitely LTB&H terms. But I'm not insisting on my particular interpretation of LTB&H, and to cater for others' interpretations as well, I would probably come up with something like the following ten rough average holding period ranges, with their corresponding churn rate ranges:

<3 years = >33%
3-4 years = 25-33%
4-5 years = 20-25%
5-7 years = 14-20%
7-10 years = 10-14%
10-14 years = 7-10%
14-20 years = 5-7%
20-25 years = 4-5%
25-33 years = 3-4%
>33 years = <3%

Gengulphus

[tjh290633]

Personally, I think of average holding periods of 10 years or more as clearly enough to count as long-term holding, and average holding periods in the 5-10 year range as arguably enough to count as long-term holding. That means that I would think of churn rates in >20% = not LTB&H, 10-20% = arguably LTB&H, <10% = definitely LTB&H terms. But I'm not insisting on my particular interpretation of LTB&H, and to cater for others' interpretations as well, I would probably come up with something like the following ten rough average holding period ranges, with their corresponding churn rate ranges:

My median holding time is 13 years, the average is higher as I have held MKS for 51 years and BP. for 41 years, among the longer durations. Of those sold, the average is 8 years, including some very short durations. The longest was ICI at 37 years. I still hold AZN which was spun out of ICI in the 1990s.

TJH

[kempiejon]

My longest holdings are Centrica from 2006 and BP and United Utilities in 2007. MY first HYP purchases were 2005 with Lloyds and UU. but those holdings have since been sold and the funds moved to the ISA.

[daveh]

My oldest holding is Norwich Union (now Aviva) purchased on demutualisation in July 1997 followed by Lloyds and United Utilities in 2000 when I started what was to become my HYP (now income portfolio as it now includes ETFs, ITs and prefs). My memory says I actually started it as a PYAD26 mechanical portfolio, but didn't buy all five in one go, before morphing into a HYP when Stephen Bland wrote his first HYP article on TMF as I thought that better suited my psychology.

Interestingly I have found an old file that suggests I purchased the following five shares as a version of the PYAD26 strategy, but at 2 month intervals from August 2000: United Utilities (7.6%), Scottish and Newcastle (5.5%); Invensys (5.2%); Bass (5.5%); Scottish Power (5.8%). The initial yields are shown in brackets. I sold Invensys at a loss in 01 as it looked like it was going to do a Carrillion (though it seems to still exist in the form of Schneider Electric), SPW and SCTN were both taken over for cash and I still own UU. and BASS (in the form of IHG and MAB). Invensys was my first voluntary sale and my shortest holding period as I sold 13 months to the day after purchase.

[funduffer]

I set up my HYP in 2014 with a lump sum, purchasing 15 shares in 15 sectors - how conventional is that!

I still own 10 of the original 15, and the HYP has grown to 22 shares in 17 sectors.

I think I have stuck closely to the guidelines. However, for whatever reason (probably my useless stock picking), I do not think my HYP has done particularly well over the last 7 years, certainly when compared to my IT portfolio.

Following the HYP guidelines does not guarantee good performance!

FD

[moorfield]

I set up my HYP in 2014 with a lump sum, purchasing 15 shares in 15 sectors - how conventional is that!

I still own 10 of the original 15, and the HYP has grown to 22 shares in 17 sectors.

I think I have stuck closely to the guidelines. However, for whatever reason (probably my useless stock picking), I do not think my HYP has done particularly well over the last 7 years, certainly when compared to my IT portfolio.

Following the HYP guidelines does not guarantee good performance!

I do wonder sometimes if most HYPsters ought pack their bags for the IT world - and I include myself too! - but that's a debate for the other place. And why people follow HYP, really. Perhaps it's just a rich old lady's or gentleman's hobby, when it comes down to it.

[kempiejon]

I do wonder sometimes if most HYPsters ought pack their bags for the IT world - and I include myself too! - but that's a debate for the other place. And why people follow HYP, really. Perhaps it's just a rich old lady's or gentleman's hobby, when it comes down to it.

I am reminded of the Motley Fool suggestion that sent me down this road - buy a low cost FTSE tracker. If I'd stuck to that I reckon I'd have as much wealth and a lot of time back but less distraction. I like fettling my portfolio and my HYP has certainly delivered a high and rising income 'cept a few hiccups and I hope in a year or two will support me indefinitely.

[Wizard]

Could it be that anyone who can't tick option one is declining to respond to the poll

[IanTHughes]

I set up my HYP in 2014 with a lump sum, purchasing 15 shares in 15 sectors - how conventional is that!

I still own 10 of the original 15, and the HYP has grown to 22 shares in 17 sectors.

I think I have stuck closely to the guidelines. However, for whatever reason (probably my useless stock picking), I do not think my HYP has done particularly well over the last 7 years, certainly when compared to my IT portfolio.

Following the HYP guidelines does not guarantee good performance!

I do wonder sometimes if most HYPsters ought pack their bags for the IT world - and I include myself too! - but that's a debate for the other place. And why people follow HYP, really. Perhaps it's just a rich old lady's or gentleman's hobby, when it comes down to it.

It might be seen as a novel idea around here, but have you ever considered that some follow the HYP Strategy because it works?

I have investigated the results of the original drawdown portfolio started in November 2000 - HYP1 - against the same investment in 12 separate ITs. As at the 20th anniversary - 20 Nov 2020 - the income received from HYP1 is more than all but 1 of the ITs - sometimes considerably more. If one re-orders the list by XIRR, HYP is number 4, out of 13. This means that many of those poor income results would not have been saved by top-slicing to build up the income.

15 diversified high-yield shares, purchased for their apparently sustainable dividend, no voluntary trading, and the portfolio beats the same investment into many ITs into a cocked hat!


Ian

[moorfield]

It might be seen as a novel idea around here, but have you ever considered that some follow the HYP Strategy because it works?

15 diversified high-yield shares, purchased for their apparently sustainable dividend, no voluntary trading, and the portfolio beats the same investment into many ITs into a cocked hat!

Of course, but what I'm getting at there is how detrimental is unnecessary HYP "churn" eg. six sells a month, to it working?

Difficult to measure of course.

[IanTHughes]

It might be seen as a novel idea around here, but have you ever considered that some follow the HYP Strategy because it works?
15 diversified high-yield shares, purchased for their apparently sustainable dividend, no voluntary trading, and the portfolio beats the same investment into many ITs into a cocked hat!

Of course, but what I'm getting at there is how detrimental is unnecessary HYP "churn" eg. six sells a month, to it working?

Difficult to measure of course.

My response was to your asking:

I do wonder sometimes if most HYPsters ought pack their bags for the IT world - and I include myself too! - but that's a debate for the other place. And why people follow HYP, really. Perhaps it's just a rich old lady's or gentleman's hobby, when it comes down to it.

Yes, measuring the results of two separate portfolios is very time consuming. First one must set up an HYP and then follow it one way at the same time as following it the other. Even then, different people would make different trading decisions so, when there is a difference, which does one accept?

Mind you, those ITs are portfolios where "voluntary" trading is performed, are they not?


Ian

[Wizard]

My Churn was zero. Greene King was taken over, but the funds were not reinvested in another HYP share, so the lower figure was zero.

[moorfield]

Thanks all so far. No one's poked their head over the parapet and claimed >10% yet I see!

I'll go with daveh's suggestion for the 2021 poll (probably in January/February next year). 5-10% seems about right to me, so maybe we'll see a spike in that bucket, which tails off rapidly after that.

Unless folk want me to redo the 2019 poll now?

[Arborbridge]

Thanks all so far. No one's poked their head over the parapet and claimed >10% yet I see!

I'll go with daveh's suggestion for the 2021 poll (probably in January/February next year). 5-10% seems about right to me, so maybe we'll see a spike in that bucket, which tails off rapidly after that.

Unless folk want me to redo the 2019 poll now?

A smaller bucket group might do it

[Gengulphus]

If you redo these 'churn' threads (which I'm neither supporting nor objecting to), please be specific about whether you want information about calendar years or tax years. I suspect that you mean the calendar year 2019 in this thread, but some people talk about the 2018/2019 tax year as just the "2019 tax year", and that has little more than 3 months in common with the calendar year 2019. And those whose HYPs are not completely tax-sheltered may well have their records organised around tax years, making it quite natural for them to provide figures for tax years...

It probably doesn't make much difference for 2019, but it seems likely that it will for 2020, 2021 and quite possibly a few later years...

Gengulphus

[moorfield]

A smaller bucket group might do it

Nonetheless it's been a useful start. We know so far there is no-one here claiming to practice HYP who churned more than 10% of their portfolio. Or if they do and did, are keeping it to themselves!

I suspect that you mean the calendar year 2019 in this thread,

For the avoidance of any doubt, yes, as will future polls be as the majority seem to work/report on calendar years here. But anyone who posts HYP annual reports in future whether calendar or tax year can expect me to be asking them the question too.

[Wizard]

A smaller bucket group might do it

Nonetheless it's been a useful start. We know so far there is no-one here claiming to practice HYP who churned more than 10% of their portfolio. Or if they do and did, are keeping it to themselves!

I suspect that you mean the calendar year 2019 in this thread,

For the avoidance of any doubt, yes, as will future polls be as the majority seem to work/report on calendar years here. But anyone who posts HYP annual reports in future whether calendar or tax year can expect me to be asking them the question too.

My bold.

And I am afraid therein lies the issue, I doubt anyone will complete the poll if they think they are above a 'reasonable' level. It also relies on people keeping records, which not everyone does.