Julian wrote:
I know that for HYP the overall portfolio performance matters and as long as any steps back are more than offset by a sufficient number of steps forward it is all par for the course, but I still find myself increasing drawn to IT's where the steps backwards and forwards are essentially hidden from the investor.
There is a price that is paid for that but it is one that, at least for half of my portfolio, I am willing to pay.
I should firstly say, just to make my personal position clear, that I'm of a similar view to you with regards to HYP and IT's, and have a large element of my HYP capital invested in a number of income-related Investment Trusts, for many of the same reasons as you've explained.
That said, I just want to pick up on your point regarding the '
steps backwards and forwards' essentially being '
hidden from the investor' where IT's are concerned.
I think this is an interesting point, but one that lands purely at the feet of our own investor-psychology. In a way, our share-related HYP's
are Investment Trusts, concerned as they are with often diverse shares in often diverse sectors.
So why do we treat our share-related HYP's as something different? Why do we allow ourselves to concentrate unduly on the shares within our HYP's, with their share-related yields, and share-related share-prices?
I think one of the biggest improvements to my own HYP-view in recent years, as my HYP has matured and settled down a great deal, is to do exactly this; look at the overall
capital, overall
yield, and overall
income as being the most important aspects, and try not to worry so much regarding the
single shares occupying the HYP itself.
It's a much simpler investment-life now, having taken this approach for the past few years. The income keeps rolling in, I re-invest when I'm happy with my cash-reserve (another IT-related aspect that I'm very happy indeed to emulate, as it allows me to keep 100% invested in my already-purchased shares, and so doesn't present me with any pressure to actually sell any already-held shares...), and I keep an eye on the overall capital, overall yield, and overall income.
I could argue then, that my HYP consists
entirely of Investment Trusts.
It just happens to be the case that I
run one of them..
Cheers,
Itsallaguess