2nd IT purchase to compliment HYP

[vrdiver]

I have a fairly typical HYP and am starting to build up an IT portfolio, partly to complement my HYP and partly to transition towards a less hands-on portfolio as I enter my dotage!

I already have Henderson Far East (HEFL) but would like to add a second IT. Being a HYPer, I'd prefer dividends to growth (but growth too please!) as I don't want to have to sell holdings to create my own dividends - I want the company to look after that bit!

Candidates exclude CTY or other FTSE-centric ITs at the moment - that will come when I start converting my existing HYP (no rush, my dotage is not imminent I hope!)

A quick filter offers:
Aberdeen Asian Income Fund Ltd (AAIF), Murray International (MYI) and JP Morgan Global Emerging Income (JEMI) based on rating (Morningstar), yield >3.5%

Any others I should look at?

VRD

[Quint]

I am in a similar position with cash to invest in the wifes SIPP.

I just topped up Henderson Far East yesterday to 5%.

I quick look on HL shows JEMI has not increased dividends since 2013 but has only slight capital loss over 5 years. AAIF has increased dividends at a better rate and has a higher yield but slightly larger capital loss over 5 years.

For the time being I am tempted to purchase a 10% holding in Murray International. It has the yield and the dividend increase but it does trade at a small premium, although charges are lower.

Wife's SIPP is all IT's as platform charge is capped at £200pa.

[SalvorHardin]

An investment trust for the UK-based income seeking investor, which offers a lot of diversification, is the European Assets Trust. It's an Anglo-Dutch investment trust, quoted in London and Amsterdam, which invests in European smaller companies. The vast majority of these companies will probably be unknown to most investors (I've been investing for over 35 years and had only heard of one of its top 10 companies before I bought the shares).

Its shares currently yield 6.2% and are trading at a premium of just under 2%. Bear in mind that the dividend is rather volatile as it is paid in Euros and the company resets the dividend every year at 6% of its 31st December net asset value (it can make dividend payments out of capital under Dutch law). Dividends are now paid quarterly.

Here's the TLF thread
viewtopic.php?t=9367

When it comes to your tax return, shareholders should bear in mind that this is a Netherlands investment so you need to treat it as foreign income. Also one of its dividends comes with a Dutch withholding tax credit, which can be used to offset your UK tax (including the dividend tax).

I'd second Murray International (which I also hold), currently yielding a touch under 4.3%. Again it's another way for HYP investors to diversify away from the UK because of its overseas focus.

[Dod101]

For the time being I am tempted to purchase a 10% holding in Murray International. It has the yield and the dividend increase but it does trade at a small premium, although charges are lower.

That will cost you serious money. I have a much more modest holding in Murray International. It has been a good investment. Even a holding equivalent to 10% of your assets seems to be quite concentrated. Maybe split it between EAT and Murray?

Dod

[Quint]

For the time being I am tempted to purchase a 10% holding in Murray International. It has the yield and the dividend increase but it does trade at a small premium, although charges are lower.

That will cost you serious money. I have a much more modest holding in Murray International. It has been a good investment. Even a holding equivalent to 10% of your assets seems to be quite concentrated. Maybe split it between EAT and Murray?

Dod

Dod, you may be right. I think maybe 5% in Murray International and rethink the other 5%. I am not convinced on EAT though. In fact I am not totally convinced on Europe at the moment.

This SIPP is not a pure income play at this point in time. I am trying to average out around 3% with some over and some under, with a chance of capital and income growth.

[Dod101]

I can't say I know a lot about EAT and do not hold it although it seems to be popular. Does it not pay at least some of its dividend out of capital gains? That would not necessarily put me off but it is to me a mark against it. Something like Finsbury Growth and Income, although it yields only around 2%? Edinburgh IT with a yield of around 4% would be better although I think with some sacrifice to growth. I think I would take a look at both. I hold them so DYOR.

Dod

[Quint]

I can't say I know a lot about EAT and do not hold it although it seems to be popular. Does it not pay at least some of its dividend out of capital gains? That would not necessarily put me off but it is to me a mark against it. Something like Finsbury Growth and Income, although it yields only around 2%? Edinburgh IT with a yield of around 4% would be better although I think with some sacrifice to growth. I think I would take a look at both. I hold them so DYOR.

Dod

Wife has Finsbury growth and income already and 10% in city of London which has recently been topped up. 10% is the max I would go to but even then only for a core holding like City. She also has Scottish American.

Edinburgh looks interesting at the moment with the yield now over 4% and at a discount but I am more inclined to something like Lowland or Diverse income with holding a large chunk of City.

[Raptor]

I was looking to spread my IT's further recnetly and looked at EAT, but could not get my head around the withholding tax and paying some dividends out of capital. In the end went for a North America fund of MCT (Canadian), was 5.7 % (not checked today).

If you purchase and use HYPTUSS you will need to add a line (see Financial Software forum).

Raptor.

[Stanley117]

Wife has Finsbury growth and income already and 10% in city of London which has recently been topped up. 10% is the max I would go to but even then only for a core holding like City. She also has Scottish American.

Edinburgh looks interesting at the moment with the yield now over 4% and at a discount but I am more inclined to something like Lowland or Diverse income with holding a large chunk of City.

Are Lowland and Diverse income much different to the above ?

Seems to be a lot of people selling Diverse income Trust according to the H-L website

[Quint]

Wife has Finsbury growth and income already and 10% in city of London which has recently been topped up. 10% is the max I would go to but even then only for a core holding like City. She also has Scottish American.

Edinburgh looks interesting at the moment with the yield now over 4% and at a discount but I am more inclined to something like Lowland or Diverse income with holding a large chunk of City.

Are Lowland and Diverse income much different to the above ?

Seems to be a lot of people selling Diverse income Trust according to the H-L website

I think Lowland and Diverse have more holdings outside the FTSE 100 than City, they seem to have better dividend growth also, however I still need to do more research on these before I make a commitment.

[monabri]

An investment trust for the UK-based income seeking investor, which offers a lot of diversification, is the European Assets Trust.

Its shares currently yield 6.2%

When it comes to your tax return, shareholders should bear in mind that this is a Netherlands investment so you need to treat it as foreign income. Also one of its dividends comes with a Dutch withholding tax credit, which can be used to offset your UK tax (including the dividend tax).

Am I correct in thinking that if the dividends (from all foreign income) are less than £300 p.a. then you do not need to declare it on the tax return?
( a holding of less than £5k approx)?

https://www.gov.uk/tax-foreign-income/paying-tax

[jackdaww]

scottish mortgage?

[PinkDalek]

... Am I correct in thinking that if the dividends (from all foreign income) are less than £300 p.a. then you do not need to declare it on the tax return?
( a holding of less than £5k approx)?

https://www.gov.uk/tax-foreign-income/paying-tax

No, you declare it, if you have to complete a Tax Return, but you don't have to use the Foreign Pages.

Your link includes:

You don’t need to fill in a tax return if your only foreign income is dividends under £300 in total and you don’t have anything else to report.

See also page TR3 https://assets.publishing.service.gov.u ... 18__1_.pdf and the notes page TRG 3 https://assets.publishing.service.gov.u ... s_2018.pdf

Taxes Practical Issues viewforum.php?f=49 is available for any follow up questions ...

[bluedonkey]

For the time being I am tempted to purchase a 10% holding in Murray International. It has the yield and the dividend increase but it does trade at a small premium, although charges are lower.

That will cost you serious money. I have a much more modest holding in Murray International. It has been a good investment. Even a holding equivalent to 10% of your assets seems to be quite concentrated. Maybe split it between EAT and Murray?

Dod

Dod,

I disagree. 10% in a fairly generalist collective as opposed to a single share is not overly concentrated. A more cerebral mind than mine - Gengulphus - posted about this a while ago.

BD

[Quint]

For the time being I am tempted to purchase a 10% holding in Murray International. It has the yield and the dividend increase but it does trade at a small premium, although charges are lower.

That will cost you serious money. I have a much more modest holding in Murray International. It has been a good investment. Even a holding equivalent to 10% of your assets seems to be quite concentrated. Maybe split it between EAT and Murray?

Dod

Dod,

I disagree. 10% in a fairly generalist collective as opposed to a single share is not overly concentrated. A more cerebral mind than mine - Gengulphus - posted about this a while ago.

BD

That was my line of thinking.

Maybe Dod thought I was intending to buy 10% of Murray International itself

[Dod101]

Sorry. Yes my warped mind. I was thinking of 10% of Murray International itself . Even so 10% of a portfolio in one IT is quite a punt on the manager of the IT even although I like Bruce Stout. I see it as buying the manager not so much the trust itself.

Dod

[Quint]

Sorry. Yes my warped mind. I was thinking of 10% of Murray International itself . Even so 10% of a portfolio in one IT is quite a punt on the manager of the IT even although I like Bruce Stout. I see it as buying the manager not so much the trust itself.

Dod

If only I had the money to be able to afford that

Appreciated. That was why I put a cap of 10% in this SIPP to any one trust, because of the manager influence, and actually the only one I have is City at this level. I put a minimum of 5% because I think smaller holdings than this start to become too small to make any real impact, especially as I am looking at pretty mainstream established trusts.

Somebody on an earlier post accused me of a scattergun approach when I mention 12 - 14 trusts, much less than that you will have to have 10% plus holdings. It is a tricky balance but that is what keeps it interesting.

[mickeypops]

Somebody on an earlier post accused me of a scattergun approach when I mention 12 - 14 trusts, much less than that you will have to have 10% plus holdings. It is a tricky balance but that is what keeps it interesting.

I'm a bit of a fan of John Baron's Investment Trust portfolios - his Winter portfolio, for example, has around 22 separate ITs. He is covering UK and International equities, Property, Alternatives and Fixed Interest ITs within this. He selects three or four ITs within each asset sector which seems sensible enough to me, reducing the risk of picking an under-performer.

[Quint]

Somebody on an earlier post accused me of a scattergun approach when I mention 12 - 14 trusts, much less than that you will have to have 10% plus holdings. It is a tricky balance but that is what keeps it interesting.

I'm a bit of a fan of John Baron's Investment Trust portfolios - his Winter portfolio, for example, has around 22 separate ITs. He is covering UK and International equities, Property, Alternatives and Fixed Interest ITs within this. He selects three or four ITs within each asset sector which seems sensible enough to me, reducing the risk of picking an under-performer.

I have been looking at his portfolios, quite a lot of trusts but they seem to work.

[Quint]

An investment trust for the UK-based income seeking investor, which offers a lot of diversification, is the European Assets Trust. It's an Anglo-Dutch investment trust, quoted in London and Amsterdam, which invests in European smaller companies. The vast majority of these companies will probably be unknown to most investors (I've been investing for over 35 years and had only heard of one of its top 10 companies before I bought the shares).

Its shares currently yield 6.2% and are trading at a premium of just under 2%. Bear in mind that the dividend is rather volatile as it is paid in Euros and the company resets the dividend every year at 6% of its 31st December net asset value (it can make dividend payments out of capital under Dutch law). Dividends are now paid quarterly.

Here's the TLF thread
viewtopic.php?t=9367

When it comes to your tax return, shareholders should bear in mind that this is a Netherlands investment so you need to treat it as foreign income. Also one of its dividends comes with a Dutch withholding tax credit, which can be used to offset your UK tax (including the dividend tax).

I'd second Murray International (which I also hold), currently yielding a touch under 4.3%. Again it's another way for HYP investors to diversify away from the UK because of its overseas focus.

After giving this some thought I added EAT to the wife's SIPP at 2.5% of capital. Will see how it goes.