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Personal High Yield Portfolio - Constructive Input Welcome

General discussions about equity high-yield income strategies
PrefInvestor
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Personal High Yield Portfolio - Constructive Input Welcome

#200254

Postby PrefInvestor » February 10th, 2019, 9:32 am

Hi All, Firstly I should say that I am new to LF having only registered yesterday. I am not new to investing though and have been doing it for many years and have used the ii discussion boards for a long time, sadly it is the deteriorating quality of investor comments on those boards that have caused me to look elsewhere for informed investor input.

I have been reading the sections of the board on HYP investing and found it quite interesting. I always choose investments that pay significant dividends (no less than ~4.5%) but unlike HYPers I am also concerned about the capital value of my investments. If that is severely threatened I will take action to preserve my capital, even if it does affect my income in the short term.

For many years (from ~2011 onwards) I invested mainly in preference shares (actually about 80% in prefs and the other in selected single stocks, REITs and ITs). Their high and predictable dividends, perceived safety and lack of volatility were all major attractions. I made considerable gains there but last March I was hit by the preference share price crash caused by a threat to redeem at par by Aviva. I had a major decision to make then and I decided to bale out and pursue a high yield investing strategy based on equities and ITs. The threat to pref prices from rising interest rates was a further reason for this move.

Had I been a HYPer no doubt I should have stayed put, but I sold EVERYTHING and spent several months investigating and purchasing a new high yield portfolio with over 50 holdings. Why so many ?. Well I have for many years operated on the principle of not putting more than about £6,000 in any one investment – to avoid getting hit by a significant fall in any investment.

After a few months operating this new portfolio I have made a few adjustments towards the end of the year, including reducing the number of holdings, reducing the number of single stocks and introducing the use of dividend ETFs which I think provide a good low cost way of introducing diversity (including geographic and currency diversity) and which are superior in some respects to ITs.

Epic Percentage Group Comments
BP. 4.52% Oil/Gas Single Stocks
RDSB 3.96% Oil/Gas Single Stocks
AV. 3.66% Asset Managers Single Stocks
LGEN 3.43% Asset Managers Single Stocks
GSK 3.42% Pharma Single Stocks
HSBA 2.53% Banks Single Stocks
BRCI 1.48% Commodities Investment Trusts
CAML 1.60% Commodities Investment Trusts
CYN 1.38% Commodities Investment Trusts
NCYF 2.01% Debt Investment Trusts
RECI 2.35% Debt Investment Trusts
SEQI 1.67% Debt Investment Trusts
SHRS 2.22% Investment Trusts Investment Trusts
SWEF 1.87% Investment Trusts Investment Trusts
VIN 1.77% Investment Trusts Investment Trusts
AAIF 2.49% Overseas (Asian) Investment Trusts
BRNA 1.67% Overseas (US) Investment Trusts
HFEL 3.49% Overseas (Asian) Investment Trusts
JEMI 1.70% Overseas (Global) Investment Trusts
IAPD 2.30% ETFs (Asia) ETFs
IUKD 2.56% ETFs (UK) ETFs
SEDY 2.26% ETFs (EM) ETFs
ZILK 2.71% ETFs (UK) ETFs
ZWEU 4.26% ETFs (EU) ETFs
ZWUK 2.54% ETFs (UK) ETFs
BWSA 3.01% Prefs Prefs
GACB 3.03% Prefs Prefs
RAVP 4.17% Prefs Prefs
RSAB 2.92% Prefs Prefs
STAB 2.77% Prefs Prefs
BSIF 3.08% Renewables Renewables
FSFL 3.46% Renewables Renewables
JLEN 3.40% Renewables Renewables
NESF 1.52% Renewables Renewables
TRIG 4.10% Renewables Renewables
UKW 2.26% Renewables Renewables

Apologies for the format but I couldnt see how to post an image or an Excel table within a post. Perhaps someone could enlighten me ?.

Yield is 6.07% according to my calculations (based on me personally collecting EPS numbers for all investments).

You will notice that I still have some prefs in the portfolio. I didn’t have till around November when the very low prices (in the mid 110s) made buying back in too good to resist. I am less worried about redemption at par at those levels. I also have a lot of renewable investments, I really like these for their good dividends (including RPI increases) and stable price performance. No doubt someone will tell me that I really have too any at about 16% of the portfolio ATM.

I still track the value of my old pref share portfolio (from March time) and am pleased to report that the new portfolio is worth about 4% more in capital terms, with only a marginal reduction in yield.

Constructive inputs welcomed. But please bear in mind this portfolio is all my own work and has not been constructed using any of investment strategies that I see described on this site.

ATB

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200260

Postby Breelander » February 10th, 2019, 9:51 am

PrefInvestor wrote:Hi All, Firstly I should say that I am new to LF having only registered yesterday. ...Apologies for the format but I couldnt see how to post an image or an Excel table within a post. Perhaps someone could enlighten me ?


Welcome to Lemon Fool. There are several ways to format a table, and a tool to help you do that here:

http://lemonfoolfinancialsoftware.weebl ... ormat.html


I've used it to reformat yours. Not everyone will be familiar with all the Epics, so a list of the names would be helpful.



tjh290633
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200263

Postby tjh290633 » February 10th, 2019, 9:55 am

Pref, you will find a tool for producing formatted tables from a spreadsheet at http://lemonfoolfinancialsoftware.weebl ... ormat.html

Just do a CTRL-C on the highlighted cells that you wish to use, CTRL-V into the input panel then format the input. You may need to tweak empty cells at the start of a header row to get it right.

We have a test board where you can play with the facility.

TJH

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200274

Postby monabri » February 10th, 2019, 10:38 am

"Testing 123".. an area where you can post stuff to check it looks ok before posting on the main boards.


viewforum.php?f=28


( dont forget to use Control + A to select ALL the data in the formatted section)

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200278

Postby monabri » February 10th, 2019, 10:53 am

It might be worth looking at where you are invested globally and to what extent. It'll mean a bit of work in Excel ....listing out your ETFs & ITs and their percentage invested in each country and then totalling it up (in £) under broad headings such as . North America, China, Asia (- Japan), UK, Europe, Japan, Emerging markets .

If you do this, you'll get an indication /understanding of where in the World your money is invested ( acknowledging many multinationals derive income globally.)

I'd then have a look at

https://www.starcapital.de/en/research/ ... in-charts/

A quick glance at your holdings suggests you are light in the US but I'm guessing you consider the US to be "fully priced" ( or worse).

PrefInvestor
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200287

Postby PrefInvestor » February 10th, 2019, 11:24 am

Hi monabri, Yes I know that I am light on US investments as only have BRNA and only added that just recently.

There are a number of reasons for this:-
1. As I will only invest in things that pay at least 4-4.5% in dividends, most ITs and stocks invested in the US dont appeal to me. I have dabbled with the likes of SMT & PCT in the past, but am not impressed. And when they fall back (like now) you are left with nothing but the losses......
2. I dont want to invest in US single stocks because of the extreme volatility.
3. I have tried direct investing in the US but it comes with currency costs applied by my broker when buying and selling (about 1%) so I am not keen on that. For all overseas investments these days I ONLY use ITs and ETFs priced in GBP.
4. If there were other ITs like BRNA invested in the US AND with a decent yield then I would consider them, but otherwise Im not interested.
5. So for the most part I ignore the US completely !!!. Well I watch it going up and down like a yo-yo, but thats all. Sad but true.

ATB

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200288

Postby PrefInvestor » February 10th, 2019, 11:33 am

Hi TJH,

Thanks for the advice on posting tables. I couldnt access any of your links because my PC security software told me that they were malware !, I dont really believe that but there is no option to continue in those circumstances and I'm not going to disable my security software to try it out. I think that Ive worked out how to post images using the BBC Code tags so I will probably use that mechanism exclusively, posting links to images on my onedrive account. Thats what I used to have to do on ii until they upgraded the software last year. But its a universal mechanism and I can post anything that I want to that way. Will have a go posting my portfolio as an image in a minute.

Thanks for your help anyway.

Pref

tjh290633
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200312

Postby tjh290633 » February 10th, 2019, 1:41 pm

You too!

I have reported this to the owner of that page, and he is taking action.

Keep a record of the link for when it has been sorted out.

Meanwhile you can copy the cells into a text file via Notepad. Format them there and paste the text between
[ pre]pre[/ pre] tags, which you can generate from the button above the window for composing a reply.

BrummieDave
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200373

Postby BrummieDave » February 10th, 2019, 6:09 pm

PrefInvestor wrote:Hi monabri, Yes I know that I am light on US investments as only have BRNA and only added that just recently.

There are a number of reasons for this:-
1. As I will only invest in things that pay at least 4-4.5% in dividends, most ITs and stocks invested in the US dont appeal to me. I have dabbled with the likes of SMT & PCT in the past, but am not impressed. And when they fall back (like now) you are left with nothing but the losses......
2. I dont want to invest in US single stocks because of the extreme volatility.
3. I have tried direct investing in the US but it comes with currency costs applied by my broker when buying and selling (about 1%) so I am not keen on that. For all overseas investments these days I ONLY use ITs and ETFs priced in GBP.
4. If there were other ITs like BRNA invested in the US AND with a decent yield then I would consider them, but otherwise Im not interested.
5. So for the most part I ignore the US completely !!!. Well I watch it going up and down like a yo-yo, but thats all. Sad but true.

ATB

Pref


Gaining exposure to the US market is, for us income seekers, a challenge indeed, and one that many Fools will have pondered over I'm sure. Obviously there is no simple answer otherwise you, and others, would have found it. That said, in the spirit of responding to your thread, here's what I've done.

As you say in your fourth point, "If there were others ITs like BRNA..." BRNA of course pays its dividend partly from capital, so I looked for other ITs with US exposure that do the same, thus enabling them to invest in some of the growth orientated US stocks, and use capital appreciation to pay me. As you point out, there aren't any US only equity based ITs doing this (unless someone else knows better of course) but there are global ITs with large US holdings that do so. I hold 'Securities Trust of Scotland' (STS) for this reason, with its focus on large cap and with around 55% of its portfolio being in North America. STS currently yields just under 4% so may not meet your threshold figure. I use it to balance 'Murray International' with its greater focus on contrarian plays such as emerging markets. What would probably not suit you of course is that the managers of STS have full discretion to vary any aspect of the portfolio including the geographies, so continued exposure to the US wouldn't be guaranteed.

The other attempt I've made to gain exposure to the US and the North American economy is through Middlefield Canadian Income (MCT) which provides reasonable correlation to the North American market, with about 20% of the portfolio in the US and the remainder in Canada of course. So whilst it doesn't fit your objective entirely, I like it as it does provide some US exposure, a steady (if not growing) high level of income currently yielding 5.5%, and some diversification away from pure equities (with its real estate and infrastructure holdings alongside pure equities).

So no answer to your US problem, but a reply to your post nevertheless.

PrefInvestor
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200421

Postby PrefInvestor » February 10th, 2019, 10:07 pm

Hi Again brummiedave, TBH I didn’t think I had a”US problem”, pretty sure I don’t actually - but thanks for your concern. I took a look at both STS (yield 3.74%) and MCT (yield 2.77%) and their share price performance over the last year and I can’t say that I’m impressed I’m afraid. The only good thing is that I can say is that they are both trading at a discount. But I won’t be investing in either of these any time soon.

The US can go it’s own merry way as far as I am concerned. Until it can deliver some dividend yields of at least 4.5% I’m not interested.

ATB

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200455

Postby BrummieDave » February 11th, 2019, 8:03 am

And there's me trying to be friendly, but with a poor choice of words perhaps. :D

What you may have a 'problem' with is your data source if it's showing MCT with a yield of 2.77% (perhaps you're using HL which I know shows this in error). At 1.275 pence per quarter, I can assure you the yield is 5.5%.

This is confirmed by the the trust's own website, other similarly accurate sources such the AIC, and also this handy little table from ii comparing MCT's performance, including yield, with other ITs in the North American sector: https://www.ii.co.uk/investment-trusts/ ... rd/LSE:MCT

PrefInvestor
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200459

Postby PrefInvestor » February 11th, 2019, 8:29 am

Hi Again brummiedave, Well I wasn't trying to be contentious either, probably could have worded my response better. So my apologies. I will take another look at MCT if it is yielding 5.5%, I did indeed use HL as my source of information and TBH anything less than 4.5% gets short shrift from me (so thumbs down to STS still). No offence meant.

ATB

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200524

Postby PrefInvestor » February 11th, 2019, 12:05 pm

Well I have had a go at using the Lemon Fool Table Formatter this morning which made things pretty easy. So have re-vamped my portfolio to look as follows:-



Have tested it on a test page and it looked OK. So here goes..... :)

richfool
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200530

Postby richfool » February 11th, 2019, 12:27 pm

PrefInvestor wrote:Hi Again brummiedave, Well I wasn't trying to be contentious either, probably could have worded my response better. So my apologies. I will take another look at MCT if it is yielding 5.5%, I did indeed use HL as my source of information and TBH anything less than 4.5% gets short shrift from me (so thumbs down to STS still). No offence meant.

ATB

Pref

I hold and am overweight in MCT and agree its dividend yield is 5.5%. (in fact my holding over the last year has returned 5.42% based on current value). The only criticism I have seen about MCT is that its hasn't increased the dividend for a long time. I note it holds property, financial and energy stocks. Other than through my global G&I trust holdings (which do have significant US exposure), it is my main exposure to North America.

I did previously hold NAIT (North American Income Trust), but sold last year for a combination of reasons: partly to reduce my USA exposure, to reduce my number of holdings, because the the yield had fallen back due to the rise in the SP and partly because there was quite a large gap between buying and selling prices. All that said, I am still drawn to NAIT., but if I did re-enter I would want a lower entry point than currently.

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200539

Postby JuanDB » February 11th, 2019, 1:11 pm

Glad to have read this thread as I’d recently passed on MCT due to the low yield reported on HL.

I do wonder why they have that wrong given the static dividend / share price over time.

Thanks,

Juan.

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200543

Postby richfool » February 11th, 2019, 1:19 pm

JuanDB wrote:Glad to have read this thread as I’d recently passed on MCT due to the low yield reported on HL.

I do wonder why they have that wrong given the static dividend / share price over time.

Thanks,

Juan.

MCT is shown as 5.53% on the Citywire website (see link below).

Note also that currently (Citywire indicates) MCT is at a discount to NAV of 14.2% (HL shows discount as 12.74%). I understand it does not hedge the exchange rate.

https://citywire.co.uk/funds_insider/in ... undID=3096

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200560

Postby PrefInvestor » February 11th, 2019, 2:07 pm

OK so Ive now had a closer look at MCT and yes the yield looks OK (1.275p quarterly). But while being a trust this investment is described as being "redeemable participating preference shares". Well some warning bells sound there based on my previous preference share experience, has anyone seen or have access to the prospectus ?. I never buy a pref without reading the prospectus !. On what terms are they redeemable, at what price and is this subject to a class vote ?. What is the par value ? (often 100p) and trading below that usually implies that the company is not doing so well. I see that these were way down in the mid 80s just before Xmas. I would need to know more before investing here. Will try and find the prospectus online.

ATB

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200565

Postby PrefInvestor » February 11th, 2019, 2:29 pm

OK found the prospectus here:-

http://www.middlefield.co.uk/pdf/cit/prospectus2012.pdf

Not an easy read, as usual....

Pref

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Re: Personal High Yield Portfolio - Constructive Input Welcome

#200631

Postby PrefInvestor » February 11th, 2019, 6:33 pm

OK so I have now concluded my consideration of MCT as an investment and decided not to proceed, for the following reasons:-

1. It seems to me that what you are investing in here is a preference share that pays you a fixed return of 1.275p a quarter and that actually what the company is invested in is pretty irrelevant to its investors. The concept that investing here is exposing the holder to the North American markets seems tenuous at best to me.
2. The prospectus as usual is complex and opaque and just might offer the company the ability to redeem at a price that might be unfavourable to investors, its difficult to tell. (Redemption risk). I have no wish to take this risk having been burned by this issue back in March with other prefs.
3. In practice there are many UK preference shares offering a yield of over 6% (ie better than MCT) that I would feel more confident about investing in than this, so no compelling reason to invest here.

formoverfunction
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Re: Personal High Yield Portfolio - Constructive Input Welcome

#201594

Postby formoverfunction » February 15th, 2019, 3:35 pm

PrefInvestor wrote:Hi All, Firstly I should say that I am new to LF having only registered yesterday. I am not new to investing though and have been doing it for many years and have used the ii discussion boards for a long time, sadly it is the deteriorating quality of investor comments on those boards that have caused me to look elsewhere for informed investor input.

I have been reading the sections of the board on HYP investing and found it quite interesting. I always choose investments that pay significant dividends (no less than ~4.5%) but unlike HYPers I am also concerned about the capital value of my investments. If that is severely threatened I will take action to preserve my capital, even if it does affect my income in the short term.

For many years (from ~2011 onwards) I invested mainly in preference shares (actually about 80% in prefs and the other in selected single stocks, REITs and ITs). Their high and predictable dividends, perceived safety and lack of volatility were all major attractions. I made considerable gains there but last March I was hit by the preference share price crash caused by a threat to redeem at par by Aviva. I had a major decision to make then and I decided to bale out and pursue a high yield investing strategy based on equities and ITs. The threat to pref prices from rising interest rates was a further reason for this move.

Had I been a HYPer no doubt I should have stayed put, but I sold EVERYTHING and spent several months investigating and purchasing a new high yield portfolio with over 50 holdings. Why so many ?. Well I have for many years operated on the principle of not putting more than about £6,000 in any one investment – to avoid getting hit by a significant fall in any investment.

After a few months operating this new portfolio I have made a few adjustments towards the end of the year, including reducing the number of holdings, reducing the number of single stocks and introducing the use of dividend ETFs which I think provide a good low cost way of introducing diversity (including geographic and currency diversity) and which are superior in some respects to ITs.

Epic Percentage Group Comments
BP. 4.52% Oil/Gas Single Stocks
RDSB 3.96% Oil/Gas Single Stocks
AV. 3.66% Asset Managers Single Stocks
LGEN 3.43% Asset Managers Single Stocks
GSK 3.42% Pharma Single Stocks
HSBA 2.53% Banks Single Stocks
BRCI 1.48% Commodities Investment Trusts
CAML 1.60% Commodities Investment Trusts
CYN 1.38% Commodities Investment Trusts
NCYF 2.01% Debt Investment Trusts
RECI 2.35% Debt Investment Trusts
SEQI 1.67% Debt Investment Trusts
SHRS 2.22% Investment Trusts Investment Trusts
SWEF 1.87% Investment Trusts Investment Trusts
VIN 1.77% Investment Trusts Investment Trusts
AAIF 2.49% Overseas (Asian) Investment Trusts
BRNA 1.67% Overseas (US) Investment Trusts
HFEL 3.49% Overseas (Asian) Investment Trusts
JEMI 1.70% Overseas (Global) Investment Trusts
IAPD 2.30% ETFs (Asia) ETFs
IUKD 2.56% ETFs (UK) ETFs
SEDY 2.26% ETFs (EM) ETFs
ZILK 2.71% ETFs (UK) ETFs
ZWEU 4.26% ETFs (EU) ETFs
ZWUK 2.54% ETFs (UK) ETFs
BWSA 3.01% Prefs Prefs
GACB 3.03% Prefs Prefs
RAVP 4.17% Prefs Prefs
RSAB 2.92% Prefs Prefs
STAB 2.77% Prefs Prefs
BSIF 3.08% Renewables Renewables
FSFL 3.46% Renewables Renewables
JLEN 3.40% Renewables Renewables
NESF 1.52% Renewables Renewables
TRIG 4.10% Renewables Renewables
UKW 2.26% Renewables Renewables

Apologies for the format but I couldnt see how to post an image or an Excel table within a post. Perhaps someone could enlighten me ?.

Yield is 6.07% according to my calculations (based on me personally collecting EPS numbers for all investments).

You will notice that I still have some prefs in the portfolio. I didn’t have till around November when the very low prices (in the mid 110s) made buying back in too good to resist. I am less worried about redemption at par at those levels. I also have a lot of renewable investments, I really like these for their good dividends (including RPI increases) and stable price performance. No doubt someone will tell me that I really have too any at about 16% of the portfolio ATM.

I still track the value of my old pref share portfolio (from March time) and am pleased to report that the new portfolio is worth about 4% more in capital terms, with only a marginal reduction in yield.

Constructive inputs welcomed. But please bear in mind this portfolio is all my own work and has not been constructed using any of investment strategies that I see described on this site.

ATB

Pref


Welcome Pref, I hope you enjoy LF. I find it so much more interesting than the "other" place :)

DL


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