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Arbit, HYP and OEICS 2021 Q1

General discussions about equity high-yield income strategies
Arborbridge
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Arbit, HYP and OEICS 2021 Q1

#402102

Postby Arborbridge » April 6th, 2021, 6:00 pm

Here's an update on how my income has varied, up until the end of Q1 2021.

Image

This is the income generated from a £100- worth of units bought on January 1 st 2010. As you see, at the start, the income generated is greater for the HYP as the yield was higher. Since then the OEIC and IT streams have overtaken the HYP stream, and in the case of the ITs, quite decisively so since covid. Now interest will centre on whether the probably slow down in IT income will allow the other streams to overtake it - frankly, I doubt it. But as they say, it's not over "until the fat lady sings" which will presumably be at my funeral - though I won't be posting after that AFAIK.

My HYP income YOY to the first quarter is down 22% for HYP, 21% for OEICS and up 4.7% for ITs. All within manageable percentages for my pension system.

Arb.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402106

Postby Arborbridge » April 6th, 2021, 6:12 pm

ReallyVeryFoolish wrote:Thank you. Perhaps there is more than just puff behind the claims that investment trusts smooth out income returns over the longer term?

The last 5 years or so has been dreadful to OEICs in comparison.

RVF


I've been really surprised about how well the OEIC stream has produced. Without being able to reserve income, they have taken a big knock just now, but overall they have been good.
But what you can say is that the ITs are doing a good job of smoothing one's income, which is worth paying for in some way. Not everyone can deal with a 21% drop in one year!

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#402128

Postby Alaric » April 6th, 2021, 7:42 pm

ReallyVeryFoolish wrote:The last 5 years or so has been dreadful to OEICs in comparison.


Unless they indulge in creative investment management by buying shares cum dividend and selling ex, Managers of OEICs are forced to pay out all the dividends they receive and no more. They may have a little flexibility in buying shares cum dividend and selling ex, or by selecting higher yielding shares. Both might impair performance.

Provided they stay within the taxation and accounting rules, managers of ITs can pay whatever dividend they want to, supplementing shortfalls with borrowings or asset sales. If they choose to smooth dividend distributions they can do so.

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Re: Arbit, HYP and OEICS 2021 Q1

#402203

Postby Padders72 » April 7th, 2021, 9:33 am

I echo the above, I've moved quite a big chunk (circa 25%) into a variety of ITs over the past year but hindsight is a wonderful thing as ever in finance. Were we to have this discussion at any point from Dec 13 to Dec 19 then the OEIC line above would make a strong case for those being the smart move with ITs trailing even a nominal HYP portfolio like that mentioned above.

I have cut my OEIC exposure right down over the years mostly just because of the extra delays in buying and selling as they are usually priced once a day. That and the issues that can occur if everyone heads for the door (see Woodford). Lucky for me I guess.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402207

Postby Arborbridge » April 7th, 2021, 9:41 am

Whatever....

I've just checked my actual investments cash receipts for Q1 2021, and compared it with Q1 2019 and the total from these three investment streams is up by 20%.
This is actual £, not pence per unit, so in terms of what I have to live off, that looks a happy situation.
Actual £'s have increased due to re-investment, whereas pence per unit show one whether one is producing the same "bang for the buck" invested. (I know you know that, but mention it for any new people around here).

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#402283

Postby daveh » April 7th, 2021, 1:01 pm

In cash terms my Income Portfolio is well up for the 1st quarter on 2020 and is also ahead of 2019. So 2019 1st qtr cash was 1.000, 2020 was 0.703 and 2021 is 1.258. If I look at dividend per unit for the 1st qtr (using the number of dividends at the end of the qtr) then in 2019 it was 3.96p and 1.92p per accumulation and income unite respectively. For 2020 it was 2.62p and 1.21p respectively and this year it was 4.47p and 1.94p respectively.

So even wrt the income units the dividend in the 1st qtr is well up on covid year 1st qtr and just head of 1st qtr 2019 which was unaffected by covid. It will be interesting to see if the next two qtrs dividends are also better than 2019. So far it is looking as if my IP income has bounced back well from the falls seen last year and is back on track to be better than 2019. This is both better than I was expecting and better than what happened after the GFC. Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402297

Postby Arborbridge » April 7th, 2021, 1:42 pm

daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#402309

Postby daveh » April 7th, 2021, 2:02 pm

Arborbridge wrote:
daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.



My accumulation units are at £3.74 last week and the previous peak was £3.70 at the end of December 2019. Like you my income unit performance has not been so good. The income units are at £1.61 now, at the end of December 2019 they were at £1.71 and back at the end of May 2017 they peaked at £1.80. They both started a t £1.00 per unit when I started unitising 30/09/2003. The income unit value is fairly flat so the majority of my gains are coming from the income and reinvestment there of and very little from the underlying capital performance.

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Re: Arbit, HYP and OEICS 2021 Q1

#402349

Postby tjh290633 » April 7th, 2021, 4:02 pm

Arborbridge wrote:
daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.

Don't worry about it. My maximum income unit value was £6.52 at the end of May 2017, when the FTSE100 stood at 7,519.95

Currently it stands at £6.07 as of last night, when the FTSE100 closed at 6,823.55. That is 93% of the maximum for unit value but 88% of the maximum for the index.

Income per income unit was 24.97p for the year to end March 2017 and 22.80p for that ended 1st April 2021. However I have 18% more income units now, and 8% more income this last year, despite a fall of 23.5% in income compared with the year to 5 April 2020.

My accumulation unit value is at an all-time high of £29.43.

TJH

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402351

Postby Arborbridge » April 7th, 2021, 4:10 pm

While we are at it, I thought I may as well update on the capital values. These are the values rebased for income unit prices from inception to end of March. Hyp is down with the FTSE 100 and ArbIT and incOEICs higher but similar to one another.

Image

It seems that my HYP became properly detached around the time of the referendum and never caught up.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402354

Postby Arborbridge » April 7th, 2021, 4:17 pm

tjh290633 wrote:My accumulation unit value is at an all-time high of £29.43.

TJH


My accumulation price hasn't quite matched the high of 222.4 set in Jan 2020 - currently (end MArch) it is 217.15.


Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#403355

Postby 88V8 » April 11th, 2021, 9:50 am

Arborbridge wrote:My HYP income YOY to the first quarter is down 22% for HYP, 21% for OEICS and up 4.7% for ITs.

Thanks to various posters notably IAAG and Arb, I've moved a significant and growing portion of the pot into ITs.

What with that and our Fixed Interest, the panpanic has been no more than a minor pothole on the investment highway.

Gradually I'm coming to think of ITs as investment, and HYP as a hobby. Mind you, we all need hobbies.

V8

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#405762

Postby Arborbridge » April 21st, 2021, 7:41 am

Here's an update on my income charts:
1) income per unit, 2) income per £100 purchased at the beginning.

Image

and here's an update on how the income would have changed if one had bought £100 of units in each basket at the outset:-

Image


Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#405872

Postby idpickering » April 21st, 2021, 4:19 pm

Excellent work Arb. Thanks for sharing it with us.

Ian.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#406048

Postby Arborbridge » April 22nd, 2021, 9:45 am

I don't have direct comparisons with my IT and OEICs basket as regards total return, but some of you may be interested in this post. It's my HYP TR against the FTSE TR.

viewtopic.php?f=15&t=29043

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Re: Arbit, HYP and OEICS 2021 Q1

#407187

Postby 1nvest » April 26th, 2021, 6:10 pm

You're doing well :)

In the way of a comparison, another investor who opted for a conservative equal four way split of FT250, S&P500, Gold, 10 year Gilt and who drew a 3% SWR from that with the additional choice of uplifting the SWR either by inflation or to 3% of the ongoing portfolio value as the amounts drawn at the start of subsequent years ...

Image

No particular point/observations intended, just posting because I have the data to hand and purely as it may (or may not) be of interest.

EDIT : Just noticed your inflation is higher than mine, mine shows around 25% whilst yours is more like 35% so I suspect I've started that a year later, should have also included 2010 instead of being a Jan 2011 start date. Also mines calendar years to end of 2020 only.

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Re: Arbit, HYP and OEICS 2021 Q1

#407194

Postby 1nvest » April 26th, 2021, 6:29 pm

Didn't have time to change the data/chart in the prior post before the 'cannot edit/delete' time limit expired, so here's the updated version that includes 2010
Image

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#407312

Postby Arborbridge » April 27th, 2021, 10:25 am

1nvest wrote:You're doing well :)

In the way of a comparison, another investor who opted for a conservative equal four way split of FT250, S&P500, Gold, 10 year Gilt and who drew a 3% SWR from that with the additional choice of uplifting the SWR either by inflation or to 3% of the ongoing portfolio value as the amounts drawn at the start of subsequent years ...


When you say "another investor" is that a real person (perhaps you?) or a theoretical portfolio, not a practical one?

Looks a good scheme. I've known about similar porfolios for decades, of course, but I've never put one into practice. I think I once tried a "dummy" but soon gave it up - I lose interest unless real cash is staked!

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#407324

Postby Spet0789 » April 27th, 2021, 10:56 am

1nvest wrote:Didn't have time to change the data/chart in the prior post before the 'cannot edit/delete' time limit expired, so here's the updated version that includes 2010
Image


Interesting analysis but any backtest involving bonds needs to be taken with a huge pinch of salt. There is almost no chance that the returns of holding 10yr bonds over the next 30 years will resemble those returns of the last 30 years. If you want to get a rough sense of what to expect, drag the returns by 2 or 3% pa and then see if you still want to hold bonds.

Personally I’d go for 60% diversified equity, 20% gold and 20% cash. If we see long term real bond yields positive again, allocate back to bonds then.

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Re: Arbit, HYP and OEICS 2021 Q1

#407369

Postby 1nvest » April 27th, 2021, 1:38 pm

Personally I’d go for 60% diversified equity, 20% gold and 20% cash. If we see long term real bond yields positive again, allocate back to bonds then.

Pretty similar to my actual intent :)

I'm in the not so conservative camp, more like a third each FT250, US stock, gold. I benchmark that to Terry's HYP and its pretty much broadly compared in total returns for actual years and when backtested to 1987. TJH HYP however has much higher volatility. I've been tempted to use that benchmark comparison as a rotation strategy choice i.e. when TJH relatively zags down a lot then rotate some/all of gold into FT250 and when its zigged higher scale back stock exposure. Should perhaps have started that in April 2020, but didn't :(

With a 10 year ladder not marked to market its a time shift type characteristic. As yields decline so older Gilts continue to add/pay relatively more, you still get the lagged benefit of older higher yields. More recently for instance the ladder has just started to be below 2%. Similarly when interest rates are rising so the Gilts bought at current low levels will act as a lag factor, assuming you do roll maturing gilts into 10 year replacement holdings as/when each matures. One option however is to shorten that down i.e. instead of rolling a maturing Gilt bought 10 years ago into another 10 year Gilt, roll it into a shorter term, perhaps 1 year cash deposit or whatever. In effect transitions a 10 year ladder into a 1 year type 'cash' holding.

Oddly, whilst I agree that former high to low interest rates has broadly added 2% to 3% type higher rewards to stocks and bonds and that forward time would seem to have bonds acting as a lag factor, whilst I've not been a bond holder I see forward time being more likely to be like a Japan 1980, UK 1965 type start date (high valuations/lower forward time benefits) situation - when having some bonds in the portfolio served well, but where my choice would be cash deposits, perhaps a three year ladder of High Street fixed income holdings (diversified up to protected levels). Cash earning -1% real that even drops to perhaps -5% real (as cash interest continues to remain low whilst inflation spikes) may very well see other assets (long dated Gilts/stocks) drop perhaps 30% or more in real terms (-25% price drop, 5% inflation), such that in stock purchase power terms cash gains +35% (0.95 cash, 0.7 stock and 0.95 / 0.7 = 1.36). Under such situation likely gold would also so (very) well and combined 25% cash, 25% gold doing OK when 50% combined UK/US stock did poorly, tends to counter balance and more (up overall).

As such, more recently after some pretty good gains, I have liquidated some of portfolio value into cash, presently hard cash i.e. its sitting idle within ISA earning nothing at present along with further additions of this years ISA allowances.

When Buffett, whose normally a 10% cash man has cash reserves up at around a third I suspect its reasonable to follow that lead.

To supplement the charts I posted earlier, here's some of the notes I recorded

Image

Primarily however my recent interest/efforts has been looking at 1965 onward UK, 1980 onward Japan type data series and the relative differences of just leaving SWR as-is (uplifted by inflation only) versus uplifting it by inflation or to 3% (or whatever) of the ongoing portfolio value whichever is higher (rising income in real terms). When you look at how deeply/hard stock heavy portfolios got hit when drawing income as well over those post 1965 UK/1980 Japan periods then I am a little fearful that recent valuations/circumstances are perhaps more closer to some form of repeat of those eras than we are distant from such.

When printing/spending trillions that so far has induced relatively little inflation does start to see inflationary effect, then once that train is running historically its been very difficult to slow/stop it and can lead to runaway. All just guesswork but I suspect interest rates will continue to remain suppressed by printing to buy bonds (maintaining high prices/low yields). I even suspect that the price of gold might be manipulated, whilst high inflation when it does hit will be left to erode massive government debts substantially/rapidly. Same old cycle really, where states do periodically default, but claim never having officially defaulted (but having cheated massive amounts of wealth out of investors pockets), Physical in-hand gold is important IMO. Yes there may be rule changes to dissuade that (tax/legality/whatever). Paper gold, even ETF's that claim to be backed by physical may be seen to blow up, maybe via claims of ownership due to having been lent/whatever. Similar to VIX type ETF's that ran until they blew up and left holders with near total losses. When there are multiple more paper gold amount floating around than there is physical gold in the world then in 'normal' times that might be fine, but when the crunch comes paper based gold might be massively chasing physical gold.


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