The Lemon Fool

Arborbridge wrote:

1nvest wrote:Just a non-specific/arbitrary/random choice

This isn't to dispute what you are arguing, but I just wonder whether MRC is a suitable choice to prove your point. I believe MRC isn't typical of an actively managed IT but has a "process" which is semi-mechanical. One poster recommended MRC in particular for that very reason, preferring a good process to a good manager - this ensures continuity compared with star managers coming and going, is the argument.

From a few dozen IT.s I'm not sure why you chose this one, but perhaps one could pick another "at random" to prove the opposite.

Arb.

Or compare the FTSE250 standard index with the FTSE250 excluding IT's index. There's little to suggest that including IT's was better than not, if anything its the other way around. Could have time selectivity applied to argue either way such that broadly you might opine that it all washes, any IT's alpha is not passed on to the investors in the IT's but lost in costs/fees.

daveh wrote:*1 I looked at both VWRL and VHYL as all world ETFs. I chose VWRL over the 'high' yield version as VHYLs yield wasn't actually that high (though about double VWRLs) and it had a much poorer TR.

I did exactly this this morning.
On a total return basis, VHYL has SIGNIFICANTLY underperformed VWRL over the last 5 and 10 years.

As someone on here said, you are comparing HYP apples with TR oranges. But the TR return guy has a lot more oranges than the HYP guy has apples.

But then capital is only secondary, right?

Wizard wrote:
However, what I was trying to say is that an investor that wishes to apply the original historic HYP concept, but applied to global basket of shares can discuss that here.

However, such a portfolio, though IMHO it would be closer to the original historic HYP concept than many approaches discussed on HYP Practical, could not be discussed on that board.

I agree.

The question then is - why is that such an existential issue for some people?

Hand-on-heart, the amount of angst I see regarding HYP Practical from some people would perhaps lead others to believe that there's been nowhere else provided by the owners of this site to discuss what some 'non-complying' income-investors would prefer to talk about on that particular board, but the existence of a number of other board options simply removes that from being an argument...

Don't get me wrong - if we were starting with a blank slate, then the current situation probably isn't one that would jump out as being an ideal end goal, but it's not an end-goal, it's a legacy situation that's trying to be dealt with by the owners of this site in a way that protects the interests of a long-established 'club', at the same time as providing other 'rooms' for people that might prefer to play slightly different games.

What's *that* wrong with that situation that causes so much grief, and what enjoyment do people get from persistently shouting around their door, when there's clear opportunities to simply get on with what you want to do elsewhere?

Cheers,

Itsallaguess

absolutezero wrote:

daveh wrote:*1 I looked at both VWRL and VHYL as all world ETFs. I chose VWRL over the 'high' yield version as VHYLs yield wasn't actually that high (though about double VWRLs) and it had a much poorer TR.

I did exactly this this morning.
On a total return basis, VHYL has SIGNIFICANTLY underperformed VWRL over the last 5 and 10 years.

As someone on here said, you are comparing HYP apples with TR oranges. But the TR return guy has a lot more oranges than the HYP guy has apples.

But then capital is only secondary, right?

Well, I'm not sure of the relevance of that sting in the tail - obviously capital is important, and I doubt anyone running a HYP ever said it wasn't.

However, passing on ..... I've long recognised that the non-income versions of OEICS and ITs usually outpace the income versions. You don't need to be a genius to find that out if you test it by the averages in Trustnet. Perhaps one needs to be a genius to prove that it isn't true

But once again, what relevance is this to HYP? None as far as I can see: HYP is about income, not TR so discuss in those terms.
As someone said lower down, another thread taken over by the idealogues of TR.
Even getting away from HYP, this is the HYSS board for income generation by HY strategies - nothing to do with TR.

Arborbridge wrote:

absolutezero wrote:As someone on here said, you are comparing HYP apples with TR oranges. But the TR return guy has a lot more oranges than the HYP guy has apples.

But then capital is only secondary, right?

Well, I'm not sure of the relevance of that sting in the tail - obviously capital is important, and I doubt anyone running a HYP ever said it wasn't.

It has been pointed out by me many times that the TR versions of the FTSE350HY (HIX) and FTSE350LY (LIX) indices diverged for a long time in favour of the HY index. In the last few years the situation has reversed, but if you wanted a good TR, then High Yield investing was the way to go. The HIX TR index at 6953.52 is still some way ahead of the LIX TR index at 5794.85.

Just in capital terms, the LIX is ahead. It's the income wot done it.

TJH

Arborbridge wrote:Even getting away from HYP, this is the HYSS board for income generation by HY strategies - nothing to do with TR.

£ 100 of dividend has the same value as £ 100 of growth. That's particularly the case if the purpose of income generation is to reinvest it. Or is that disputed?

Alaric wrote:

Arborbridge wrote:Even getting away from HYP, this is the HYSS board for income generation by HY strategies - nothing to do with TR.

£ 100 of dividend has the same value as £ 100 of growth. That's particularly the case if the purpose of income generation is to reinvest it. Or is that disputed?

You're on the wrong board, that's the problem:

It is emphasised that value strategies and total return strategies are NOT the remit of this board, which is intended for discussions of higher-yielding equities for the purposes of generating an income through such equities' natural yield.

Itsallaguess wrote:

Wizard wrote:
However, what I was trying to say is that an investor that wishes to apply the original historic HYP concept, but applied to global basket of shares can discuss that here.

However, such a portfolio, though IMHO it would be closer to the original historic HYP concept than many approaches discussed on HYP Practical, could not be discussed on that board.

I agree.

The question then is - why is that such an existential issue for some people?

Hand-on-heart, the amount of angst I see regarding HYP Practical from some people would perhaps lead others to believe that there's been nowhere else provided by the owners of this site to discuss what some 'non-complying' income-investors would prefer to talk about on that particular board, but the existence of a number of other board options simply removes that from being an argument...

Don't get me wrong - if we were starting with a blank slate, then the current situation probably isn't one that would jump out as being an ideal end goal, but it's not an end-goal, it's a legacy situation that's trying to be dealt with by the owners of this site in a way that protects the interests of a long-established 'club', at the same time as providing other 'rooms' for people that might prefer to play slightly different games.

What's *that* wrong with that situation that causes so much grief, and what enjoyment do people get from persistently shouting around their door, when there's clear opportunities to simply get on with what you want to do elsewhere?

Cheers,

Itsallaguess

I really didn’t think there was much of that sort of discussion on HYPP any more, but then I drop in there much less frequently these days so maybe I have missed it. I had presumed the lack of ‘debate’ was one of the reasons HYPP had a lot less activity these days.

tjh290633 wrote:

Arborbridge wrote:

absolutezero wrote:As someone on here said, you are comparing HYP apples with TR oranges. But the TR return guy has a lot more oranges than the HYP guy has apples.

But then capital is only secondary, right?

Well, I'm not sure of the relevance of that sting in the tail - obviously capital is important, and I doubt anyone running a HYP ever said it wasn't.

It has been pointed out by me many times that the TR versions of the FTSE350HY (HIX) and FTSE350LY (LIX) indices diverged for a long time in favour of the HY index. In the last few years the situation has reversed, but if you wanted a good TR, then High Yield investing was the way to go. The HIX TR index at 6953.52 is still some way ahead of the LIX TR index at 5794.85.

Just in capital terms, the LIX is ahead. It's the income wot done it.

TJH

The trouble is, that does not seem to me to translate into results "on the ground". At almost any time over the past decade, the average return of the UK equity income sector in practice has been lower than the UK all company sector.

Something doesn't match up somewhere.

Arborbridge wrote:You're on the wrong board, that's the problem:

It is emphasised that value strategies and total return strategies are NOT the remit of this board, which is intended for discussions of higher-yielding equities for the purposes of generating an income through such equities' natural yield.

Many of the active participants on both this board and HYP-P are trying to accumulate wealth through receipt and reinvestment of dividends. What does "generating an income" mean in the context of wealth accumulators?

Alaric wrote:

Arborbridge wrote:
You're on the wrong board, that's the problem:

[From the High Yield Shares & Strategies guidelines - ]

It is emphasised that value strategies and total return strategies are NOT the remit of this board, which is intended for discussions of higher-yielding equities for the purposes of generating an income through such equities' natural yield.

Many of the active participants on both this board and HYP-P are trying to accumulate wealth through receipt and reinvestment of dividends.

What does "generating an income" mean in the context of wealth accumulators?

It's similar to the 'I just want to get fit' approach for joggers...

Joggers want an easy way to do what they enjoy, that delivers to their individual needs in terms of the level of fitness they want to achieve.

Your tedious approach to their enjoyment of jogging would be to constantly ask - 'If you're wanting to get the fittest you can be - why are you only jogging? Why are you not running marathons?'

If you could put yourself in the context of that jogging discussion, I would like to think you'd quickly realise how tedious your line of questioning would get if you asked the same joggers the same marathon question at every single opportunity, and especially where you're always barging into the jogging club itself to hassle them...

I mean, it would be completely unreasonable and ignorant for anyone to want to do that, wouldn't it?

Itsallaguess

Itsallaguess wrote:

Alaric wrote:

Arborbridge wrote:
You're on the wrong board, that's the problem:

[From the High Yield Shares & Strategies guidelines - ]

Many of the active participants on both this board and HYP-P are trying to accumulate wealth through receipt and reinvestment of dividends.

What does "generating an income" mean in the context of wealth accumulators?

It's similar to the 'I just want to get fit' approach for joggers...

Joggers want an easy way to do what they enjoy, that delivers to their individual needs in terms of the level of fitness they want to achieve.

Your tedious approach to their enjoyment of jogging would be to constantly ask - 'If you're wanting to get the fittest you can be - why are you only jogging? Why are you not running marathons?'

If you could put yourself in the context of that jogging discussion, I would like to think you'd quickly realise how tedious your line of questioning would get if you asked the same joggers the same marathon question at every single opportunity, and especially where you're always barging into the jogging club itself to hassle them...

I mean, it would be completely unreasonable and ignorant for anyone to want to do that, wouldn't it?

Itsallaguess

Not sure it's that similar if I'm honest.

Don't get me wrong, I am in agreement with you on the needless insisting on joggers getting faster if all they want to do is enjoy exercise etc. But the question is a legitimate one I think.

If the aim is wealth creation (at least in an "accumulation phase"), and if, as you say, a positive feature is to have "an easy way to do what ... delivers..." why have a strategy that involves recycling of (high dividend) income back into investments, when an easier way might be to invest in shares that possess other qualities such that income may be lower, but capital growth more easily delivered? Surely it is easier to "wealth accumulate" when you have less of the work to do yourself, with more of the work being internalised within the underlying companies invested in?

Many Income investors may be happy with the "recycling" work, and enjoy their "hobby". Absolutely fine. Many might legitimately feel High Income investments will deliver higher wealth accumulation due to their value being outed over time by a currently over negative market. Again absolutely fine. Or more specifically to HYP, may believe UK shares are due out performance over non-UK, and a HYP type selection is a rational way of adopting such an approach. Or many other rational reasons.

If wealth creation isn't the goal, and (current, not reinvestable) income the preference, then sure I think we can all see, particularly for those focussing on maximising current income, high yielding dividend paying stocks are probably an easy way of delivering that outcome. But that wasn't the premise in the question, and the observable behaviour of many "income" investors on this site.

ReallyVeryFoolish wrote:Meantime over there, there's someone patting themselves on the back for a ten year return on their HYP which quite frankly is pathetic when you compare it to my ten year investment in Fundsmith.

I know, apples and bananas. But I have a lot more of them now.

RVF

Possibly me, I'm not sure. Without further knowledge of your total investments, are you not risking all your extra apples being in a single basket. And, for every Fundsmith there's a Woodford.

Don't get me wrong, we invest in more than HYP, the bulk being either in company pension schemes in broad global equities, or in property.

dealtn wrote:
If the aim is wealth creation (at least in an "accumulation phase"), and if, as you say, a positive feature is to have "an easy way to do what ... delivers..." why have a strategy that involves recycling of (high dividend) income back into investments, when an easier way might be to invest in shares that possess other qualities such that income may be lower, but capital growth more easily delivered?

Surely it is easier to "wealth accumulate" when you have less of the work to do yourself, with more of the work being internalised within the underlying companies invested in?

Because doing so with a single, long-term income-strategy during both phases gives good visibility of the income-stream over a much longer, confidence-building period for some investors.

That confidence can be gained by looking at the size of the long-term income stream, as well as it's long-term growth and growth-trends, and also it's reliability over the long-term, often passing through a number of market drops.

That confidence might be difficult to achieve if using a separate growth strategy initially, and then changing tack later on when wanting to move into an income-strategy phase, and that confidence might be a highly important aspect of this type of investment for some people...

I accept that there's lots of investors who might be quite happy to just 'be' confident that such income-reliability and visibility might just 'occur' once such a second 'income-strategy' phase might be started, but I think it would also be very useful for people to also understand that there's some investors who would be quite happy and willing to accept *some* level of lower overall 'round trip performance' if they were able to stick with the single 'income-strategy', re-investing during what would be your 'growth phase', and then simply flicking the dividend-delivery 'switch' from re-investment to 'income-delivery' at some point where required.

It's a simple, single-strategy approach that delivers benefits that some people might be happy to accept, even in the face of lower overall 'total returns'....

The question you're asking is a valid one dealtn.

The issues generally arise when the same people keep asking the same questions, and pretending that they've not been answered in the past, and at that point I'm sorry to say that they simply look like trouble-makers persistently barging into that joggers room, and demanding to know why they don't just do marathons...

Cheers,

Itsallaguess

Itsallaguess wrote:The issues generally arise when the same people keep asking the same questions, and pretending that they've not been answered in the past, and at that point I'm sorry to say that they simply look like trouble-makers persistently barging into that joggers room, and demanding to know why they don't just do marathons...

The question that's being asked and is only answered by metaphors about jogging is whether £ 1 of reinvested income is regarded as worth more than £ 1 of capital gain. Following on from that is that if they are of equivalent value as to why the £ 1 of reinvested income is preferred, even at the stock picking level of going for dividend yields which plausibly have a greater risk of capital loss.

A plausible reply is that both are worth the same, but the dividend route is preferred because it helps define a future safe withdrawal rate and the process of reinvesting is enjoyed. From a safe withdrawal viewpoint investing in junk equities has its risky side.

Alaric wrote:

Itsallaguess wrote:
The issues generally arise when the same people keep asking the same questions, and pretending that they've not been answered in the past, and at that point I'm sorry to say that they simply look like trouble-makers persistently barging into that joggers room, and demanding to know why they don't just do marathons...

The question that's being asked and is only answered by metaphors about jogging is whether £ 1 of reinvested income is regarded as worth more than £ 1 of capital gain. Following on from that is that if they are of equivalent value as to why the £ 1 of reinvested income is preferred, even at the stock picking level of going for dividend yields which plausibly have a greater risk of capital loss.

A plausible reply is that both are worth the same, but the dividend route is preferred because it helps define a future safe withdrawal rate and the process of reinvesting is enjoyed.

And yet that plausible reply, even when repeatedly offered up every time you ask similar room-barging questions, seems to never actually satisfy your need to keep asking them....

Cheers,

Itsallaguess

Itsallaguess wrote:And yet that plausible reply, even when repeatedly offered up every time you ask similar room-barging questions, seems to never actually satisfy your need to keep asking them....

I have accused HYP advocates of not treating capital and dividends of the same amount as having the same value. They usually seem to deny it despite evidence to contrary in other statements. Timing stock purchases to be immediately before x div dates is one such example.

Arborbridge wrote:

Alaric wrote:

Arborbridge wrote:Even getting away from HYP, this is the HYSS board for income generation by HY strategies - nothing to do with TR.

£ 100 of dividend has the same value as £ 100 of growth. That's particularly the case if the purpose of income generation is to reinvest it. Or is that disputed?

You're on the wrong board, that's the problem:

It is emphasised that value strategies and total return strategies are NOT the remit of this board, which is intended for discussions of higher-yielding equities for the purposes of generating an income through such equities' natural yield.

With a title like 'HYP concept waning' then surely discussion of Total Return strategies as an opposed to high yield. is naturally to happen. So the idea of the wrong board is rather daft.

Arborbridge wrote:

tjh290633 wrote:

Arborbridge wrote:
Well, I'm not sure of the relevance of that sting in the tail - obviously capital is important, and I doubt anyone running a HYP ever said it wasn't.

It has been pointed out by me many times that the TR versions of the FTSE350HY (HIX) and FTSE350LY (LIX) indices diverged for a long time in favour of the HY index. In the last few years the situation has reversed, but if you wanted a good TR, then High Yield investing was the way to go. The HIX TR index at 6953.52 is still some way ahead of the LIX TR index at 5794.85.

Just in capital terms, the LIX is ahead. It's the income wot done it.

TJH

The trouble is, that does not seem to me to translate into results "on the ground". At almost any time over the past decade, the average return of the UK equity income sector in practice has been lower than the UK all company sector.

Something doesn't match up somewhere.

And the roughly double outperformance of an all world tracker vs the all world high yield tracker on a total return basis over the last 5 years.

absolutezero wrote:

Arborbridge wrote:

tjh290633 wrote:It has been pointed out by me many times that the TR versions of the FTSE350HY (HIX) and FTSE350LY (LIX) indices diverged for a long time in favour of the HY index. In the last few years the situation has reversed, but if you wanted a good TR, then High Yield investing was the way to go. The HIX TR index at 6953.52 is still some way ahead of the LIX TR index at 5794.85.

Just in capital terms, the LIX is ahead. It's the income wot done it.

TJH

The trouble is, that does not seem to me to translate into results "on the ground". At almost any time over the past decade, the average return of the UK equity income sector in practice has been lower than the UK all company sector.

Something doesn't match up somewhere.

And the roughly double outperformance of an all world tracker vs the all world high yield tracker on a total return basis.

Over what period? See my highlighted phrase above.

TJH