ITs Bought

[monabri]

I've added HFEL....an IT but I'm treating it as a higher yielding stock which adds to my HYP diversification in as much as one might buy into a new sector. With recent shareprice falls, the dividend yield is ~6%.

[Itsallaguess]

Dipped a toe in the water with a few income-IT purchases earlier today -

Aberdeen Asian Income Fund (AAIF) (Forecast Yield = 4.2%)
JP Morgan Global Emerging Income (JEMI) (Forecast Yield = 3.8%)
Murray International Trust (MYI) (Forecast Yield = 4.0%)
Merchants Trust (MRCH) (Forecast Yield = 5.1%)

I'm not in any mood at all to go stock-picking in this market, but I'm prepared to dip my toe into wider-scoped income-related IT's such as the above.

I fully expect further market volatility, and also expect that I'll probably lose capital in the medium term with the above purchases, but I'm still working and will be able to continue dipping into the market whilst maintaining a sizeable cash element if things go on to get a great deal worse.

Cheers,

Itsallaguess

[Quint]

I've added HFEL....an IT but I'm treating it as a higher yielding stock which adds to my HYP diversification in as much as one might buy into a new sector. With recent shareprice falls, the dividend yield is ~6%.

Wife holds this in her sipp. Purchased December 2017.

[monabri]

Ah, I wondered where this posting went to

The original thread was in response to Arb's posting over on the "pure" HYP board.

viewtopic.php?f=15&t=10016

I then responded to itsallaguess over on the HYP board but it looks as though there has been a hiatus followed by a cut and paste. No matter!

( Hopefully just sets the context to my post above)

[eyeball08]

HFEL seems a good buy.

I wonder why some buy AAIF Aberdeen Asian income in the same sector, when HFEL Henderson Far East has a considerably higher yield as well as better growth in share price and NAV over 1 and 5 years. AAIF also has slightly higher charges and higher gearing. Both same size IT's circa 440million.
Am I missing something?

In addition to my HYP of mainly usual suspects I also hold CTY (City of London) MYI (Murray International) and PLI (Perp Income and Growth) and of course HFEL.
Pleased with all of them but maybe less pleased with my choice of PLI: maybe it's a contrarian pick .

Considering adding 1) Mercantile for diversity: lots of small and medium firms I don't look at normally. Very big Trust, over 2 billion.
2) NAI North American Income Trust: obvious further diversity from HYP.
3) FGT Finsbury Growth and Income: it's numbers look fairly rubbish on the AIC site but maybe it's another "contrarian" pick like my PLI and some
trusted people here on the lemon keep mentioning it!
eyeball

[BBLSP1]

My thinking on HFEL v AAIF is that the top holdings by country according to the AIC website are:

HFEL: China 30.4% and S. Korea 16.4%

AAIF: Australia 27.2% and Singapore 17.3%

These represent nearly half of the holdings for each fund. Now China may run out of steam and S. Korea currently has geo-political risks whereas some may consider Australia and Singapore to be safe haven locations.

I currently have HFEL to my upper limit of holding and am now considering AAIF – it is at a discount of 7% and the 4.3% yield is reasonable.

[Itsallaguess]

I wonder why some buy AAIF Aberdeen Asian income in the same sector, when HFEL Henderson Far East has a considerably higher yield as well as better growth in share price and NAV over 1 and 5 years.

AAIF also has slightly higher charges and higher gearing. Both same size IT's circa 440million.

Am I missing something?

Hi eyeball,

I like Henderson Far East too, but my recent top-up of Aberdeen Asian was influenced by a number of factors -

1. Aberdeen Asian is currently on a roughly 7% discount to NAV, and I do often like to use this as an influencing factor. Whilst the 0.7% premium of Henderson is neither here nor there, the discount of Aberdeen is something I'd normally look for when reviewing income-related Investment Trusts for purchase.

2. The top holdings of Aberdeen Asian and Henderson are markedly different to each other, with China being a huge part of the Henderson breakdown, and a much smaller proportion of Aberdeen's. I already have some other China-influenced holdings and the overall oversees balance of my HYP was influenced more positively with the broader scope of the Aberdeen holdings, regarding it's much smaller 7% China influence.

3. The 4.3% yield is roughly around the overall yield of my HYP, so it's simply a case of getting some cash 'working' that's been sitting on the sidelines waiting for this sort of market-volatility to come along. In this situation I am really nervous about 'chasing yield' with these sorts of top-ups, and to be quite honest, I don't tend to place too high a priority on maximising yield nowadays. When I've done that in the past, I've often regretted the decision to allow the yield figure alone to be of such a high influence, so I tend to allow myself to fish in lower-yielding parts of the pond with more frequency in recent years.

4. The purchase of Aberdeen Asian was influenced somewhat by my existing holding, and it's position within my overall HYP. Aberdeen Asian was a relatively small holding, and this purchase has allowed it to gravitate towards the other HYP elements in terms of holding-size. I try to make portfolio-balancing a key part of my top-up purchases, and in this case it was a contributing factor to my decision.

5. I agree with your comment regarding share-price growth and NAV differences between Aberdeen Asian and Henderson, but I often take a more contrarian approach, and would currently see the out-performance of something like Henderson as a slightly negative factor to this sort of decision, although I appreciate that others may see that differently.

6. I also note your comment on the charges, but don't see the difference between Henderson and Aberdeen Asian as being anywhere near large enough to warrant it influencing a purchase-decision one way or another, although I do agree that we need to keep a watchful eye on these things as it's easy to allow charges to creep up if ignored completely. Similarly, the gearing differences between the two options are not substantial enough for it to be an influence to me in this particular case.

Cheers,

Itsallaguess

[Wizard]

I've added HFEL....an IT but I'm treating it as a higher yielding stock which adds to my HYP diversification in as much as one might buy into a new sector. With recent shareprice falls, the dividend yield is ~6%.

I've had HFEL on the radar for a while, so glad to see others pulling the trigger. Always useful to know.

You say you will treat as a high yielding stock. Can't remember if you unitise, but if you do does that mean that HFEL will be built into that unitisation?

Terry.

[vrdiver]

I bought HFEL at the start of January, and again on Thursday, currently representing just over a 1/4 holding (based on the mean of my top 20 holdings).

I include them in my HYP, as they fill a gap in my exposure to Asia-Pac and meet my yield criteria. This is one area where I wouldn't buy directly, as the foreign shares witholding taxes, lack of (my) understanding of the markets, their regulatory frameworks and quality of companies therein makes it a minefield for me, so the management fee of the IT is a good trade-off to remove that risk and dividend cost, IMHO.

I appreciate others will separate out their HYP from their IT holdings: I may do so in the future, but currently that's just more hassle than it's worth, at least for me.

VRD

[monabri]

I've added HFEL....an IT but I'm treating it as a higher yielding stock which adds to my HYP diversification in as much as one might buy into a new sector. With recent shareprice falls, the dividend yield is ~6%.

I've had HFEL on the radar for a while, so glad to see others pulling the trigger. Always useful to know.

You say you will treat as a high yielding stock. Can't remember if you unitise, but if you do does that mean that HFEL will be built into that unitisation?

Terry.

I started by unitising my UK HYP shares (to compare with FTSE100 & CTY performance). I then added more money to the pot to buy HFEL (& MYI). Each addition of money I unitised. I'm treating "HFEL" and "MYI" as though they were individual shares. I add them into HYPTUSS just as one might add BP or ULVR. They comprise 6% of my HYP by value.

Rightly or wrongly, I just see them as a further diversification from solely UK companies (even the ones that are seemingly "pan-world" like HSBC & ULVR).

monabri

[monabri]

My thinking on HFEL v AAIF is that the top holdings by country according to the AIC website are:

HFEL: China 30.4% and S. Korea 16.4%

AAIF: Australia 27.2% and Singapore 17.3%

These represent nearly half of the holdings for each fund. Now China may run out of steam and S. Korea currently has geo-political risks whereas some may consider Australia and Singapore to be safe haven locations.

I currently have HFEL to my upper limit of holding and am now considering AAIF – it is at a discount of 7% and the 4.3% yield is reasonable.

Useful - thanks for that!

[puffster]

From the last annual report:

Management Fees

As announced on 26 October 2017, following a formal review of the management fee arrangements, I am pleased to report that with effect from 1 September 2017, the Board has agreed a tiering basis to the management fee arrangements so that the existing management fee of 0.9% will only apply to the first £400m of net assets with the balance above that charged at a reduced rate of 0.75%. There is no performance fee.

So in the future HFEL may have a lower management cost than it used to, the fund is currently ~£430m.

Puffster.

[Wizard]

For buying into ITs I'll be keeping an eye out for an entry (back into) Polar Technology PCT -


And a first time holding in Worldwide Health care WWH -


Both have been stellar performers and both (I think) got very expensive. Both are trading close to par, which is an important criteria for me to be met.

10 year charts courtesy of Hargreaves Landown.

Moderator Message:
RS: And both charts copyright HL! Please do not post copyright material here.

I did not post the charts here. They were hotlinks to the originals hosted at Hargreaves Lansdown. Kindly explain why this is now disallowed. Are links to ALL images at their copyright holders web addresses now banned? Please advise, because if they are, that's the last straw for me, I'm leaving here.

FredBloggs

Maybe it is a limitation of the LemonFool software, but when I read the post I did not see a link what I saw was the charts embedded in your post.

Terry.

[langley59]

This pullback in prices really has set the scene for someone who has been sitting on cash waiting for an opportunity to invest for income for the long term. It is remarkable that the pullback in the US market is quite small relative to the UK market and many Investment Trusts / ETFs which long term income investors might wish to add to.

The S&P 500 index has only fallen back to the level it was at at the end of November 2017, however the FTSE 100 has fallen back to where it was in December 2016, likewise Vanguard All World High Dividend ETF (VHYL), Murray International (MYI) and City of London (CTY), to name three I have been topping up / intend to top up further. This means that you get another chance to invest at not that far off the levels you had around the time President Trump got elected in the knowledge of what US and global growth and earnings have been in the year and a bit since then. Food for thought, caveat being that there could obviously be further falls to come making entry points even cheaper.

[Stonge]

Hotlinking is banned by most forums. Linking to a page is usually OK.

[CryptoPlankton]

An interesting and useful thread.

There is one issue with the discussion of IT's that still perplexes me - I have raised it before and had no response...

There have been several references to the importance of management fees on this thread. I really don't understand it. I bought HFEL several years ago in a S&S ISA with a known dividend yield and have quite happily received increasing annual dividends ever since (with the added bonus of a healthy capital gain over the period). Likewise, I have some "growth" IT's,which have given me ready-made portfolios in their specific (geographical/sector) areas. They obviously charge fees too, but I never see them - it's not as if my account gets deducted in the same way as by the ISA provider. All that matters is the TR and if I am happy with that then surely the costs associated with achieving it (like with any individual company investment) are irrelevant?

I do glance at the management fees when researching IT's, but only because they are there on the page in front of me! I would genuinely be grateful if someone could tell me how I am damaging my investment returns by pretty much ignoring them.

TIA

[BrummieDave]

I'm looking to add to existing investments first thing Monday, and am drawn between Murray International, HFEL, City, and Murray Income. I already have all four, and am not looking to address any under/over weight positions. It's a straightforward new investment. On a LTBH, income biased but would like capital to grow to a lesser degree, which has become the most attractive over past few days? I'm favouring Murray International but wonder what others think?

[monabri]

I'm looking to add to existing investments first thing Monday, and am drawn between Murray International, HFEL, City, and Murray Income. I already have all four, and am not looking to address any under/over weight positions. It's a straightforward new investment. On a LTBH, income biased but would like capital to grow to a lesser degree, which has become the most attractive over past few days? I'm favouring Murray International but wonder what others think?

I've compiled the table below based on divis paid (so hopefully yield going forward will be a tad higher) and share price at close on Friday.



So in terms of straightforward yield, it looks like HFEL is out in front. (minor point - HFEL is registered in Jersey so there is no 0.5% tax).

[monabri]

An interesting and useful thread.

There is one issue with the discussion of IT's that still perplexes me - I have raised it before and had no response...

There have been several references to the importance of management fees on this thread. I really don't understand it. I bought HFEL several years ago in a S&S ISA with a known dividend yield and have quite happily received increasing annual dividends ever since (with the added bonus of a healthy capital gain over the period). Likewise, I have some "growth" IT's,which have given me ready-made portfolios in their specific (geographical/sector) areas. They obviously charge fees too, but I never see them - it's not as if my account gets deducted in the same way as by the ISA provider. All that matters is the TR and if I am happy with that then surely the costs associated with achieving it (like with any individual company investment) are irrelevant?

I do glance at the management fees when researching IT's, but only because they are there on the page in front of me! I would genuinely be grateful if someone could tell me how I am damaging my investment returns by pretty much ignoring them.

TIA

My view is that the costs are taken before the divi is divvied. So, I would just work on the basis of "is the yield right?".

https://www.fool.co.uk/investing-basics ... nt-trusts/

[CryptoPlankton]

An interesting and useful thread.

There is one issue with the discussion of IT's that still perplexes me - I have raised it before and had no response...

There have been several references to the importance of management fees on this thread. I really don't understand it. I bought HFEL several years ago in a S&S ISA with a known dividend yield and have quite happily received increasing annual dividends ever since (with the added bonus of a healthy capital gain over the period). Likewise, I have some "growth" IT's,which have given me ready-made portfolios in their specific (geographical/sector) areas. They obviously charge fees too, but I never see them - it's not as if my account gets deducted in the same way as by the ISA provider. All that matters is the TR and if I am happy with that then surely the costs associated with achieving it (like with any individual company investment) are irrelevant?

I do glance at the management fees when researching IT's, but only because they are there on the page in front of me! I would genuinely be grateful if someone could tell me how I am damaging my investment returns by pretty much ignoring them.

TIA

My view is that the costs are taken before the divi is divvied. So, I would just work on the basis of "is the yield right?".

https://www.fool.co.uk/investing-basics ... nt-trusts/

Thank you for taking the time to reply. That's exactly how I see it - if I know the actual yield that I would get on an investment, whether the company is charging 0.5% or 1.5% is neither here nor there. Oh well, it seems no-one who does will tell me why they take an interest in the fees, but I'm satisfied that I have nothing to gain by doing so. Thanks again.