Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

After exiting the HYP revolving door...

General discussions about equity high-yield income strategies
staffordian
Lemon Quarter
Posts: 2298
Joined: November 4th, 2016, 4:20 pm
Has thanked: 1887 times
Been thanked: 869 times

After exiting the HYP revolving door...

#190266

Postby staffordian » December 31st, 2018, 4:56 pm

With apologies to IAAG as we now know him :)

Following on from the very interesting thread Itsallaguess started about post HYP strategies, I thought it might be instructive to find out a little more about the IT portfolios the ex-HYPers have gone for.

I'll start the ball rolling by outlining mine.

When I started to think about ITs in 2016 I simply bought an equally weighted B7 basket - thanks Luni!

I left it at this for a while before deciding to add a couple of others.

I added HFEL (Henderson Far East Income) for a reasonably juicy yield as well as to widen exposure a little and more recently I bought FCIT (Foreign & Colonial) for a bit of long term growth.

So I currently have nine ITs, equally weighted.

On an HSDL cheap dealing day earlier this year I sold my HYP shares and added equally to the nine ITs. I continue to add to them, buying each in turn on a monthly basis with new funds and accrued dividends.

So far, I'm happy with my choices. I don't rule out adding others - though I'm in no particular hurry to do so, if only because it will mess up my spreadsheet :D - but I'll be interested to hear which might be worth considering.

My key drivers for the swap from HYP to ITs were outlined in IAAG's thread but simplicity and ease of management if I pop my clogs were uppermost in my mind.

Staffordian

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: After exiting the HYP revolving door...

#190273

Postby TUK020 » December 31st, 2018, 5:25 pm

I have the following in equity investment instruments:
% value
CTY 5.3
HFEL 2.62
HICL 2.95
MRCH 2.3
MYI 3,75
TMPL 1.54
FCIT 1.68
LWDB 0.95
RMMC 1.74
Total 22,84

Also, I now use the HYPTUSS sheet as my main tracking sheet for the portfolio (split between ISA & SIPP). Another investment that is an equity instrument,I have a couple of % in the L&G Global 100 ETF. This does not appear in the portfolio as HYPTUSS does not seem to be able to scrape the market price on this.

Intention of using ITs is primarily to get additional diversification, and a secondary point of getting some reduction in income volatility.

CTY is also the benchmark for my Portfolio of Higher Yielding stocks. As such, it tends to act as the 'bucket' for top up funds if nothing else appeals.
I have increased the % on ITs significantly this year, in the process of doing a lot of top slicing and rebalancing of the portfolio. This % will probably stay static for the next few years, but when I start finding the HYP management more of a chore than a hobby, I suspect I will start to migrate stuff across faster to make things more robust to neglect.

staffordian
Lemon Quarter
Posts: 2298
Joined: November 4th, 2016, 4:20 pm
Has thanked: 1887 times
Been thanked: 869 times

Re: After exiting the HYP revolving door...

#190291

Postby staffordian » December 31st, 2018, 7:38 pm

After submitting my original post it occurred to me that some may know nothing of this fabled B7, and even those who are aware of it may not be certain of it's constituents, so in the interests of completion, here is the full list of my nine ITs, the first seven being those put put forward by Luniversal as his "Basket of Seven"

Bankers Inv Trust BNKR
BMO Capital and Income Inv. Trust BCI
JPMorgan Claverhouse Inv Trust JCH
Lowland Investment Co LWI
Mercantile Investment Trust (The) MRC
Murray International Trust MYI
Perpetual Income and Growth Inv Trust PLI
Henderson Far East Income Ltd. HFEL
Foreign & Colonial Investment Trust FCIT

Staffordian

tramrider
2 Lemon pips
Posts: 128
Joined: November 4th, 2016, 5:09 pm
Has thanked: 151 times
Been thanked: 45 times

Re: After exiting the HYP revolving door...

#190404

Postby tramrider » January 1st, 2019, 3:21 pm

This is one of my portfolios that is now all ITs, compared with others that are moving away from HYP towards ITs. It used some of the best choices from Luniversal, plus others recommended at various times on the Lemon Fool.

Last year, the accumulation units lost 5.8% compared with a loss of 9.5% for the FTSE All share total return. The annual yield is 3.7%. So the ITs have improved stability.


jackdaww
Lemon Quarter
Posts: 2081
Joined: November 4th, 2016, 11:53 am
Has thanked: 3203 times
Been thanked: 417 times

Re: After exiting the HYP revolving door...

#190442

Postby jackdaww » January 1st, 2019, 6:08 pm

i was very pleased to see this subject resurrected , with suggested IT's.

just in the last few weeks i have thought the IT route may be beneficial in the present conditions.

when i started saving , aged 4 1/2 , my investment pot was literally just that , and based on total returns of course .

moving on , to bank deposits , and later unit trusts , of the higher yielding type.

then when PEP's began i plumped for individual higher yielding shares.

with plenty of cash from selling some of my higher yielding shares in the summer , i am still very overweight in the usual suspects .

wary of pumping too much more into those , it somehow seems less worrying to spread it over some IT's.

a dilemma though , is that it may then be hard to avoid sectors i dislike , such as banks, utilities , construction and low margin contractors .

so i may have to stick to my guns and add to the pharmas, miners , oils, tobacco , insurance etc.

:)

monabri
Lemon Half
Posts: 8396
Joined: January 7th, 2017, 9:56 am
Has thanked: 1539 times
Been thanked: 3428 times

Re: After exiting the HYP revolving door...

#190457

Postby monabri » January 1st, 2019, 7:27 pm

jackdaww wrote:wary of pumping too much more into those , it somehow seems less worrying to spread it over some IT's.

a dilemma though , is that it may then be hard to avoid sectors i dislike , such as banks, utilities , construction and low margin contractors .

so i may have to stick to my guns and add to the pharmas, miners , oils, tobacco , insurance etc.

:)


Miners & Oils - have a shufty at Black Rock Commodities (it contains Shell/BP/Rio/BHP) - (BRCI)

https://www.hl.co.uk/shares/shares-sear ... rdinary-1p

Then there is the "mining version" (BRWM)

https://www.hl.co.uk/shares/shares-sear ... rdinary-5p


then there are the specialised funds over at iShares in the "themes" section

https://www.ishares.com/uk/individual/e ... &view=list

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#190526

Postby Arborbridge » January 2nd, 2019, 11:53 am

monabri wrote:
Miners & Oils - have a shufty at Black Rock Commodities (it contains Shell/BP/Rio/BHP) - (BRCI)

https://www.hl.co.uk/shares/shares-sear ... rdinary-1p

Then there is the "mining version" (BRWM)

https://www.hl.co.uk/shares/shares-sear ... rdinary-5p




Both of these have been very poor for me. I was cogitating over BRCI only today, which I bought during some self doubts about direct share holdings in this sector. I seems BRCI/BRWM are nice catch alls instead of owning mining shares, and with a substantial energy amount thrown in.

I bought BRCI in May 2015 and it gave me a reasonable yield but with dividends which pretty soon dropped a third and have now been constant for three years. The XIRR is 1.84% over the period, implying that the yield has been at the expense of capital - "expensively bought" as Dod would say.

So I have a classic dilemma: double, stick or sell? On one hand, one must surely believe that the demand for these commodities isn't evaporating overnight - far from it - and so one might think the future would be steady, at least. On the other hand, the history is telling me this fund does not cut the mustard and the capital would be better placed elsewhere.

Note that the advantageous time to have bought it has past for the moment - like the famous bandwagon - because the company operates a discount control mechanism. The discount has recently reduced from 7 or 8% to around par just before Christmas.

So, I have my own problem, but before you leap into this one, do give it some thought - it ain't the all round panacea I took it for.

As for BRWM, the dividend is still below what it was 5 years back, although there are signs of it improving. At least one could buy this one at a reasonable discount (around 10%) and if the payouts improve over five years, there's a chance the discount will close back to where it started five years ago. THis is more of a pure replacement for HYP shares such as RIO and BHP.

BTW, my direct holding in BHP was none too successful at first (which is why I became interested in the IT solution) Since owning in 2012, the XIRR is 4.26%. Last year I had 5.8% yield on my capital base dated 31st Dec 2017. The direct holding now looks to have been more successful than the ITs. Mind you, I was 20% down at one point, so one has to remember that these nasty cyclicals need patience.

Arb.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#190582

Postby Arborbridge » January 2nd, 2019, 3:37 pm

Perhaps the following table will be of interest: well, I do hope so because it's taken a long time to pull the facts together and tabulate it!
This is my basket of ITs collected to provide income for my pension. I'm not saying it's the best possible basket but it just happens to be what I have right now.
I've ranked the table by the percentage income provided by each IT so one can see my dependency on each. The XIRR is given, along with the date that I first started tracking this percentage. No doubt some of you will have fun trying to spot any relationship between XIRR, yield and dividend growth ;)

Incidentally, the last entry is for my own HYP. You will notice it has some lacklustre numbers. It's pretty much always been the baby of the bunch in terms of XIRR and that's why I have frequently voiced the view that it is difficult for me and no doubt others, to outrun a good fund manager. That could be why some people exit via that revolving door. After years of saying "the jury is out" I'm slowly coming to think they might bring in a guilty verdict on my HYP. If I were a fund manager, I'd likely terminate my contract!




PS does anyone know how in the table formatting, how I can show a double row blue header colour?

Arb.

monabri
Lemon Half
Posts: 8396
Joined: January 7th, 2017, 9:56 am
Has thanked: 1539 times
Been thanked: 3428 times

Re: After exiting the HYP revolving door...

#190619

Postby monabri » January 2nd, 2019, 5:23 pm



(I used the Lemon Fool table formatter)...and I cheated ...a little!!

1 - Generate a table using the formatter and then copy and paste into the HYP board in the usual manner.

Then you need to do a little manual editing....

2. After the first header (Company) I added the desired 2nd line of text - i.e. 'name' . I then hit carriage return on the keyboard between the word "Company" and "Name"

3. After the word "Yield", I entered the desired 2nd line , in this case "%". I then hit carriage return on the keyboard between the word "Yield" and "%"

4. etc.

On screen, it looks like:-

Image

monabri
Lemon Half
Posts: 8396
Joined: January 7th, 2017, 9:56 am
Has thanked: 1539 times
Been thanked: 3428 times

Re: After exiting the HYP revolving door...

#190622

Postby monabri » January 2nd, 2019, 5:27 pm






Image

Breelander
Lemon Quarter
Posts: 4179
Joined: November 4th, 2016, 9:42 pm
Has thanked: 1000 times
Been thanked: 1855 times

Re: After exiting the HYP revolving door...

#190629

Postby Breelander » January 2nd, 2019, 5:41 pm

Arborbridge wrote:PS does anyone know how in the table formatting, how I can show a double row blue header colour?


Put all your header text on one row. Word-wrap is built in to the TABLE format. Text rows will word-wrap only if required to keep a table width within the width of a post. eg:





Only when this is no longer possible due to the width of numbers in the columns will a scroll bar be added.



This can end up looking a bit messy, if so then consider using [ pre ] [ /pre ] instead.

sackofspuds
2 Lemon pips
Posts: 115
Joined: January 5th, 2017, 1:04 am
Has thanked: 225 times
Been thanked: 16 times

Re: After exiting the HYP revolving door...

#190922

Postby sackofspuds » January 4th, 2019, 12:22 am

Arborbridge wrote:the last entry is for my own HYP. You will notice it has some lacklustre numbers.


Very interesting table, thanks for making the effort with it.

I think you're being too harsh on yourself. Of the 21 investments, your HYP's yield is 6th of 21 so that's very good. Of course, 5 year div growth is 15th and XIRR is 17th so not so good.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#190941

Postby Arborbridge » January 4th, 2019, 7:18 am

sackofspuds wrote:
Arborbridge wrote:the last entry is for my own HYP. You will notice it has some lacklustre numbers.


Very interesting table, thanks for making the effort with it.

I think you're being too harsh on yourself. Of the 21 investments, your HYP's yield is 6th of 21 so that's very good. Of course, 5 year div growth is 15th and XIRR is 17th so not so good.


Well, thanks for the encouragement, but you are too kind. My result seems to suggest that one pays for higher yield with slower dividend growth and higher risk to the capital. This more or less resonates with conventional wisdom: there's no free lunch. This added to my own dose of incompetence, perhaps, leads to the mediocre result.

Arb.

ADrunkenMarcus
Lemon Quarter
Posts: 1584
Joined: November 5th, 2016, 11:16 am
Has thanked: 672 times
Been thanked: 479 times

Re: After exiting the HYP revolving door...

#190948

Postby ADrunkenMarcus » January 4th, 2019, 8:44 am

Arborbridge wrote:Well, thanks for the encouragement, but you are too kind. My result seems to suggest that one pays for higher yield with slower dividend growth and higher risk to the capital. This more or less resonates with conventional wisdom: there's no free lunch. This added to my own dose of incompetence, perhaps, leads to the mediocre result.


Arb

We're all incompetent in one way or another.

I think what you say is correct. From my perspective, what I try to do is balance a reasonable overall starting yield (there are some high yielding collectives in my portfolio which bump it up) with good dividend growth over the long term and the prospect of special dividends. It's too soon to tell if this will work but I expect to have specials for both this year and next, after having one last year. Over the long term, it's a high yield strategy and should obtain a high dividend yield on cost, but it's not an immediate high dividend yield in the sense of many other strategies. (I report my results in the Portfolio Management & Review forum.)

Best wishes

Mark.

88V8
Lemon Half
Posts: 5769
Joined: November 4th, 2016, 11:22 am
Has thanked: 4098 times
Been thanked: 2560 times

Re: After exiting the HYP revolving door...

#191126

Postby 88V8 » January 4th, 2019, 8:10 pm

Funds,,, as I've commented previously, on the whole they amount to managed mediocrity.

But it's true that a well-run HYP needs a deal of attention and has the scope to go pear-shaped. So if one does not wish to spend the time or is risk=averse, funds can be a decent refuge.

At the moment the sweetshop of HYP shares is well and truly open. Yields better than 5% on every shelf. How fortunate we are to be investing in times where the 5.6% yield of BRCI (I hold) can be considered shabby.

V8

Wizard
Lemon Quarter
Posts: 2829
Joined: November 7th, 2016, 8:22 am
Has thanked: 68 times
Been thanked: 1029 times

Re: After exiting the HYP revolving door...

#191218

Postby Wizard » January 5th, 2019, 11:46 am

Arborbridge wrote:...Incidentally, the last entry is for my own HYP. You will notice it has some lacklustre numbers. It's pretty much always been the baby of the bunch in terms of XIRR and that's why I have frequently voiced the view that it is difficult for me and no doubt others, to outrun a good fund manager. That could be why some people exit via that revolving door. After years of saying "the jury is out" I'm slowly coming to think they might bring in a guilty verdict on my HYP. If I were a fund manager, I'd likely terminate my contract!...

Not so sure you are doing as badly as you say Arb. By my calculation the weighted average of the ITs' yield is 4.63% and the weighted average of the ITs' dividend growth is 3.52%. I am not sure if it is legitimate to simply create a weighted average of the XIRRs, but if it is that number for the ITs is 7.91% by my reckoning. That is not exactly blowing the HYP results away IMHO.

I note in your HYP review that you say total income is now twice what you need, so I guess you could sacrifice a percentage point of yield for a little more growth and overall return. But as the HYP is not that wildly off the benchmark provided by the ITs, if you still enjoy the no doubt greater effort associated with the maintenance of the HYP there does not seem a compelling reason to abandon it.

Of course the flip side is, for somebody who does not enjoy the investment process, there is not much of a payback for the time and effort, based on your numbers.

Terry.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#191220

Postby Arborbridge » January 5th, 2019, 11:55 am

88V8 wrote:Funds,,, as I've commented previously, on the whole they amount to managed mediocrity.

But it's true that a well-run HYP needs a deal of attention and has the scope to go pear-shaped. So if one does not wish to spend the time or is risk=averse, funds can be a decent refuge.

At the moment the sweetshop of HYP shares is well and truly open. Yields better than 5% on every shelf. How fortunate we are to be investing in times where the 5.6% yield of BRCI (I hold) can be considered shabby.

V8


Managed mediocrity is what I have with my HYP too. That's not a bad thing - a pension fund does not want excitement!

Of course, one can always find something with better go-faster stripes, but I'm, happy with "sufficient unto the day".

Arb.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#191228

Postby Arborbridge » January 5th, 2019, 12:08 pm

Wizard wrote:
Arborbridge wrote:...Incidentally, the last entry is for my own HYP. You will notice it has some lacklustre numbers. It's pretty much always been the baby of the bunch in terms of XIRR and that's why I have frequently voiced the view that it is difficult for me and no doubt others, to outrun a good fund manager. That could be why some people exit via that revolving door. After years of saying "the jury is out" I'm slowly coming to think they might bring in a guilty verdict on my HYP. If I were a fund manager, I'd likely terminate my contract!...

Not so sure you are doing as badly as you say Arb. By my calculation the weighted average of the ITs' yield is 4.63% and the weighted average of the ITs' dividend growth is 3.52%. I am not sure if it is legitimate to simply create a weighted average of the XIRRs, but if it is that number for the ITs is 7.91% by my reckoning. That is not exactly blowing the HYP results away IMHO.

I note in your HYP review that you say total income is now twice what you need, so I guess you could sacrifice a percentage point of yield for a little more growth and overall return. But as the HYP is not that wildly off the benchmark provided by the ITs, if you still enjoy the no doubt greater effort associated with the maintenance of the HYP there does not seem a compelling reason to abandon it.

Of course the flip side is, for somebody who does not enjoy the investment process, there is not much of a payback for the time and effort, based on your numbers.

Terry.


My spreadsheet tells me the combined XIRR is 8.33%, but it varies according to the market and my investment input, of course. In the recent past, XIRR has danced around 10-14% but the recent market deterioration has put a damper on it.
The HYP is actually similar. Hmm...maybe I feel another chart coming on, if I have an idle moment.

If you compare my unit price increase directly with CTY's share price since 2010, it is pretty dire. Granted, I've had a higher yield all the way through, but I doubt that would make up the gap. The IT basket is slightly different in that it included some not very good performers anyway. Although it would be easy to conclude I should just bung it all in CTY, I am pathologically incapable of putting all my eggs in one basket ! ---- and there is always that yield gap between the two which would immediately reduce my income. Although it is sufficient, as you point out, one never knows what is round the corner, so giving up income is difficult. I do do that though: i.e. investment occasionally in Mercantile (MRC) and FGT, funds I like but with quite a low yields.

Arb.

Wizard
Lemon Quarter
Posts: 2829
Joined: November 7th, 2016, 8:22 am
Has thanked: 68 times
Been thanked: 1029 times

Re: After exiting the HYP revolving door...

#191265

Postby Wizard » January 5th, 2019, 1:49 pm

Arborbridge wrote:
Wizard wrote:
Arborbridge wrote:...If you compare my unit price increase directly with CTY's share price since 2010, it is pretty dire. Granted, I've had a higher yield all the way through, but I doubt that would make up the gap. The IT basket is slightly different in that it included some not very good performers anyway. Although it would be easy to conclude I should just bung it all in CTY, I am pathologically incapable of putting all my eggs in one basket !...

I think this comment raises an interesting question, well it is to me anyway.

I have all of my portfolio invested via a single company, Hargreaves Lansdowne (HL). While the investments may be diversified, I have put all my eggs into the HL basket in terms of the risk of failure or fraud. Is that any worse than putting everything in to CTY? I guess the added risk with CTY is thT I think they do actively trade in and out of shares more frequently than I do, so there is a risk that they get this wrong, but of course they may also get it right and then the performance will be better than mine.

Any thoughts on this would be appreciated.

Terry.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: After exiting the HYP revolving door...

#191287

Postby Arborbridge » January 5th, 2019, 3:34 pm

Wizard wrote:
Arborbridge wrote:
Wizard wrote:

I think this comment raises an interesting question, well it is to me anyway.

I have all of my portfolio invested via a single company, Hargreaves Lansdowne (HL). While the investments may be diversified, I have put all my eggs into the HL basket in terms of the risk of failure or fraud. Is that any worse than putting everything in to CTY? I guess the added risk with CTY is thT I think they do actively trade in and out of shares more frequently than I do, so there is a risk that they get this wrong, but of course they may also get it right and then the performance will be better than mine.

Any thoughts on this would be appreciated.

Terry.


I'm not competent to judge whether it is better or worse. All I can tell you is that I've split my investments between four brokers (though, not equally) so I guees that is one answer. My Sipp is all with A J Bell and that is by far the biggest dollop, though I am reluctant to split it down further. I'm hoping that the regulation surrounding pensions and the difficulty of shifting them around willy-nilly in itself provides me good protection. ISAs are with HSDL, HL and iDealing.

Arb.


Return to “High Yield Shares & Strategies - General”

Who is online

Users browsing this forum: No registered users and 8 guests