Personal High Yield Portfolio - Constructive Input Welcome

[richfool]

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.

PrefInvestor, MCT is mostly targetted at/gives greatest exposure to Canada.

I have held it for quite a few years, and chose it partly for its yield and particularly as a means to hedge against sterling weakness and capitalise on overseas earnings. It's dividends are enhanced when converted back to a weak £ sterling.

[Hariseldon58]

@PrefInvestor

Interesting thread and interesting portfolio choice.

I was wondering why the interest in purely high yield? I wondered if you might clarify your thinking ? Are you investing for the future , supplementing a pension etc it might draw more helpful suggestions/ comments.

I believe the context of the portfolio is important, I hold a number of the trusts mentioned.

I was a little surprised at the maximum holding being defined as a £ amount rather than a % ‘age

[PrefInvestor]

Hi richfool, Well from what I read about MCT it said that it paid a fixed return per quarter defined in pence (quite typical of a preference share in my experience). However given that I dont quite see how that benefits from any Canadian exposure at all ?. The share price yes as a function of the assets its invested in but not the dividend surely ?.

ATB

Pref

[PrefInvestor]

Hi Hariseldon58, I am retired and see the objectives for my portfolio in two ways 1) to possibly supplement my pension income in future years and 2) as a lump sum to pass on to the family, most especially the grandchildren who are definitely going to need it. Unfortunately I missed the boat on SIPPs with their IHT advantage but everything I have is fully ISAd up so no worries about income tax or CGT or anything like that - and no tax returns to do !.

I have an aversion to growth stocks due to a bad experience with OEIC Accumulation fund during the 2008 financial crisis. Swore I would never invest a penny there again and have no attention of starting to do so now. I know things like SMT are popular and have done well for some people, but the bottom line on these types of investment is that when they fall into loss (as they do) then you are left with nothing but the losses. I want to invest in things that deliver an income (primarily for re-investment) and are not too volatile (which is why I hate US stocks).

In my portfolio I have tried to achieve a mix of growth investments (the single stocks), stable dividend payers (prefs and renewables and well known reliable single stocks), asset classes (fixed income, debt and equities), geographies and currencies (UK, Europe and EM), Active and passive investments (ITs and ETFs).

The portfolio is still a work in progress but I think that I am getting there.....at least I hope so. Only time will tell !!.

ATB

Pref

[TUK020]

Pref,
worth thinking about setting up JISAs for each of your grandkids, and putting a regular annual amount into each. I believe that if shown as a regular payment, this then avoids IHT, and any amount more than 7 years preceding your departure would be clear anyway. If run over 10 years or more, this then provides their house deposit for when they want to buy a place.
Furthermore, you can use it as a training ground for investments for them - explain what you are doing and why.
Probably a more meaningful exchange than them mumbling "thank you" to your tombstone
tuk020

[Lootman]

I want to invest in things that deliver an income (primarily for re-investment) and are not too volatile (which is why I hate US stocks).

The volatility of the US stock market is relatively low, as you might expect from the largest and most diverse economy on the planet. US markets significantly out-performed in the 2007-2009 market crash, and the US dollar typically does well in bad markets and economic crises as well.

There may be good reasons for a person to not invest in US shares but volatility is not one of them. The UK market, for instance, is more volatile on average, perhaps because of the relatively high representation of the finance sector in the UK market, and because of the concentrations of a few other leading sectors such as natural resources.

[PrefInvestor]

Hi lootman,

Well Ive tried investing in US single stocks (AAPL, FB, GOOG etc.) and over a year they went to 15% up and then 6% down. No dividends so nothing to show for it at all. Also my broker applies a 1% currency charge on any overseas stock buy or sell which adds a 2% headwind to directly investing in any overseas stocks. As a result of this experience right now my position is that I will get my overseas exposure by investing in ETFs and ITs priced in GBP.

I have also tried investing in some ITs that are invested in US stocks eg SMT, PCT & JUSC. But these are pretty volatile too and again no dividends. I am holding some BRNA right now but otherwise my enthusiasm for investing in anything in the US is very low - largely because no investments there seem to offer a decent dividend (ie 4.5%+).

Someone on these boards recommended MCT as an investment. But this is a preference share and I am very wary of buying those having been burnt last March by the redemption threat. If I wanted to buy prefs there are many UK based ones that I would be more comfortable buying than MCT. Also I already have my full allocation for prefs in my portfolio ATM really so am not in the market for any more right now.

ATB

Pref