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Diversified income portfolio (DIP 2)

General discussions about equity high-yield income strategies
rm41sm8
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Diversified income portfolio (DIP 2)

#225761

Postby rm41sm8 » May 31st, 2019, 11:37 am

Good morning all. My second post on lemon fool, and it’s a bit of a cross post from the first one back in February

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=16480

At the time I was thinking about how to invest a lump sum to top up my company pension payment. I wanted to be diversified across countries and across asset classes, and to avoid having too much equity and in particular UK bias. I’ve since subscribed to John Baron portfolios and done a lot of reading, and this is what I have come up with.
My plan is to invest, follow, not be too interventionist, and enjoy the income without worrying too much about underlying value, although any capital growth would be nice.
I had some really helpful feedback last time I posted, much of which influenced my thinking, so would really welcome your thoughts here

1. UK income funds 19.5%
The funds I have gone for are Merchants, Temple Bar, Aberdeen Standard Equity Income, MI Chelverton UK income and Finsbury Income and Growth. My thinking here was that I wanted to get some diversification across the UK, high income funds, but with my outlook for the UK I was far more comfortable with largely having money invested in companies who are making most of their profits overseas. I consider that the UK has relative exchange rate risk right now, and I’m a little gloomy about medium to long term prospects for the UK. Finsbury Income and growth is a bit of an outlier here, lower yield than the others, but a fund I like.
The ones I was researching but didn’t quite make the cut were Perpetual Income and Growth, Henderson High Income Trust, City of London and Diverse Income Trust

2. Overseas funds 23.5%
I’ve gone for JP Morgan European Income, JP Morgan Emerging Markets Income, Murray International, Schroders Oriental Income, Black Rock North American, Middlefield Canadian Income. My thinking here was to get a good spread from around the world, with focus on yield. I haven’t found any Japanese funds which fit my criteria

3. Bonds 20%
I wanted to get some bond exposure into the portfolio to get diversification from the equity portion. The funds I have gone for here are Jupiter Strategic Bond, City Merchants High Yield Trust, CQS New City High Yield, Invesco Enhanced Income and Henderson Diversified Income. Jupiter strategic bond is an outlier here, lower yield than the others, but I already hold and like the fund

4. Infrastructure 15 %
I had a bit of a breakdown here. I looked at several funds such as HICL Infrastructure, First State Global Infrastructure, Renewables Infrastructure Group, John Laing, Sequoia, Biopharma Credit. But I concluded that while I know how equities, property, and bonds work, I don’t really fully understand the infrastructure funds, how they make their money and what the key risks are. So, I’ve gone against my principles slightly and gone for two general fund of funds both with good yields and several of these funds in their portfolios
The funds I’ve gone for are VT Travis Infrastructure and BMO Managed Portfolio Income

5. Property 14%
I wanted to pick some funds which own the properties themselves rather than funds which have shares in property companies (eg TR Property). I also wanted to get some international exposure here and I’ve partially failed. Was after good consistent yields, wel managed risks and limited exposure to Retail
I’ve gone for Schroder European Real Estate, Regional REIT, AEW UK REIT and Standard Life Property Income

6. Cash Buffer 8%
Intent here is to hold some back in the event of other opportunities

OLTB
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Re: Diversified income portfolio (DIP 2)

#225788

Postby OLTB » May 31st, 2019, 1:44 pm

rm41sm8 wrote:
I haven’t found any Japanese funds which fit my criteria




Hi there rm41sm8

For my IT portfolio's Japanese pick I have JPMorgan Japan Smaller Companies Trust (JPS). It has a quarterly dividend payment and yield is (according to HL) 4.75% sitting at a 12% discount.

Cheers, OLTB.

Crazbe7
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Re: Diversified income portfolio (DIP 2)

#225859

Postby Crazbe7 » May 31st, 2019, 7:28 pm

OLTB,

Ever received a dividend from JPMorgan Japan Smaller Companies Trust? Interested as also looking for Japanese income.

JP Morgan's web-site suggests no dividend payments from 2013 to 2018 and promotes this fund as a growth fund rather than income. From their data sheet: -

Objective: To produce long-term capital growth through investment in small and medium-sized Japanese companies. Investment is permitted in Japanese quoted companies, other than the largest 200, measured by market capitalisation, emphasising capital growth rather than income.

Crazbe7

monabri
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Re: Diversified income portfolio (DIP 2)

#225867

Postby monabri » May 31st, 2019, 8:16 pm

Crazbe7 wrote:OLTB,

Ever received a dividend from JPMorgan Japan Smaller Companies Trust? Interested as also looking for Japanese income.

JP Morgan's web-site suggests no dividend payments from 2013 to 2018 and promotes this fund as a growth fund rather than income. From their data sheet: -

Objective: To produce long-term capital growth through investment in small and medium-sized Japanese companies. Investment is permitted in Japanese quoted companies, other than the largest 200, measured by market capitalisation, emphasising capital growth rather than income.

Crazbe7



I received a payment from JPS on 9 May .

And, from the AIC... ( which lists the divi paid in pence)

https://www.theaic.co.uk/companydata/164

The yield is as OLTB indicates above.

Crazbe7
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Re: Diversified income portfolio (DIP 2)

#225885

Postby Crazbe7 » May 31st, 2019, 9:08 pm

Monbari
Thanks - Interesting as their own data sheet dated 30 April 2019 only gives yield and dividend history from 2013 to 2017 as - - - - with a prospective yield of 4%.

Perhaps it needs a refresh!

Crazbe7

OLTB
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Re: Diversified income portfolio (DIP 2)

#225891

Postby OLTB » May 31st, 2019, 9:26 pm

Crazbe7 wrote:OLTB,

Ever received a dividend from JPMorgan Japan Smaller Companies Trust? Interested as also looking for Japanese income.

JP Morgan's web-site suggests no dividend payments from 2013 to 2018 and promotes this fund as a growth fund rather than income. From their data sheet: -

Objective: To produce long-term capital growth through investment in small and medium-sized Japanese companies. Investment is permitted in Japanese quoted companies, other than the largest 200, measured by market capitalisation, emphasising capital growth rather than income.

Crazbe7


Hi Crazbe7

The quarterly dividend has been a relatively new introduction from July 2018. JPS have said they pay a quarterly dividend based on 1% of NAV.

Just to mirror what monabri has already stated, I have also received the dividends without any issues.

Cheers, OLTB.

rm41sm8
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Re: Diversified income portfolio (DIP 2)

#226299

Postby rm41sm8 » June 2nd, 2019, 5:11 pm

Thanks OLTB. I hadn't spotted that one, maybe because it is a smaller companies fund. But the yield is impressive will look into it

Hi there rm41sm8

For my IT portfolio's Japanese pick I have JPMorgan Japan Smaller Companies Trust (JPS). It has a quarterly dividend payment and yield is (according to HL) 4.75% sitting at a 12% discount.

Cheers, OLTB.


Any thoughts at all about approach, content, allocations, number of funds ? Is this a model others would be comfortable with ?

It is essentially a bit of a mix of the john barron portfolios with a bit more of an overseas slant and an allocation I feel comfortable with.
No individual shares at all, I don't feel I could easily stay on top of them

Appreciate any views and constructive feedback

Gadgeisbackagain
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Re: Diversified income portfolio (DIP 2)

#240021

Postby Gadgeisbackagain » July 29th, 2019, 6:35 am

Do you plan on buying one actual pick from the equity sector lists that you provided? If not, then I think you should.
If yoi buy all these things, you will end up with a mix of equities that no one is managing and lots of multiple picks of the same shares across different funds and ITs.
It is tempting to act like a kid in a sweet shop, keep it simple instead.

Be wary of funds, especially in areas like property. You may get locked in like Woodford Equity. Consider using ITs instead (like John Baron).

I wouldn't bother with cash holding. It will act as a drag on your returns. It is cheap enough to sell something to buy any opportunity that comes along. In my view it is a hangover from using stockbrokers who all charged a fortune in commissions on buys and sales and bled you dry.

Good luck with your choices.

Gadge


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