The Lemon Fool

I have been thinking about getting back into HYP for part of my ISA due to the great value on offer in the UK at the moment.

Some of you may already know that I have been running a test portfolio called the Gadge Global Income Portfolio (GGIP) for a few years now and that this is benchmarked against various things inc Scottish mortgage/PNL 50/50 barbell and Vanguard LS 80/20.

So, I decided to add a new benchmark to the dashboard consisting of £126600 of HYP, which is the current notional value of GGIP today.

To keep the selection simple, I bought 75k of ISF from iShares which is a distributing ETF of the FTSE. This yields approx 4 5 per cent currently which I think is a great return and 1 per cent more than I would want to take out annually.

To make it HYP, give it a slight edge over the FTSE on yield and to overweight it towards certain shares as I see fit, I then spent the balance on equal shares of VOD (liking the new guys ideas eg floating off masts), GSK and RIO.

My dashboard automatically backtests each portfolio and to my surprise this combo has produced returns in the last 12 months of over 30 per cent and has trounced all other benchmarks inc GGIP.

Interesting and I think I may repeat this exercise in real life this week.

I hold Compass already and this would add a bit of defense to the mix but will lower the overall yield a bit.
Anyway, I really like the company's business so it's not going anywhere for sure.

Gadge

Gadgeisbackagain wrote: To keep the selection simple, I bought 75k of ISF from iShares which is a distributing ETF of the FTSE. This yields approx 4 5 per cent currently which I think is a great return and 1 per cent more than I would want to take out annually.

You haven't posted on HYP Practical, which is probably just as well, because the HYP purists consider investing in collectives off topic.

It's not something you see very often, namely a comparison of "HYP" to a FTSE 100 ETF.

Gadgeisbackagain wrote:To make it HYP, give it a slight edge over the FTSE on yield and to overweight it towards certain shares as I see fit, I then spent the balance on equal shares of VOD (liking the new guys ideas eg floating off masts), GSK and RIO.


Gadge

I'm not clear how that makes it HYP - if that's what you mean. Unless I've misunderstood the information, this is certainly NOT HYP - that might be a good thing, of course, but it won't help anyone trying to compare HYP with anything else.


Arb.

Gadge,

It sounds like you are increasing your 'bet' on the UK by adding an income play. With a baseline income from ISF you've then added some individual higher yielders. A HY income portfolio perhaps? (But not HYP as defined on the HYP Practical board).

I'd be wary regarding the bit about

"and to my surprise this combo has produced returns in the last 12 months of over 30 per cent and has trounced all other benchmarks inc GGIP."

This doesn't seem right. I can see that something like RIO has done well over the last 12m and Compass but the rest of the UK market (ISF) has been flat.

One thing that I do know, my HYP has not trounced anything in the last 12 m, languishing way behind an IT portfolio in terms of total return .

monabri wrote: I can see that something like RIO has done well over the last 12m and Compass but the rest of the UK market (ISF) has been flat.

According to tools.morningstar, total return on RIO is 20.69% over a year against 2.91% for the FTSE 100. Compass is 29.36%. VOD is -13.05% although up 16% over the past month.

If you increase the risk by picking individual stocks, you may get an extra reward if they perform well.

Alaric wrote:

monabri wrote: I can see that something like RIO has done well over the last 12m and Compass but the rest of the UK market (ISF) has been flat.

According to tools.morningstar, total return on RIO is 20.69% over a year against 2.91% for the FTSE 100. Compass is 29.36%. VOD is -13.05% although up 16% over the past month.

If you increase the risk by picking individual stocks, you may get an extra reward if they perform well.

The part I was picking up on was the "produced returns in the last 12 months of over 30 per cent ". With £75k of £126k invested in ISF (total return approx 2.5% * since Aug 18), where was the other ~£51k invested to obtain such an overall return?


(* read by eye from graph using Hargreaves Lansdown comparator tool for a 1 year period with total return box checked )

monabri wrote:
The part I was picking up on was the "produced returns in the last 12 months of over 30 per cent ". With £75k of £126k invested in ISF (total return approx 2.5% * since Aug 18), where was the other ~£51k invested to obtain such an overall return?

Perhaps he just meant 30% higher than the FTSE 100. That seems plausible enough with higher returns on Rio and Compass to balance the losses on VOD.

The yield on Compass is currently 1.89% so wouldn't have been chosen by anyone only looking at dividend yields above the FTSE 100 average.

Alaric wrote:

Gadgeisbackagain wrote:To keep the selection simple, I bought 75k of ISF from iShares which is a distributing ETF of the FTSE. This yields approx 4 5 per cent currently which I think is a great return and 1 per cent more than I would want to take out annually.

You haven't posted on HYP Practical, which is probably just as well, because the HYP purists consider investing in collectives off topic.

More important in this case are the following facts:

* The HYP Practical board's guidance was posted by Clariman, who is one of the two owners of the site, and the other owner (stooz) hasn't expressed any significant disagreement with it. It says what is on-topic on the board and on this one, and because they're the owners of the site, they define the on-topic areas of the site's boards - not just express opinions about them.

* With just 4 holdings, the portfolio Gadgeisbackagain describes clearly runs against "At its simplest, it will have at least 15 holdings, none of which should be from the same sector." in the HYP Practical section of that guidance, and its holding of ISF at the very least runs against the spirit of at least one of "For the HYP Practical board we define an HYP as a portfolio comprised exclusively of ordinary shares." and "Investment Trusts or open ended funds should not be included, although REITs are acceptable." and quite likely against the letter of both of them (I believe iShares aren't actually "ordinary shares" and are "open ended funds", but I haven't actually checked up thoroughly on those points).

So basically, this subject would have been off-topic for the HYP Practical board, as a matter of fact about what the site owners have said its topic is - it's not just a matter of what some site users consider. So it is definitely just as well that Gadgeisbackagain avoided posting on HYP Practical, not just probably so.

Personally, I think that it was rather unwise of him to describe his portfolio as HYP, because it's so much at odds with how the term is used on HYP Practical that it invites misunderstandings and arguments - I'd call it something like "tracker+fewHY" portfolio. But unlike the above, that's opinion, not fact.

Gengulphus

Hey Gadge, you mentioned your GGIP (Gadge Global Income Portfolio).

I always thought this was a great idea.

Are you planning on giving an update on how it is doing sometime?

(I had a quick search of your posts but couldn't see a post from you on this on LMF, but may have missed something).

funduffer wrote:Hey Gadge, you mentioned your GGIP (Gadge Global Income Portfolio).

I always thought this was a great idea.

Are you planning on giving an update on how it is doing sometime?

(I had a quick search of your posts but couldn't see a post from you on this on LMF, but may have missed something).

Third on the list of Gadgeisbackagain posts https://www.lemonfool.co.uk/search.php?author_id=4994&sr=posts

"I am planning to post the current contents of GIP here soon and will probably post a copy of the Xmas review here too if anyone here is still interested.

Gadge"

Google for Gadge Global Income Portfolio for more.



Adrian