moorfield wrote:Bagger46 wrote:The concept the HYP(and I am more than familiar with it), by avoiding managers fees, would do better is not borne out at all by my personal experience in the slightest. I have seen HY portfolios beat a basket of ITs, sure, but I have seen just as many grossly underperform them, including a demo HYP.
As for it being 'simpler' not to mix shares and ITs, well in my view it is not simpler at all, just different; for me EPICs are just EPICs. I analyse my two portfolios separately because they have different aims and benchmarks, but both contain ITs. ITs achieve two things for me, they mostly allow me to reach other markets and aspects more simply, and in the ISA they do dampen divi diving when the proverbial hits the fan.
I don't hold any ITs (yet) but those such as CTY (4.6% yield) and MRCH (5.8%) are useful benchmarks. I'm increasingly feeling disinclined to hold individual shares yielding less than those.
For example, I currently SGE, ULVR, AZN, JMAT, IMI, GSK, UU. and VOD. Were I to sell all of those tomorrow and buy MRCH, forecast portfolio income over the next 12 months would increase 15.3% ...
Hello Moorfield
I hope I have not given encouragement to switching entirely to ITs, that certainly was not my intention at all, although I have friends who do just that, and are happy successful investors.
I like running the mixture, but as I have said above my main aim in holding the ITs alongside individual holding is to extend the reach (markets and aspects not easily covered by individual holdings) of my two(very different by design) portfolios. I do hold the odd reference IT holdings, and the odd ones for decades long for 'sentimental/historical/laziness?' reasons(WTAN,CTY and LWI held for donkeys but never topped up these days).
If you are at the building stage, then I would certainly caution you against chasing yield. At that earlier stage of the investment journey total return is what matters(despite what anybody will tell you, it is a mathematical fact), and from my experience of portfolios I am very familiar with, chasing yield excessively has a strong potential to reduce the potential eventual size of your pot. So for example I would certainly stick with ULVR, and quite possibly AZN and SGE. I hold the first two, and held the third for a long while, but I sensed that it might very well come under increased competition from slicker new products so let it go at a handsome profit. I don't hold Utilities any more, even without the shadow of Corbyn, regulators will be under increasing pressure to screw their profits down imho. I don't know the others enough to comment.
You don't mention ex UK investments(particularly the US), Tech/Bio or Small Cos, but this is where my best returns have been by far and where I have encouraged our three children to mostly invest. My taxed portfolio majors in those. The ISA, which seeks reasonable but growing and mostly re invested off course income, is doing fine, but even with the tax burden, the other portfolio is well ahead. I do like running the combination of the two though. (The small Cos segment is where the fun is, but you need to stomach the ride, and only good if you can afford it, and are prepared to do the research.)
MRCH, which you mention, has done better recently because the shackles of gearing with expensive debt have been partially removed. I always see it more as an IT one might hold when actually needing/taking the income, rather than in the building phase earlier in the journey. But others will have different views. Some like to duplicate holdings between their ITs and individual holdings, some don't. I generally try to minimize this without overanalysing the detail.
Anyway all the best
Bagger
