Arbit, HYP and OEICs 2022 Q4

[Arborbridge]

Here are the final charts of my "Three Streams" for 2022.
First, the income produced by £100 invested in each of the three portfolios in 2010, plus the RPI line.



What is clear is that we had increasing income, rather above RPI until 2019-20. Then a huge drop in HYP and OEIC income followed by a bounce back. The IT stream is steadier due to the way they operate, and although this line has fared better, the bounce back will be delayed. What we might expect from now on is the ITs line increasing more slowly as they need to rebuild their reserves - this might give the other two streams a chance to consolidate their current lead. The most impressive in respect of "bouncing back" is the OEICs stream which is the only one anywhere near in touch with the RPI line at the moment.

Next, the capital chart showing price per unit in pence (income withdrawn) of each "basket":-



Here we have a clear split, with the HYP line now barely hanging on to the FTSE100 line, and actually looking like a down trend since the peak in early 2015. The other two, peaked around 2018 and are now struggling - trying to decide whether they are truly in a downtrend or not. The head of steam built up against the RPI line has now evaporated as that line overtakes them, for the moment.

As ever, we wait to see the next phase in this saga.

Arb.

[BullDog]

I remain impressed that the investment trusts do pretty much what they say they're supposed to do. With investment, that's all too often just not the case. Thanks for the work involved in running this.

[StepOne]

Hi Arb,

Very interesting - thanks for this. Is there a post which gives the contents of each of the portfolios?

Thanks,
StepOne

[monabri]

Hi Arb,

Very interesting - thanks for this. Is there a post which gives the contents of each of the portfolios?

Thanks,
StepOne

Arbit & OEIC - April 22 ( the thread ends in Aug 22). Maybe Arb has tweaked it recently..?

viewtopic.php?p=492763#p492763

[Arborbridge]

Hi Arb,

Very interesting - thanks for this. Is there a post which gives the contents of each of the portfolios?

Thanks,
StepOne

Arbit & OEIC - April 22 ( the thread ends in Aug 22). Maybe Arb has tweaked it recently..?

viewtopic.php?p=492763#p492763

Very minor alterations. I will post the latest in a day or two.

[Arborbridge]

Contents of porfolios:-
Income OEICS


Income ITs



Contents of the HYP are to be found here:-

viewtopic.php?f=15&t=37389

This brings the information up to date, though

Arb.

[Itsallaguess]

Contents of portfolio:-

Income ITs

Reformat of the above income-IT portfolio with additional AIC Sector information and some sub-sector totals -

CompanyName                              Ticker     AIC Sector                      Value as % of Total          Latest Yield
Henderson Far East Income Ltd.           HFEL       Asia Pacific Equity Income      5.46%                        8.4%
JPMorgan Asia Growth & Income            JAGI       Asia Pacific Equity Income      3.17%                        4.3%
Schroder Oriental Income Fund Ltd.       SOI        Asia Pacific Equity Income      8.14%                        4.3%
                                                    Sector Sub-Total                16.77%                       
                                                                                                                 
Jpmorgan European Growth & Income        JEGI       Europe                          5.51%                        3.36%
                                                    Sector Sub-Total                5.51%                        
                                                                                                                 
JP Morgan Global Emerging Income         JEMI       Global Emerging Markets         4.01%                        3.9%
                                                    Sector Sub-Total                4.01%                        
                                                                                                                 
Henderson International Income Trust     HINT       Global Equity Income            4.04%                        4%
JPMorgan Global Growth & Income          JGGI       Global Equity Income            0.81%                        3.9%
Murray International Trust               MYI        Global Equity Income            8.23%                        4.2%
                                                    Sector Sub-Total                13.08%                       
                                                                                                                 
3i Infrastructure                        3IN        Infrastructure                  4.64%                        3.2%
                                                    Sector Sub-Total                4.64%                        
                                                                                                                 
Mercantile Investment Trust (The)        MRC        UK All Companies                4.27%                        3.4%
City of London Inv Trust                 CTY        UK Equity Income                8.12%                        4.7%
Edinburgh Inv Trust                      EDIN       UK Equity Income                7.85%                        3.9%
Finsbury Growth and Income Trust         FGT        UK Equity Income                2.92%                        2.1%
Invesco Select UK                        IVPU       UK Equity Income                4.33%                        3.9%
Law Debenture Corp.                      LWDB       UK Equity Income                4.04%                        3.6%
Merchants Trust                          MRCH       UK Equity Income                8.84%                        4.7%
Murray Income Trust                      MUT        UK Equity Income                3.87%                        4.2%
Schroder Income Growth Fund              SCF        UK Equity Income                6.08%                        4.3%
Temple Bar Inv Trust                     TMPL       UK Equity Income                5.68%                        3.5%
                                                    Sector Sub-Total                56%                          
                                                                                                                 
                                                    All Sector Total                100%

Cheers,

Itsallaguess

[Arborbridge]

Why, thank you! - you must be having a boring Saturday to do this.

The percentages show the basket's origin, which was originally looking for "HYP-like" ITs for benchmarking purposes, then added in some more foreign spices to add diversity. That's why the UK content is so high.

It's interesting to see this sort analysis (I've never done it for the ITs) but ultimately the question is "what percentages should there be?" - to which there cannot be an answer. You just have to do what seems right at the time. I usually choose the IT which looks interesting from a yield POV and has a reasonable history - a bottom up approach, one might say.

Now I have established the four or five big hitters which add some solid amounst of income, I've been adding some others to add a bit of diversity and balance. The latest recruits are the two smallest international ITs.

Arb.

[Itsallaguess]

It's interesting to see this sort of [sector] analysis (I've never done it for the ITs) but ultimately the question is "what percentages should there be?" - to which there cannot be an answer.

You just have to do what seems right at the time. I usually choose the IT which looks interesting from a yield POV and has a reasonable history - a bottom up approach, one might say.

Now I have established the four or five big hitters which add some solid amounts of income, I've been adding some others to add a bit of diversity and balance. The latest recruits are the two smallest international ITs.

Ultimately it'll come down to personal decisions, of course, but where you say 'You just have to do what seems right at the time', I'm definitely of the opinion that you really need to know where you're currently at before incorporating additional changes, and things like current diversification of my income-IT's at sector level is definitely something I'd broadly want to have a good handle on at any given time, otherwise I'd be concerned that any future portfolio-management decision might not be acted on using appropriate baseline information.

HYPTUSS has the majority of these AIC sectors in the IT areas of the datasheet, and where there's any candidates missing then it's a simple process to insert the data into the data-sheet, so there's very little work involved in then using the built in portfolio-weighting chart and listing functionality, and that's the primary way I keep abreast of this sort of thing with my own income-portfolio holdings.

Cheers,

Itsallaguess

[Arborbridge]

HYPTUSS has the majority of these AIC sectors in the IT areas of the datasheet, and where there's any candidates missing then it's a simple process to insert the data into the data-sheet, so there's very little work involved in then using the built in portfolio-weighting chart and listing functionality, and that's the primary way I keep abreast of this sort of thing with my own income-portfolio holdings.

Cheers,

Itsallaguess

Yes, I could do that in HYPtuss, but I've never bothered to us it - though I did just now, having done my normal weekly "run" of the portfolios. I'm really not bothered about the sector distribution of ITs, unlike the HYP business sectors. As I say, there seems no "right" sector distribution to me - I'm not even sure there's a "wrong" one either, for that matter. And how would one know if the distribution was adviseable or not? - until it was too late.

Arb.

[moorfield]

It's interesting to see this sort analysis (I've never done it for the ITs) but ultimately the question is "what percentages should there be?" - to which there cannot be an answer. You just have to do what seems right at the time. I usually choose the IT which looks interesting from a yield POV and has a reasonable history - a bottom up approach, one might say.

I don't see any reason why one shouldn't select an IT portfolio like an HYP - 15 holdings from different AIC sectors and regions. Your UK Equity Income sector is looking rather like a stamp collection, a lot of duplication mitigating what risks? And yet for income oriented-ITs none of the higher hitters - AEI, CHI, HHI for example? There are bargains for income to be had in the property (reit) and debt sectors too.

For example, something leaner and more diversified might look like...

Code: Select all

EAT  | European Equity               
CSH  | Property (UK Residential)     
VSL  | Direct Lending                 
THRL | Property (UK Healthcare)       
HFEL | Asia Pacific Equity           
NCYF | Loans & Bonds                 
AEI  | UK Equity                     
APAX | Private Equity                 
BRWM | Commodities                   
HHI  | UK Equity & Bond               
FSFL | Renewable Energy Infrastructure
ALAI | Latin America                 
INPP | Infrastructure                 
TRY  | Property (Securities)         
MYI  | Global Equity                 


[Itsallaguess]

I'm really not bothered about the sector distribution of ITs, unlike the HYP business sectors.

As I say, there seems no "right" sector distribution to me - I'm not even sure there's a "wrong" one either, for that matter.

I think it really depends on what you mean by 'right' or 'wrong' there though...

At a personal-investor level, of course something like diversification is going to be a personal choice, and in that particular space then 'right' or 'wrong' is going to be a quite subjective decision.

Where I'm coming from with this particular discussion though, is that once an investor does decide that he wants to be 'more diversified' with his holdings, then I'm struggling to see how such a process can really be actioned and quantified against, if at any given point the investor doesn't know how diversified he currently is...

For an exaggerated example of this, let's pretend that an income-IT investor initially holds 100% of his invested capital in a single UK-Equity income-IT, but then decides that he wants to me more diversified geographically...

If he buys a second income-IT from the 'Global Income' sector, but weights that purchase at just 1% of his subsequent overall portfolio weighting, then I'd perhaps argue that he's achieved two different things at the same time -

• His sector diversification is now 'right', because he's now more globally diversified than he was previously

• His sector diversification is still 'wrong', because he's now decided that he needs to be more globally diverse with his sector allocation, but he's not yet achieved anything worthwhile in that overall diversification process

It's clear, I hope, that once an investment-decision has been made to be 'more diversified' with an income-IT portfolio, then it's difficult to quantify how well that proposed diversification process might be progressing in terms of it's final aims if the investor doesn't know what he wants, *or* if the investor does know what he wants, but doesn't know where he is on any given diversification path in actually delivering it...

So whilst I'd never try to argue what's 'right or wrong' in this area, I would suggest that such a position can still be taken whilst also saying 'but you still need to know where you're at to decide if *your* 'right' is actually being achieved'...

Cheers,

Itsallaguess

[Arborbridge]

So whilst I'd never try to argue what's 'right or wrong' in this area, I would suggest that such a position can still be taken whilst also saying 'but you still need to know where you're at to decide if *your* 'right' is actually being achieved'...

Cheers,

Itsallaguess

Your supposed right might prove to be wrong (in the sense lower investment success, however you want to define that). My view is that there are too many unknowns in the quest for investment success, so I'm happy with some sort of "being good enough for my purpose". Anything else tends towards overthinking it for little extra achievement - or I'm sure that is so in my case. The result is that I am more sanguine about these extra efforts.

As you might say yourself; getting to sleep at night is a valuable aim in itself.

Anyhow, I found your percentage analysis interesting but I doubt it would of itself propel me on to a different course.

Arb

[Itsallaguess]

Anyhow, I found your percentage analysis interesting but I doubt it would of itself propel me on to a different course.

Thanks Arb - and I suppose the point I've been trying to make is that you've perhaps quite rightly decided the above from being in a position of having now seen the IT sector-diversification figures, and all I'd gently question is if there was the possibility that a different set of figures might have drawn a different conclusion.

Cheers,

Itsallaguess