John Lee in FT describes his high yield portfolio

[Lootman]

I suspect that many HYPs have performed close to the index, since the names in them are typically the biggest names in the index anyway. The real problem has been the FTSE-100 itself, which has done nothing since 1999, other than dividends.

Since the low of the global financial crisis the FTSE-100 has about doubled from 3,800 or so. The S&P 500 is up nearly seven-fold in the same time, from 666 to around 4,500. If you are fishing in a pond with very few fish, you won't do as well regardless of your skill level.

But you are not comparing the same thing. You are comparing dividend income v growth. Your argument would be more persuasive if you compared dividend growth in the FTSE-100 v S&P 500.

No, I was comparing two indices, minus dividends and FX.

In terms of dividend growth I would also expect the US to have done better, simply because it was coming from a much lower base and from a much higher level of dividend cover and earnings growth. But I cannot be bothered to look it up, can you?

The only metric where I can see the UK doing better is in total nominal amounts of dividends paid out. But even that will crossover at some point.

[Crazbe7]

But you are not comparing the same thing. You are comparing dividend income v growth. Your argument would be more persuasive if you compared dividend growth in the FTSE-100 v S&P 500.

No, I was comparing two indices, minus dividends and FX.

Ideal then for this board!!

Crazbe7

[dealtn]

Ideal then for this board!!

Crazbe7

Why?

[csearle]

Ideal then for this board!!

Crazbe7

Why?

Crazby7 was, I believe, being sarcastic. C.

[dealtn]

Why?

Crazby7 was, I believe, being sarcastic. C.

Ok. I'm am unable to pick up on things like that.

[csearle]

Crazby7 was, I believe, being sarcastic. C.

Ok. I'm am unable to pick up on things like that.

I might be wrong. This sort of thing is notoriously difficult with messaging, hence emoticons etc. C.

[dealtn]

Ok. I'm am unable to pick up on things like that.

I might be wrong. This sort of thing is notoriously difficult with messaging, hence emoticons etc. C.

Don't take me there. They make it worse not better. Reading emotions is difficult enough, deciphering emoticons as literal rarely identifies things for me (and others like me). Its genuinely difficult and can lead to stress and difficulty.

[MDW1954]

Don't take me there. They make it worse not better. Reading emotions is difficult enough, deciphering emoticons as literal rarely identifies things for me (and others like me). Its genuinely difficult and can lead to stress and difficulty.

Agreed.

MDW1954

[funduffer]

- for example dig a little over on HYP Practical and you'll find some horror story decision making soon enough.

Really, can you link to one? I'm not aware of any HYP that has done worse than the index it has been taken from let alone merit the term 'horror story'. Obviously there have been some individual share selections that have done terribly but that's to be expected for any diversified portfolio unless the investor is either very lucky or owns a functioning crystal ball.

BoE

Watch this space.

Next year I will have been running a HYP and an income IT portfolio of roughly equal sizes for 10 years, and I will be doing a comparison on this board.

Sneak preview - the HYP has done much worse than the IT's for income (and much worse than the FTSE AS index for capital)!

FD

[moorfield]

Next year I will have been running a HYP and an income IT portfolio of roughly equal sizes for 10 years, and I will be doing a comparison on this board.

Sneak preview - the HYP has done much worse than the IT's for income (and much worse than the FTSE AS index for capital)!

So why continue? You will telling us what you already know then?

[funduffer]

Next year I will have been running a HYP and an income IT portfolio of roughly equal sizes for 10 years, and I will be doing a comparison on this board.

Sneak preview - the HYP has done much worse than the IT's for income (and much worse than the FTSE AS index for capital)!

So why continue? You will telling us what you already know then?

I told myself at the start I would give it 10 years to decide which income route suits me best.
So, I will wait until my 10 years is up.

Then I have to decide how and when to dissolve one option and move it to the other, or keep both going.

FD

[kempiejon]

the HYP has done much worse than the IT's for income (and much worse than the FTSE AS index for capital)!

How did the FTSE AS do for income vs the ITs for capital?
Before individual shares I started with trackers, then I got clever and had a value strategy for about 5 years, easily my best returns but too much effort. HYP seemed a good mid ground. I also see how ITs have some strengths.
Now I'd say to my previous self go for a global tracker. But then I wouldn't have accumulated the stories to be a bore at parties about asset allocation, fungibility, risks, cash buffers, diversification, yield, total return, global market weighted capitilisations etc.

[moorfield]

I told myself at the start I would give it 10 years to decide which income route suits me best.
So, I will wait until my 10 years is up.

Then I have to decide how and when to dissolve one option and move it to the other, or keep both going.

I see your Vistry has just gone pop today No time like the present!
The time to fly is now. (did you see what I did there).


You could start by doing something like this ie. replacing your lower yield holdings with a higher yield IT (or portfolio of). This is what I am currently doing in my portfolio, about 2/3s of overall income now comes from 15 ITs.

[tjh290633]

I told myself at the start I would give it 10 years to decide which income route suits me best.
So, I will wait until my 10 years is up.

Then I have to decide how and when to dissolve one option and move it to the other, or keep both going.

I see your Vistry has just gone pop today No time like the present!
The time to fly is now. (did you see what I did there).


You could start by doing something like this ie. replacing your lower yield holdings with a higher yield IT (or portfolio of). This is what I am currently doing in my portfolio, about 2/3s of overall income now comes from 15 ITs.

You can also recycle the capital from your lower yielding shares into your higher yielding shares. Were I to sell all holdings yielding less than 3% (BA., TATE, DGE, PSON, AZN, IMI and HLN in my case) my yield would rise from 5.32% to 6.09%. That assumes that it would be spread equally. It needn't be.

TJH

[funduffer]

I see your Vistry has just gone pop today No time like the present!
The time to fly is now. (did you see what I did there).


You could start by doing something like this ie. replacing your lower yield holdings with a higher yield IT (or portfolio of). This is what I am currently doing in my portfolio, about 2/3s of overall income now comes from 15 ITs.

You can also recycle the capital from your lower yielding shares into your higher yielding shares. Were I to sell all holdings yielding less than 3% (BA., TATE, DGE, PSON, AZN, IMI and HLN in my case) my yield would rise from 5.32% to 6.09%. That assumes that it would be spread equally. It needn't be.

TJH

Yes I could do this, and relax the guidelines I have on sectorial balance and the like, to rescue my HYP.

I rarely top-up my HYP these days, most of the dividends go into my IT's or is spent.

I will probably do something more like moorfield is suggesting - maintain a smaller, more focused HYP and put the rest in high-yielding IT's.

Anyway, I will post something around the end of the year at the end of my 10 year experiment and try and describe what I have learnt.

FD

[funduffer]

the HYP has done much worse than the IT's for income (and much worse than the FTSE AS index for capital)!

How did the FTSE AS do for income vs the ITs for capital?
Before individual shares I started with trackers, then I got clever and had a value strategy for about 5 years, easily my best returns but too much effort. HYP seemed a good mid ground. I also see how ITs have some strengths.
Now I'd say to my previous self go for a global tracker. But then I wouldn't have accumulated the stories to be a bore at parties about asset allocation, fungibility, risks, cash buffers, diversification, yield, total return, global market weighted capitilisations etc.

The IT portfolio capital value (unit price) has matched the FTSE AS over 10 years, but far exceeded the FTSE AS income. So TR is well ahead.

However, whilst the FTSE AS is a reasonable benchmark for my HYP, it is questionable whether it is for my IT portfolio, which has a much wider Geographical and sectorial spread, covering Far East, Europe, North America, and various infrastructure holdings, besides the usual UK-focused suspects.

[kempiejon]

However, whilst the FTSE AS is a reasonable benchmark for my HYP, it is questionable whether it is for my IT portfolio, which has a much wider Geographical and sectorial spread, covering Far East, Europe, North America, and various infrastructure holdings, besides the usual UK-focused suspects.

I know, compared to the global market the UK hasn't been as profitable this decade. My ISA HYP generates enough income for me at about 4.5%, My VUSA - vanguard S&P, has been more profitable though over some of the same era. I was late to investing specifically outside the UK market. My SIPP is global exUK.

[Itsallaguess]

I rarely top-up my HYP these days, most of the dividends go into my IT's or is spent.

I will probably do something more like moorfield is suggesting - maintain a smaller, more focused HYP and put the rest in high-yielding IT's.

Anyway, I will post something around the end of the year at the end of my 10 year experiment and try and describe what I have learnt.

The income from my high-yield portfolio is currently split along the following lines -

• Single Shares - 22%

• Investment Trusts - 78%

Each new tax year I look to reduce that single-share allocation as part of my rotational tax and portfolio-management processes, and whilst I expect it's likely to never reach 0%, there is still some way to go for me in terms of that planned reduction.

I look forward to your 10-year review, and to hear your thoughts on what you've learnt during that period of parallel running with your two income-investment approaches.

Cheers,

Itsallaguess

[AEWNimrod]

I have been unable to access the Lord Lee articles in the FT, by putting the title into google looking for an unredacted version has anyone else experienced this.

Many thanks

[monabri]

I have been unable to access the Lord Lee articles in the FT, by putting the title into google looking for an unredacted version has anyone else experienced this.

Many thanks

I just clicked on H58's link ( the first post) and it loaded OK.

https://www.ft.com/content/3a80d337-cd0 ... 7e08720669

HTH !