Arbit, HYP and OEICs 2023 Q3

[Arborbridge]

Here's the income bought by £100 in each income stream up to 2023 Q3:-


The astonishing increase in OEIC income has cooled a little; ITs likewise; the HYP has improced a little relatively.

Somewhat disappointed in the HYP which I hoped would have a big catching up this year - like the OEICs did. However, after a spurt in 2021, the income has been stodgy, to be generous about it.

Capital would have bought me £6.489 per £100 invested for the year ended Sept 2022, and £6.54 for year ended Sept 2023. The equivalent figures for the IT income is £6.41 and £6.54 respectively; 2% up - but the IT and HYP "bang for the buck" are now equal over the past year to September.


Arb.

[BullDog]

Thanks very much for the update, it's a very interesting exercise. The volatility OEIC income stream is a little alarming. But when you think they can't build up income reserves to smooth out volatility the way investment trusts do, it's understandable.

I guess if choosing the OEIC strategy, it would be advisable to have a bit more of your own income reserve to smooth out the volatility. Whilst the ITs do much of that for you, it seems to me.

PS - it also looks a lot like the HYP strategy has most of the volatility of the OEICs without the steady Eddie effect of the ITs.

[Arborbridge]

Thanks very much for the update, it's a very interesting exercise. The volatility OEIC income stream is a little alarming. But when you think they can't build up income reserves to smooth out volatility the way investment trusts do, it's understandable.

I guess if choosing the OEIC strategy, it would be advisable to have a bit more of your own income reserve to smooth out the volatility. Whilst the ITs do much of that for you, it seems to me.

PS - it also looks a lot like the HYP strategy has most of the volatility of the OEICs without the steady Eddie effect of the ITs.

I take this into account when I pay myself. For example, when forecasting what my income for next year may be, I will only take 80% of the HYP and OEICs income into account, but all of the ITs income. In fact, I don't draw that much of the total anyway, but that would be my "ceiling" withdrawal rate.

The OEICs catch-up, and the ITs slowing down a bit, was well predicted in discussions here on TLF.
I must point out that although originally this was a comparison of "apples with apples" that is no longer true. HYP has remained steadfast to the idea of buying UK stocks, but both the other streams indulge in foreign investments, such as Murray International, or Jupiter Asian, among others. That may explain why the HYP income hasn't bounced back as well.

Arb.

[Itsallaguess]

I must point out that although originally this was a comparison of "apples with apples" that is no longer true.

HYP has remained steadfast to the idea of buying UK stocks, but both the other streams indulge in foreign investments, such as Murray International, or Jupiter Asian, among others.

That may explain why the HYP income hasn't bounced back as well.

Thanks for the updated comparison-chart Arb, which continues to be one of the most interesting drum-beats of the investing year for me.

As you allude to above, the HYP income-recovery was to be expected after it's COVID-related dip, but no doubt that recovery is welcome all the same now it's actually been delivered.

An interesting juncture then, with the ARBIT section of your income portfolio still taking something of a breather whilst the individual components continue to take stock of their income-reserves, and with the HYP and ARBIT levels roughly aligned in this particular Q3 chart.

Will the HYP components still have enough in the tank after their recent recovery, or will the ARBIT elements begin to open up the delivery-taps a little, now they're likely to have replenished their reserves somewhat?

Is the recent dip in the ARBOEIC level indicative of a broader turn in fortunes for that particular income-stream?

The best news is that we'll be half-way through winter when we get to see the final Q4 chart of the year in January, which I'll look forward to with interest.

Cheers,

Itsallaguess

[funduffer]

Just for completeness, this is my version of arb's chart. Note, my OEIC is just one fund - Fidelity Moneybuilder Dividend income fund (this has 98% UK shares - mainly typical HYP-types).



Note, HYP and IT values are calculated monthly, and the OEIC fund quarterly. All reflect the dividends received in the previous 12 month period.

This shows that the IT portfolio's income barely fell during the pandemic and has forged on upwards since. (note, the spike in April 2023 is simply due to a dividend falling into a different month from the previous year). The portfolio has a mixture of UK, overseas and infrastructure IT's / investment funds.

The HYP income started falling before the pandemic and has recovered a bit, but not yet to pre-pandemic heights.

The OEIC has also not recovered yet.

This will be the last time I can produce this chart - the OEIC has been sold!

FD

[monabri]

Just for completeness, this is my version of arb's chart. Note, my OEIC is just one fund - Fidelity Moneybuilder Dividend income fund (this has 98% UK shares - mainly typical HYP-types).

Note, HYP and IT values are calculated monthly, and the OEIC fund quarterly. All reflect the dividends received in the previous 12 month period.

This shows that the IT portfolio's income barely fell during the pandemic and has forged on upwards since. (note, the spike in April 2023 is simply due to a dividend falling into a different month from the previous year). The portfolio has a mixture of UK, overseas and infrastructure IT's / investment funds.

The HYP income started falling before the pandemic and has recovered a bit, but not yet to pre-pandemic heights.

The OEIC has also not recovered yet.

This will be the last time I can produce this chart - the OEIC has been sold!

FD

It would be interesting to know the ITs you've been adding since, say, Dec 21. They must be the (very) higher yielders to have driven the income up that much. Arb's unit values for ITs flat lined over the same period.

[kempiejon]

It would be interesting to know the ITs you've been adding since, say, Dec 21. They must be the (very) higher yielders to have driven the income up that much. Arb's unit values for ITs flat lined over the same period.

Thanks Arb and FD for sharing, as monabri says it would be interesting to see what's under the bonnet but is that right that they must be very high yielding? Surely they are growing the absolute dividend amounts quickly? I have found, in single share selections, that the fastest growth in dividend amount more often comes from lower down the yield table. Things might be different with investment trusts, I don't know. Or is it that the new money going into high yield is skewing the result? In my purchases new money hardly moves the needle on my established portfolios, only being a small %age of the total invested.

[Arborbridge]

There's a list of the OEICS holdings in this thread -

viewtopic.php?f=31&t=39914

And here are the latest ITs in the basket, listed by size. You will see that of my "big hitters", two are international or far east (in the loose sense):-



I will post an updated capital chart before long.

Arb.

[Wuffle]

By way of a comparison, looking at the dividend for CMPI, a professionally managed investment trust of other investment
trusts focused on dividends displays similar characteristics to funduffer with the dividend accelerating away in 2021.
That is a dynamic portfolio, rather than fixed.

The capital performance has reflected the dramatic change in prevailing interest rate which has been a little distressing but as a side note, there is quite a bit of discount baked in to the capital at the moment everywhere you look in the IT world.

W.

[funduffer]

I haven’t time to post a table, but my IT/investment company portfolio is:

UK based: CTY, DIG, CTUK (roughly one share each)

Overseas based: HFEL, JEGI, SAIN, MYI (roughly one share each)

commodity: BRWM (roughly one share)

Infrastructure: GCP, HICL (roughly half shares)

Renewables: UKW, NESF ( roughly half shares)

You might argue the latter could be part of my HYP, but that’s just not the way I have organised things!

I would have to look more closely to understand where the post pandemic growth has come from, but the renewables dividends have certainly increased at a decent rate.

I agree there are a lot of steep discounts around at the moment - particularly infrastructure and renewables.

FD

[Charlottesquare]

I haven’t time to post a table, but my IT/investment company portfolio is:

UK based: CTY, DIG, CTUK (roughly one share each)

Overseas based: HFEL, JEGI, SAIN, MYI (roughly one share each)

commodity: BRWM (roughly one share)

Infrastructure: GCP, HICL (roughly half shares)

Renewables: UKW, NESF ( roughly half shares)

You might argue the latter could be part of my HYP, but that’s just not the way I have organised things!

I would have to look more closely to understand where the post pandemic growth has come from, but the renewables dividends have certainly increased at a decent rate.

I agree there are a lot of steep discounts around at the moment - particularly infrastructure and renewables.

FD

Just had a look at three we of mine, very mixed:

HFEL 30/8/19 5.7p, 25/8/23 6.1p, increase 7% over 4 years
JPM I & G, 4/10/19 3.26p, 6/10/23 4.61p, increase 41.041% over 4 years
SOI 27/8/19 1.8p, 25/8/23 2p, increase 11.11% over 4 years

Also noted MYI knocked out a 20p special dividend on 5/5/23 which may have somewhat boosted returns.
Certainly my total IT dividends have increased slowly over the period (cannot say the same for market values)

[Itsallaguess]

Just had a look at three of mine, very mixed:

HFEL 30/8/19 5.7p, 25/8/23 6.1p, increase 7% over 4 years
JPM I & G, 4/10/19 3.26p, 6/10/23 4.61p, increase 41.041% over 4 years
SOI 27/8/19 1.8p, 25/8/23 2p, increase 11.11% over 4 years

Also noted MYI knocked out a 20p special dividend on 5/5/23 which may have somewhat boosted returns.
Certainly my total IT dividends have increased slowly over the period (cannot say the same for market values)

You had me scratching my head thinking I'd missed that MYI 'special', but I think you'll see that it just looks 'lumpy' from here because it was the final dividend before the 5-for-1 MYI share split -

https://www.dividenddata.co.uk/ex-dividend-date-search.py?searchTerm=MYI

Cheers,

Itsallaguess

[88V8]

Here's the income bought by £100 in each income stream up to 2023 Q3:-....
The astonishing increase in OEIC income has cooled a little; ITs likewise; the HYP has improved a little relatively.

Has this exercise led you to any tentative conclusions yet?
As to the continuation of all three streams?
As to the respective merits as distinct from an element of luck in picking the participants?

V8 (no OEICs)

[Charlottesquare]

Just had a look at three of mine, very mixed:

HFEL 30/8/19 5.7p, 25/8/23 6.1p, increase 7% over 4 years
JPM I & G, 4/10/19 3.26p, 6/10/23 4.61p, increase 41.041% over 4 years
SOI 27/8/19 1.8p, 25/8/23 2p, increase 11.11% over 4 years

Also noted MYI knocked out a 20p special dividend on 5/5/23 which may have somewhat boosted returns.
Certainly my total IT dividends have increased slowly over the period (cannot say the same for market values)

You had me scratching my head thinking I'd missed that MYI 'special', but I think you'll see that it just looks 'lumpy' from here because it was the final dividend before the 5-for-1 MYI share split -

https://www.dividenddata.co.uk/ex-dividend-date-search.py?searchTerm=MYI

Cheers,

Itsallaguess

You are correct, apologies, HL did not have it lined up with the other previous ones on their tables and I did not take enough care reading

[Arborbridge]

Here's the income bought by £100 in each income stream up to 2023 Q3:-....
The astonishing increase in OEIC income has cooled a little; ITs likewise; the HYP has improved a little relatively.

Has this exercise led you to any tentative conclusions yet?
As to the continuation of all three streams?
As to the respective merits as distinct from an element of luck in picking the participants?

V8 (no OEICs)

It's a classic "never-ending-story" isn't it? One always wonders how long trends will run and what is just round the corner. I guess at present, I would say that the OEICS have been surprisingly good (compared with expectations downgraded by some pro IT views here); that HYP in the past few years has been disappointing; that ITs have been stalwart and far less bother.

The total investment drive has evolved, but only a little, based on experience. I've gradually invested more in ITs, and more into global offerings to diversify from the home grown ITs and HYP shares. The OEICS have stayed pretty much constant - just reinvesting income and making the occasional change down the years according to perfomance. That is, until this year, when I sold of a couple of laggarding OEICS and used the cash for another purpose (not re-invested). BTW, the decision about that is difficult because you never know whether laggards will become leaders. I do it based on XIRR. I keep a record of XIRR twice a year and compare each OEIC to the median XIRR of the others in the basket. I therefore can choose which ones to cull based on long term performance relative to the others. This also applies to my ITs, but they have hardly changed except for mergers and additions. I've had CTY and LWDB since I first started investing, for example.

That's about all I can say at the moment. I think my investment style is more or less settle now, but if anything I have have a few thoughts about going more down yield as my income seems sufficient. Mind you, that might be put on hold unless current dividends start perking up!

Arb.

[Arborbridge]

And here is the latest for the capital side - unit price in pence for each of the three streams:-



Arb.

[Newroad]

Hi Arb.

Do you have a "total return" version of your charts/units, against whatever benchmark(s) you think relevant - my apology in advance if you have supplied one and I misunderstood/missed it?

Regards, Newroad

[BullDog]

Many thanks again for this fascinating experiment. Quite an expensive income stream from ArbHYP, it seems.

[Arborbridge]

Hi Arb.

Do you have a "total return" version of your charts/units, against whatever benchmark(s) you think relevant - my apology in advance if you have supplied one and I misunderstood/missed it?

Regards, Newroad

I've never kept one for the OEICS or ITs, and the one I have for the accumulation units for the HYP I don't often publish - simply because it started retrospectively rather than from the word "go". Therefore I was never 100% sure of its accuracy.
However, I can tell you that the accumulationg units have traditionally been higher than the FTSE100 TR curve - that is, until recently when they have dipped below it.

Arb.

[Arborbridge]

Many thanks again for this fascinating experiment. Quite an expensive income stream from ArbHYP, it seems.

Yes, but the principle of HYP is that one never sells it, so the price becomes irrelevant. After I'm dead, it will have served its purpose.
In any case, how expensive would it have been to give my capital away to an insurance company and buy an annuity? - yet people do it, and that was my main alternative option when I retired. In practice HYP was a good decision because the income from an annuity would not have been enough.

Arb.