HYP versus VUKE

[Arborbridge]

Heres' something that I've been playing with. I took a small investment in VUKE in 2019 to see if eventually I might shift my investments into it rather than run a HYP. In fact, I probably won't for various reasons, but I might as well look at what I found out so far.....

Here are the comparisons for each separate year for the XIRR of HYP versus VUKE.

Date      | ArbHYP | VUKE  
31-Dec-20 | -8.31% | -7.93%
31-Dec-21 | 18.67% | 18.03%
30-Dec-22 |  0.68% |  5.30%
30-Dec-23 |  5.59% | -1.83%

If my arithmetic is correct, I make that HYP is in the lead by a small margin. Not surprisingly, the numbers follow fairly well, which is conforting for my record keeping! - except for the last two years. This might be explained by post covid realignment of particular shares and dividends, but I have double checked and the numbers look correct. Another factor is that my HYP is "dynamic" i.e. has occasional fresh capital - but so far the VUKE has received no extra money.

Now I have gotten around to doing this I might as well carry on - particularly if anyone finds it interesting or amusing.

Arb.

[G3lc]

Why did you consider shifting your investments into VUKE ?

[Arborbridge]

Why did you consider shifting your investments into VUKE ?

I thought it could give my much the same as a HYP with much less decision making and record keeping. This is in the context of getting older, and possibly leaving something which my wife can use easily.


Arb.

[kempiejon]

Why did you consider shifting your investments into VUKE ?

I thought it could give my much the same as a HYP with much less decision making and record keeping. This is in the context of getting older, and possibly leaving something which my wife can use easily.


Arb.

Was this plan for you to do the swap before you die or leave the instruction to liquidate and redirect?
This does come up from time to time on the boards. Making it easy for any inheritor of these share machinations we've spent decades fettling with. Warren suggested Mrs Buffet stick 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index tracker. She did predecease him but I think his plan is good. I'd probably tune that to a global tracker. I hope my HYP could be ignored with the income used for shopping but there are corporate actions to look at and those could be stuck into the afore mentioned global tracker.

I suppose if leaving a portfolio that would be the sole source of wealth and income for the survivor a plan for an indifferent or ignorant heir is a good idea but the HYP was supposed to be an easy fire and forget exercise. Talking of which Arb it's good to see your HYP pulling ahead of the index otherwise what's the point? I assume it's also offered a higher yield.

[Arborbridge]

Confession time: I know at least one of those XIRR numbers is incorrect, so I will have to check them all again.

Right now, I have had enough of looking a spread sheet numbers so I'm taking time out to do something practical.

Will come back on it tonight or tomorrow morning.

[Arborbridge]

Was this plan for you to do the swap before you die or leave the instruction to liquidate and redirect?
This does come up from time to time on the boards. Making it easy for any inheritor of these share machinations we've spent decades fettling with. Warren suggested Mrs Buffet stick 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index tracker. She did predecease him but I think his plan is good. I'd probably tune that to a global tracker. I hope my HYP could be ignored with the income used for shopping but there are corporate actions to look at and those could be stuck into the afore mentioned global tracker.

I suppose if leaving a portfolio that would be the sole source of wealth and income for the survivor a plan for an indifferent or ignorant heir is a good idea but the HYP was supposed to be an easy fire and forget exercise. Talking of which Arb it's good to see your HYP pulling ahead of the index otherwise what's the point? I assume it's also offered a higher yield.

Originally, I just wanted to have a benchmark. It was out of curiosity, really, just to see whether I might just as well dump most of my capital in the one instrument if it served as well as the HYP. I would probably never do that, I realised later, because of my general caution. Having heard of so many disasters down the years where people have lost their life savings I'm notorious for having many eggs in many baskets.

As regards my wife, she has often said she wouldn't have a clue what to do - or even how to get into my accounts. I usually tell her not to worry about the HYP because for months on end there's really nothing one needs to do. She has a HYP of her own which I run (the ArbWyfHYP) and I rarely make any changes in that and it does rather well!

I think far more difficulty will arise from legal issues such as probate than problems with investment. The main worry would be the temptation to get involved with some money sucking IFA.

Arb.

[ReformedCharacter]

As regards my wife, she has often said she wouldn't have a clue what to do - or even how to get into my accounts. I usually tell her not to worry about the HYP because for months on end there's really nothing one needs to do. She has a HYP of her own which I run (the ArbWyfHYP) and I rarely make any changes in that and it does rather well!

I think far more difficulty will arise from legal issues such as probate than problems with investment. The main worry would be the temptation to get involved with some money sucking IFA.

Arb.

You raise a good point, My OH is a highly intelligent woman but has little interest in finances. Also, I have a well founded dislike of the IFA industry in general. A few years ago I wrote her a strategy for when I died or could no longer manage our finances. A few months ago I decided that I had made it too complicated and that she would struggle to make use of it as intended, so I rewrote it. As it stands now I've suggested that she leaves the individual company shares and ITs alone and re-invest the income in equal amounts into 3 low cost tracker funds, one with Fidelity and 2 with Vanguard. I've also pointed her in the direction of gilts, given the possible tax advantages and asset diversification. I want her to be confident in how to manage the finances, particularly as she is likely to receive a fairly substantial inheritance at some point in the future. I keep all the details in several shared Google sheets, fortunately one of my sons is fairly interested and keen to learn.

RC

[Arborbridge]

I've checked the percentages until I had a consistent result three times in a row - and here's the final table:-

Date      | ArbHYP | VUKE  
31-Dec-20 | -8.31% | -7.93%
31-Dec-21 | 18.67% | 17.33%
30-Dec-22 |  0.68% |  5.28%
30-Dec-23 |  5.59% |  6.86%

The above are XIRRs for the discrete year to Dec 31st.

I've also give below the income table. Mine is income per unit, and for VUKE income per share - in both cases to December 31st in each year.

Date      | ArbHYP | VUKE  
31-Dec-20 |   5.33 |  78.84
31-Dec-21 |   6.68 | 125.74
30-Dec-22 |   7.20 | 128.69
30-Dec-23 |   6.85 | 128.36

The 2020 to 2021 figure for VUKE looks like a covid recovery, so we will see how things develop now when hopefully a more normal market has resumed.


Arb.

[Bubblesofearth]

Heres' something that I've been playing with. I took a small investment in VUKE in 2019 to see if eventually I might shift my investments into it rather than run a HYP.


Arb.

Can I make a plea that you or anyone introducing a ticker symbol let us know what it stands for?

I know it's easy to look up but putting the inconvenience of that extra step onto the reader might mean fewer responses, especially if people are scanning lots of posts.

BoE

[Arborbridge]

Heres' something that I've been playing with. I took a small investment in VUKE in 2019 to see if eventually I might shift my investments into it rather than run a HYP.


Arb.

Can I make a plea that you or anyone introducing a ticker symbol let us know what it stands for?

I know it's easy to look up but putting the inconvenience of that extra step onto the reader might mean fewer responses, especially if people are scanning lots of posts.

BoE

Yes, I'll try to remember - pure laziness on my part but sometimes the names are quite long. Well, that's my excuse.

Thinking about my holding in VUKE, if one took out of the equation the wish to have an fit and forget alternative for HYP (I know there isn't such a thing) one could look at the Vanguard All FTSE fund VUKAAGI yielding 3.7%, but this only pays dividends annually. It's a unit trust.

[kempiejon]

As regards my wife, she has often said she wouldn't have a clue what to do - or even how to get into my accounts. I usually tell her not to worry about the HYP because for months on end there's really nothing one needs to do. She has a HYP of her own which I run (the ArbWyfHYP) and I rarely make any changes in that and it does rather well!

I think far more difficulty will arise from legal issues such as probate than problems with investment. The main worry would be the temptation to get involved with some money sucking IFA.

So what was your conclusion should sudden catastrophe or terminal decline strike you first? We've not had the conversation, we both have income and pension provision so my HYP ISAs wouldn't be vital should I predecease but post probate the income flow could be redirected to the new recipient and the extravagances commence. I don't worry too much about continued maintenance of the HYP, just spend any money it throws off or cash it in and fritter it away. I'm just as dead. No heirs. I feel we should make a better plan otherwise as well as mourning the loss of a partner the admin will be a hassle. Those thoughts are for another time and board.

[G3lc]

My problem is I tend to be paranoid with most of my investments being certificated, and when I look at Vanguard and the like they own very little apart from other peoples money/investments and produce no certificate of ownership and nothing in writing apart from online, and one has to ask how safe are they when online is down for whatever reason and how does one really safeguard one’s interests both now and after one, for whatever reason is no longer able to deal with stuff.

[Tedx]

My problem is I tend to be paranoid with most of my investments being certificated, and when I look at Vanguard and the like they own very little apart from other peoples money/investments and produce no certificate of ownership and nothing in writing apart from online, and one has to ask how safe are they when online is down for whatever reason and how does one really safeguard one’s interests both now and after one, for whatever reason is no longer able to deal with stuff.

That is paranoid.

[IanTHughes]

Heres' something that I've been playing with. I took a small investment in VUKE in 2019 to see if eventually I might shift my investments into it rather than run a HYP. In fact, I probably won't for various reasons, but I might as well look at what I found out so far.....

Here are the comparisons for each separate year for the XIRR of HYP versus VUKE.

Date      | ArbHYP | VUKE  
31-Dec-20 | -8.31% | -7.93%
31-Dec-21 | 18.67% | 18.03%
30-Dec-22 |  0.68% |  5.30%
30-Dec-23 |  5.59% | -1.83%

If my arithmetic is correct, I make that HYP is in the lead by a small margin.

Why do you only calculate discrete one-year values for XIRR? Why not calculate an XIRR value from start date to now?

That is after all the point of XIRR.

Enjoy!


Ian

[Arborbridge]

Heres' something that I've been playing with. I took a small investment in VUKE in 2019 to see if eventually I might shift my investments into it rather than run a HYP. In fact, I probably won't for various reasons, but I might as well look at what I found out so far.....

Here are the comparisons for each separate year for the XIRR of HYP versus VUKE.

Date      | ArbHYP | VUKE  
31-Dec-20 | -8.31% | -7.93%
31-Dec-21 | 18.67% | 18.03%
30-Dec-22 |  0.68% |  5.30%
30-Dec-23 |  5.59% | -1.83%

If my arithmetic is correct, I make that HYP is in the lead by a small margin.

Why do you only calculate discrete one-year values for XIRR? Why not calculate an XIRR value from start date to now?

That is after all the point of XIRR.

Enjoy!


Ian

I do both, but I was also interestde to see the variation.

[monabri]

Why do you only calculate discrete one-year values for XIRR? Why not calculate an XIRR value from start date to now?

That is after all the point of XIRR.

Enjoy!


Ian

I do both, but I was also interestde to see the variation.

Seems "interesting" to see that the XIRR performance of a 30+ HYP should behave similar to VUKE for year 1 and 2 and then the divergence?

[Arborbridge]

I do both, but I was also interestde to see the variation.

Seems "interesting" to see that the XIRR performance of a 30+ HYP should behave similar to VUKE for year 1 and 2 and then the divergence?

I'm not sure if you saw the corrected values:

Date | ArbHYP | VUKE
31-Dec-20 | -8.31% | -7.93%
31-Dec-21 | 18.67% | 17.33%
30-Dec-22 | 0.68% | 5.28%
30-Dec-23 | 5.59% | 6.86%

The big difference seeems to be in 2022. No idea what happened - maybe aftermath of Covid? VUKE does have a different population to a HYP.

Arb.

[kempiejon]

The big difference seems to be in 2022. No idea what happened - maybe aftermath of Covid? VUKE does have a different population to a HYP.

Arb.

Not only a different population only about 20% of the number of holdings in the portfolio but also equal weighting at least on the get go. Seems lots of equities and strategies are often correlated and trends do read across.

[Arborbridge]

The big difference seems to be in 2022. No idea what happened - maybe aftermath of Covid? VUKE does have a different population to a HYP.

Arb.

Not only a different population only about 20% of the number of holdings in the portfolio but also equal weighting at least on the get go. Seems lots of equities and strategies are often correlated and trends do read across.

Thinking on, I remember something similar happened with tqo of my ITs - Murray Income and City of London. During Brexit MUT came through better than CTY even though they are both have many holdings and fish in teh same pond. So, that I'm different to VUKE shouldn't be too surprising.

[OhNoNotimAgain]

So what you really want is a vehicle that holds all the dividend paying stocks in the FTA and distributes every month that you can buy and forget?