dundas666 wrote:Weirdly (or not) I think I might end up using a hybrid approach, including all three types: Growth, Income and G+I investment trusts.
Income ITs - buy and hold, enjoy the steady dividends as they roll in
G+I ITs - buy and hold for growing yields, so in 10 years they're effectively Income ITs
Growth ITs - for selling to top-up income
If nothing else it gives me a full selection of ITs to choose from!
Like you, I hold a range of ITs from pure income through to pure growth and I do not think it is weird. However, I think it is worth considering the results of doing this, as to how to divide up your available capital. Here is a spectrum of 4 widely divergent ITs that I hold.
The figures are based on the excellent AIC site today. The first column shows the 5 year total return, including both capital gain and dividends reinvested. In the second column, this is converted to what would happen in an average single year. The third column is the trailing yield for the past year. Subtracting this from the total return gives the approximate capital gain for a year (ignoring dates of dividend reinvestment in the total return calculation).
To illustrate what this means in practice, I have applied the percentages to a £1000 investment. This gives the dividend column, the capital gain column and the total gain column.
TIDM Name 5yr Tot 1yr Tot Yield 1yr Cap Divis Cap Total
Ret % Ret % % Ret % £ Gain £ Gain £
NCYF CQS New City High Yield Fund 38.3 6.7 8.3 -1.6 83.0 -16.0 67.0
HFEL Henderson Far East Income 55.9 9.3 7.2 2.1 72.0 20.9 92.9
JGGI JP Morgan Global Grow & Inc 145.7 19.7 3.2 16.5 32.0 165.0 197.0
SMT Scottish Mortgage 343.6 34.7 0.3 34.4 3.0 344.1 347.1
I quite like NCYF because it behaves nearly like a fixed income investment, giving a lot of dividend that I can either spend or use it to reinvest and rebalance my holdings. However, there is a slight capital loss at present but my XIRR is still 8.1%, which is better than most savings accounts.
HFEL provides diversity to the Far East and a slightly smaller yield, but with a capital gain that should push up the yield a little, year by year.
I feel that JGGI is the sweet spot for me. Although the past year yield is given as 3.2%, this is because the capital rise has overtaken the 4.0% intended yield which is the 'average' over the year, but in hindsight looks less as the IT price has risen strongly. So there is both an acceptable 4.0% dividend and a very acceptable capital gain, which can be accessed if necessary.
SMT is very popular as it keeps on 'giving' capital gain, but the £3.00 annual dividend would not be enough to live on. We would have to do as DOD has and sell some during the volatile peaks.
I hope this gives you something to think about and compare for the range of IT strategies. The AIC site is excellent at showing both the 5 year total return and the historic dividend yield by clicking on the arrowheads at the top of the table to sort according to preference for particular IT strategies, such as Global in this case.
https://www.theaic.co.uk/aic/find-compa ... desc=falseTramrider