VPC Specialty Lending (VSL)

[yieldhog]

VSL has some attractive features that may appeal to anyone looking for a high yield combined with a reasonable risk profile.
At current market price it yields around 9%
The latest Interim Report comments:
1. Weighted Average Coupon 10.82%
2.Weighted Average Life 32- months
It pays quarterly and has been paying 2p per quarter since 2018 while dividend cover has remained above 1.0.

My personal view is that inflation will not be easily contained below the sort of level we saw back in the 1970's (15%+) but with such a high coupon rate and short average life VSL may provide attractive real returns to be achieved.

Not for the faint-hearted but do your own research if it sounds interesting and let me know if you have any constructive comments.
Please, no diatribes about 'junk bonds' and high yielders in general. VSL is not a 'junk bond' portfolio.

I own some VSL as part of a well diversified portfolio of shares, bonds, ITs and ETFs.

Y

[Alaric]

I own some VSL as part of a well diversified portfolio of shares, bonds, ITs and ETFs.

One little quirk relevant if held outside of ISA or SIPP, the distribution is split between dividend and interest.

[yieldhog]

Alaric,

That's an interesting point.
Until last year, all my UK stock market investments had been in my SIPP and hence I never had to worry about adverse tax implications of what I bought or sold. However, since selling our rental properties and creating some surplus cash, my wife and I have set up a joint taxable broker account and an ISA each. We don't need to be concerned about the dividends and capital gains in the ISAs, but maybe we will need to pay more attention to tax implications for the taxable account. I haven't yet seen a broker annual tax return document, so it will be interesting to learn more about the numerous quirks of the UK tax reporting system.

From preliminary figures, the various new accounts generated the following total returns:
My ISA +12.9%
Her ISA +7.8%
Taxable A/C + 3.8%

The two ISAs were pretty fully invested within a month or so of the start of the tax year, whereas the taxable account investments were spread over the whole year.
The main contributors to the gains in the taxable account were BERI, SLPE and PIN, whereas the main losses were JSGI and IBT.
The taxable account is more growth oriented than the ISAs.

As with all investments, it's personal circumstances and preferences that determine the structure of each fund. If anyone is interested in the full list of investments I'd be happy to share them, but they reflect my personal choices rather than any established investment strategy.

Y

[Alaric]

Alaric,
I haven't yet seen a broker annual tax return document, so it will be interesting to learn more about the numerous quirks of the UK tax reporting system.

From their latest dividend announcement

https://otp.investis.com/clients/uk/vpc ... id=1553490

The Company has elected to designate all of the interim dividend for the three-month period to 31 December 2021 as an interest distribution to its shareholders, thereby "streaming" income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. No income tax will therefore be deducted at source from this, or from future interest distributions.

That dividend will count alongside interest on cash towards the £ 1000/£ 500 limit.