Shires IT

[richfool]

I am currently appraising the performance of my portfolio of IT's, and am particularly looking at Shires IT, which I bought into early this year, because, as well as investing in UK stocks with an income & growth emphasis and paying a good dividend yield (over 5%), it also gave me some exposure to fixed interest/corporate bonds (the latter I didn't have). The fixed interest element amounts to approx 25%.

I thought when interest rates rise the fixed interest element may suffer some loss of value.

During the course of this year, the trust has lost some value and particularly so over the last week or so, and more so than its peers in the same sector. What I am trying to determine is whether the poor capital performance is simply due to the poor performance of the sector (UK G&I), or whether the fixed interest/corporate bond holdings have been a significant or major factor in its fallback.

I note that it holds some smaller company stocks by way of ASCI - Aberdeen Smaller Companies trust) and the trust is relatively small, being under £100m.

I would welcome any comments from more learned posters.

https://citywire.co.uk/money/investment ... undID=3205

https://citywire.co.uk/money/investment ... ePeriod=12

https://www.hl.co.uk/shares/shares-sear ... 50p-shares

[Avantegarde]

In the past five years, the total return of Shires has been 33% (according to the AIC stats). For that, you would have paid almost 1% of your total investment each year by way of the ongoing charge. A FTSE All-Share tracker would have returned (as of today) 37% in that time, and charged you less than 0.1% each year for the privilege. Shires does not sound very attractive to me.

[richfool]

In the past five years, the total return of Shires has been 33% (according to the AIC stats). For that, you would have paid almost 1% of your total investment each year by way of the ongoing charge. A FTSE All-Share tracker would have returned (as of today) 37% in that time, and charged you less than 0.1% each year for the privilege. Shires does not sound very attractive to me.

One thing one can be sure of with a tracker, is that it will track the market all the way down. I prefer active management, because there is at least a chance that they will outperform, also the manager can adjust sectors or take a defensive stance if he sees it appropriate. I also doubt a UK tracker will be paying 5.5% dividend yield, as with Shires currently.

As mentioned Shires also has a mix of equities and fixed interest and the return (capital and dividend income) is net of all charges..

[Hariseldon58]

I don't think the active management will prevent the issues of a tracker faithfully following the market down but it may well mitigate the effect.

I held an HYP and dumped it in April 2008 and went into Investment Trusts and subsequently into mostly passive ETF's.

In 2016 I did some analysis to see what would have happened if I had held on to the HYP, how it compared to my actual portfolio, the FT All Share and finally to City of London Investment Trust.

The HYP made gentle progress from its 2008 value in both capital and Income but the All Share did better and the initially lower income had almost caught up with the HYP. City of London did much better in capital and income terms.

My own portfolio did far better, some of the Investment Trusts I bought in 2008-2010 did really well, Lowland, Finsbury Growth and Income amongst others. I think that active management worked in picking up some bargains. My own portfolio did far better as I added other overseas assets in quantity from around 2011-12 onwards and thus it cannot be compared to a static mix.

You can't extrapolate from my experience in general as it could be my HYP was poorly selected ( 35 holdings, too many financials... couple of shares did really well but nothing like enough to make up for the disasters) but the indications are that active management in Investment trusts was helpful.

The Investment Trust was not hit by forced redemptions etc so it could take a more relaxed view of a crisis, there was room to employ gearing etc.

[richfool]

Thanks for the thoughts.

My original point was more from the perspective of - is Shires a good trust to use to gain UK equity and fixed interest exposure and whether its performance is reasonable bearing in mind its fixed interest holdings, and noting that its dividend yield is good at 5.5%.