IT SIPP Horrific

[OllyDrod]

It's been a tough week watching things slide, but the only thing I've sold are my JP Morgan Indian (JII) shares which I'd already committed to offload as part of a corporate action to buy back at NAV. Considering myself lucky to have locked in the NAV back in January when they announced it, but that's all it was - luck. These sort of sell-offs are exactly the reason I don't try to time the market, try to buy and hold wherever possible, and will tend towards defensive(ish) income over growth most of the time.

Looking at my IT portfolio this morning, almost everything seems to have taken a hit - including the REITs, thematic trusts, bond-focused ITs, emerging markets, etc. Slightly surprised to see all of these moving in the same direction (albeit to varying degrees) and to me that suggests panic has been the main driver this week, rather than (eg) a dispassionate assessment of the impact of the virus on future profits driving an equity sell-off. After some back-of-the-envelope calcs, I appear to be down about 75% as much as the FTSE over the week, which is a crumb of comfort, and perhaps indicates a modicum of success with regard to diversification.

How have others fared?
Has anything held up surprisingly well?
Has anyone spotted any apparent bargains? (falling knife-proof gloves advised...)

I will continue to hold and ride this out, harvesting my divs and possibly lighting up some dry powder should the mood take me. Remember Kipling:

"If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’
...
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!"
https://www.poetryfoundation.org/poems/46473/if---

- OllyDrod

============================

were all doooooooooooooomed......................

Ahem...
*Don't panic

- OllyDrod

[ffacoffipawb64]

Update. I have now reduced my drawdown and have got a part time job to make sure i dont run out of money. Retiring early has been a mistake and in retrospect i should have been more careful with my numbers before fully retiring. Oh well. Perhaps life will get back to normal in a few months and i can give retirement another go. Anyway i have been back at work for four days and it isnt as bad as my previous job which helps i suppose. Not exactly a challenging job but at least it is stress free and it can help preserve my sipp for the future. I was getting bored anyway. Hopefully i wont die with too much money left.

Moral is dont invest above your risk profile i suppose, but nobody could have really forseen this mess, i didnt anyway.

[Dod101]

Update. I have now reduced my drawdown and have got a part time job to make sure i dont run out of money. Retiring early has been a mistake and in retrospect i should have been more careful with my numbers before fully retiring. Oh well. Perhaps life will get back to normal in a few months and i can give retirement another go. Anyway i have been back at work for four days and it isnt as bad as my previous job which helps i suppose. Not exactly a challenging job but at least it is stress free and it can help preserve my sipp for the future. I was getting bored anyway. Hopefully i wont die with too much money left.

Moral is dont invest above your risk profile i suppose, but nobody could have really forseen this mess, i didnt anyway.

Good that you are feeling more comfortable but frankly the 'mess' as you put is just another day in the life of the long term investor. I am sure we would all prefer that it had not happened but these things do. The stock market is not a one way escalator as you now know. I am anything but complacent but these things happen.

Dod

[Bagger46]

Looking at the OP's post, horrified at the drop in MRCH share price leaves me puzzled.

If in drawdown, then the SIPP investor in MRCH has obviously chosen to live on portfolio income, and MRCH of all ITs is very unlikely to drop its divi, at worse it might vegetate later on for a year or so as a result of the crisis, but I bet the next divi will be up by at least inflation. So business as usual.

If still building the SIPP, then not horrific at all, but terrific, just get the pound cost averaging going, and accelerate it if you can. That is what my grandkids are busy doing at the mo in their SIPPs.

Sad that the OP felt he had to go back to work, even more sad that he was bored in retirement. In our case we are so busy in retirement that we can't see how we had time to go to work in the first place!

Bagger

[Wuffle]

Is sad the right word?
There is a social irony here that the talented - I will give meritocracy the benefit of doubt - can swan off into the sunset the earliest.
Einstein would have been unavailable towards the end of WW2 for example.

W.

[Steveam]

"Pensions Freedom" includes the freedom to get things wrong. When Osborne introduced the freedoms I was pleased as I was/am in a position to withstand considerable volatility is both asset values and, more importantly, income. I had a concern for those with less resilience in their finances.

I have a friend who was planning to retire later this year and asked me for advice (which I'm not qualified to give). I have reatedly reminded him that markets can and do drop 30%+ and suggested that he think very carefully about how this would leave him.

[SalvorHardin]

Looking at the OP's post, horrified at the drop in MRCH share price leaves me puzzled.

If in drawdown, then the SIPP investor in MRCH has obviously chosen to live on portfolio income, and MRCH of all ITs is very unlikely to drop its divi, at worse it might vegetate later on for a year or so as a result of the crisis, but I bet the next divi will be up by at least inflation. So business as usual.

If still building the SIPP, then not horrific at all, but terrific, just get the pound cost averaging going, and accelerate it if you can. That is what my grandkids are busy doing at the mo in their SIPPs.

Sad that the OP felt he had to go back to work, even more sad that he was bored in retirement. In our case we are so busy in retirement that we can't see how we had time to go to work in the first place!

IMHO it's our old friend "loss aversion" at work. Humans are hardwired to avoid losses and when they happen this produces an adverse reaction far worse than the benefit provided by a gain of the same magnitude. The behavioural economists have run many experiments which show that the vast majority of people require a gain of at least £200 to overcome the psychological pain of losing £100. Give them their lost £100 back, so they're no worse off, and they still have negative feelings.

Taking losses can hurt a lot. The HYP investors try to dull the pain with "capital losses don't matter", which helps because it focuses attention on dividends (and dividends produced by a portfolio are much less volatile than its capital value). But if you're in drawdown mode then losses really do matter.

I've known several people over the years who've dipped a metaphorial toe in the stock market, saw their investment fall, then clung on until they (finally) got their capital back (nominal, not adjusted for inflation) and then sold up never to return.

https://en.wikipedia.org/wiki/Loss_aversion

It's hard for most people to focus on the dividends, which in Merchants case as you've pointed out are highly unlikely to be cut, when you're seeing capital losses accumulate every day. It can be very wearing.

Us old-timers develop some resistance to loss aversion. I retired in 2003, have no income other than that provided by my investments and so far I'm down 11% on 2019. This loss has no effect on my lifestyle, even if dividends are cut to the same extent. I'm fairly laid back about it, losses like this come with the territory and what really helps is that I have a big margin of safety (a 50% cut in my dividends has no effect on my lifestyle).

Me too for "however did I find the time to go to work". Though many people find that when they retire there is a big hole in their life because of the absence of work and the structure that it provided to their life (and often to their social life).

[Newroad]

Hi All,

Whilst there is an element of watching a train wreck happen, it is interesting (even if only academically) to see things unfold. You may recall my earlier post (citing figures from around 20th Feb). Here are the latest.

ISA:
WTAN - down about 14.5%
HDIV - down about 0.5%

SIPP:
ATST - down about 15.5%
IPE - down about 3.5%

JISA(s):
FCIT - down about 16.5%
CMHY - down about 3.5%

So, as expected, CMHY bounced back towards its NAV, reasonably quickly as it happens. I'm going to now follow MYI as well, as my wife holds those for the kids (courtesy of the other set of grandparents) - though not in a tax efficient vehicle.

Wife:
MYI: down about 14.0%

It will be interesting to see how the two sectors, Global - I know MYI is technically Global Equity Income - and Debt (Loans and Bonds) do versus each other over the next period. I plan to stay equally invested, though may re-balance each sub portfolio at some point.

The one left field thought I had was perhaps adding some Berkshire Hathaway B-stock if they drop some more, perhaps sub $200 somewhere. I know not strictly an Investment Trust, but there are some similarities between these and a conglomerate. In context, I've never bought a US stock before - if I was to buy the above stock (on the II platform, if relevant) - would it matter

Which vehicle, e.g. does it matter whether SIPP, ISA, JISA, and
What ticker (it appears to show as "0R37" on II - is that correct, and
Does anybody know how the currency conversion for payment works?

Regards, Newroad

[77ss]

.....

Us old-timers develop some resistance to loss aversion. I retired in 2003, have no income other than that provided by my investments and so far I'm down 11% on 2019. This loss has no effect on my lifestyle, even if dividends are cut to the same extent. I'm fairly laid back about it, losses like this come with the territory and what really helps is that I have a big margin of safety (a 50% cut in my dividends has no effect on my lifestyle).

.....

Quite. Safety margin is so important. I retired in 2002. Knowing that I luckily had the cushion of a DB pension to come enabled me to ride out the financial crash of 2008 without panicking. Currently dividends provide about 60% of my income and I reckon a 30% cut would have little effect on me.

A bit of calm and perspective helps. So my holdings are down 9% YTD - last year they were up 28% (and down 10% in 2018). No comfort to new investors of course , but that's the way the markets move - and the dividends are largely unchanged.

[mc2fool]

Moral is dont invest above your risk profile i suppose, but nobody could have really forseen this mess, i didnt anyway.

The first part of that sentence is most definitely a key lesson. However, as for the second part, if you didn't foresee "this mess", as you call it, I'd sorry to say that suggests a lack of basic research into and understanding of the nature of equity investment.

The market, as measured by the FTSE 100, currently at 6463, is just 18% down from its all time peak of 7877 in May 2018, and the FTSE 250 at 18747 is just 15% down from its all time peak of 22108 at the beginning of this year.

In the grand scheme of equity markets, that's well within the range of expectations -- the FTSE 100 has lost ~50% of its value twice already in the last couple of decades, and of course that's an average; individual investments, in particular ITs which have premiums/discounts and possibly gearing too, could drop more.

While I don't wish to sound like I'm rubbing it in (and I do sympathise!), a quick look at a historical chart of, say, the FTSE 100 should have set your expectations as to what could happen. http://mediacharting.digitallook.com/cg ... dicator_3=

So, while I, at least, didn't foresee this specific drop at this time, a serious drop (indeed, like a serious pandemic) has always been on the cards as a matter of "when", not "if".

[mc2fool]

Of course, there are always times when even the most philosophical investors raise an eyebrow ...

[ffacoffipawb64]

Of course, there are always times when even the most philosophical investors raise an eyebrow ...

I'll have to go on the game at this rate.

[88V8]

I've been buying Merchants as they fall. If one has liquidity, this is a golden time. I buy, they fall some more, I buy again.
I would not like to be 'fully invested' right now.

V8

[JuanDB]

Agreed V8. I recently got into MRCH at 4.54 which seemed a steal. Topped up at 5.38 which smarted a little. At 4.08 I’m a buyer all day long. Around a 6.7% forward yield I think.

Cheers,

Juan.

[Spet0789]

Of course, there are always times when even the most philosophical investors raise an eyebrow ...

I'll have to go on the game at this rate.

To paraphrase the sailor from Blackadder, I suspect you’d struggle to charge sixpence for a good, hard shag.

[88V8]

MRCH 385p to buy - I hope, no firm price.
So I have.
Panic now!!

V8

[JDot]

Does anyone have any comment on HFEL fall to 284.00?
Is it a good buy or not at this price a slight discount to NAV of -0.84

[JuanDB]

I'm overweight HFEL otherwise I would be buying at this level. I would suggest looking at the dividend history for HFEL around the 2008/9 GFC when it did take a dip for a year or two; it doesn't have an extended history of unbroken increases in the same way some other ITs do.

[JDot]

I'm overweight HFEL otherwise I would be buying at this level. I would suggest looking at the dividend history for HFEL around the 2008/9 GFC when it did take a dip for a year or two; it doesn't have an extended history of unbroken increases in the same way some other ITs do.

From what I have found here it does indeed seem to have an unbroken dividend history from around 2007 to present or have I missed something?


LSE:HFEL

Henderson Far East Income Dividends - HFEL

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Henderson Far East Income Limited HFEL London Ordinary Share JE00B1GXH751 ORD NPV
Price Change Price Change % Stock Price Low Price High Price Open Price Close Price Last Trade
-19.00 -6.23% 286.00 275.00 304.00 300.00 305.00 16:35:18
more quote information »
Industry Sector
EQUITY INVESTMENT INSTRUMENTS
Memo
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Henderson Far East Income HFEL Dividends History
Announcement Date Type Currency Dividend Amount Period Start Period End Ex Date Record Date Payment Date Total Dividend Amount
22/01/2020 Interim GBX 5.7 31/08/2019 31/08/2020 30/01/2020 31/01/2020 28/02/2020 0
22/10/2019 Interim GBX 5.7 31/08/2019 31/08/2020 31/10/2019 01/11/2019 29/11/2019 22.4
20/06/2019 Interim GBX 5.7 31/08/2018 31/08/2019 01/08/2019 02/08/2019 30/08/2019 0
25/04/2019 Interim GBX 5.5 31/08/2018 31/08/2019 02/05/2019 03/05/2019 31/05/2019 0
23/01/2019 Interim GBX 5.5 31/08/2018 31/08/2019 31/01/2019 01/02/2019 28/02/2019 0
24/10/2018 Final GBX 5.5 31/08/2017 31/08/2018 01/11/2018 02/11/2018 30/11/2018 21.6
22/06/2018 Interim GBX 5.5 31/08/2017 31/08/2018 02/08/2018 03/08/2018 31/08/2018 0
19/04/2018 Interim GBX 5.3 31/08/2017 31/08/2018 03/05/2018 04/05/2018 31/05/2018 0
24/01/2018 Interim GBX 5.3 31/08/2017 31/08/2018 01/02/2018 02/02/2018 28/02/2018 0
26/10/2017 Final GBX 5.3 31/08/2016 31/08/2017 02/11/2017 03/11/2017 30/11/2017 20.8
23/06/2017 Interim GBX 5.3 31/08/2016 31/08/2017 03/08/2017 04/08/2017 31/08/2017 0
24/04/2017 Interim GBX 5.1 31/08/2016 31/08/2017 04/05/2017 05/05/2017 31/05/2017 0
26/01/2017 Interim GBX 5.1 31/08/2016 31/08/2017 02/02/2017 03/02/2017 28/02/2017 0
25/10/2016 Final GBX 5.1 31/08/2015 31/08/2016 03/11/2016 04/11/2016 30/11/2016 20
27/07/2016 Interim GBX 5.1 31/08/2015 31/08/2016 04/08/2016 05/08/2016 31/08/2016 0
20/04/2016 Interim GBX 4.9 31/08/2015 31/08/2016 05/05/2016 06/05/2016 31/05/2016 0
28/01/2016 Interim GBX 4.9 31/08/2015 31/08/2016 04/02/2016 05/02/2016 29/02/2016 0
21/10/2015 Final GBX 4.9 31/08/2014 31/08/2015 05/11/2015 06/11/2015 30/11/2015 19.2
26/06/2015 Interim GBX 4.9 31/08/2014 31/08/2015 06/08/2015 07/08/2015 28/08/2015 0
22/04/2015 Interim GBX 4.7 31/08/2014 31/08/2015 07/05/2015 08/05/2015 29/05/2015 0
20/01/2015 Interim GBX 4.7 31/08/2014 31/08/2015 12/02/2015 13/02/2015 27/02/2015 0
24/10/2014 Final GBX 4.7 31/08/2013 31/08/2014 06/11/2014 07/11/2014 28/11/2014 18.2
01/07/2014 Interim GBX 4.7 31/08/2013 31/08/2014 06/08/2014 08/08/2014 29/08/2014 0
09/04/2014 Interim GBX 4.4 31/08/2013 31/08/2014 07/05/2014 09/05/2014 30/05/2014 0
14/01/2014 Interim GBX 4.4 31/08/2013 31/08/2014 05/02/2014 07/02/2014 28/02/2014 0
29/10/2013 Final GBX 4.4 31/08/2012 31/08/2013 06/11/2013 08/11/2013 29/11/2013 16.7
02/07/2013 Interim GBX 4.1 31/08/2012 31/08/2013 07/08/2013 09/08/2013 30/08/2013 0
16/04/2013 Interim GBX 4.1 31/08/2012 31/08/2013 08/05/2013 10/05/2013 31/05/2013 0
15/01/2013 Interim GBX 4.1 31/08/2012 31/08/2013 06/02/2013 08/02/2013 28/02/2013 0
01/11/2012 Final GBX 4.1 31/08/2011 31/08/2012 07/11/2012 09/11/2012 30/11/2012 16
04/07/2012 Interim GBX 4.1 31/08/2011 31/08/2012 01/08/2012 03/08/2012 31/08/2012 0
18/04/2012 Interim GBX 3.9 31/08/2011 31/08/2012 02/05/2012 04/05/2012 31/05/2012 0
18/01/2012 Interim GBX 3.9 31/08/2011 31/08/2012 01/02/2012 03/02/2012 29/02/2012 0
20/10/2011 Final GBX 3.9 31/08/2010 31/08/2011 02/11/2011 04/11/2011 30/11/2011 15
05/07/2011 Interim GBX 3.9 31/08/2010 31/08/2011 03/08/2011 05/08/2011 31/08/2011 0
12/04/2011 Interim GBX 3.6 31/08/2010 31/08/2011 04/05/2011 06/05/2011 31/05/2011 0
19/01/2011 Interim GBX 3.6 31/08/2010 31/08/2011 02/02/2011 04/02/2011 28/02/2011 0
20/10/2010 Final GBX 3.6 31/08/2009 31/08/2010 03/11/2010 05/11/2010 30/11/2010 13.6
19/07/2010 Interim GBX 3.6 31/08/2009 31/08/2010 04/08/2010 06/08/2010 31/08/2010 0
23/04/2010 Interim GBX 3.2 31/08/2009 31/08/2010 05/05/2010 07/05/2010 28/05/2010 0
19/01/2010 Interim GBX 3.2 31/08/2009 31/08/2010 03/02/2010 05/02/2010 26/02/2010 0
31/10/2009 Final GBX 3.2 31/08/2008 31/08/2009 04/11/2009 06/11/2009 30/11/200912.4
09/07/2009 Interim GBX 3.2 31/08/2008 31/08/2009 05/08/2009 07/08/2009 31/08/2009 0
21/04/2009 Interim GBX 3 31/08/2008 31/08/2009 06/05/2009 08/05/2009 29/05/2009 0
22/01/2009 Interim GBX 3 31/08/2008 31/08/2009 04/02/2009 06/02/2009 27/02/2009 0
31/10/2008 Final GBX 3 31/08/2007 31/08/2008 05/11/2008 07/11/2008 28/11/2008 12
10/07/2008 Interim GBX 3 31/08/2007 31/08/2008 06/08/2008 08/08/2008 29/08/2008 0
16/04/2008 Interim GBX 3 31/08/2007 31/08/2008 07/05/2008 09/05/2008 30/05/2008 0
14/01/2008 Interim GBX 3 31/08/2007 31/08/2008 06/02/2008 08/02/2008 29/02/2008 0
30/10/2007 Final GBX 2.75 31/08/2006 31/08/2007 07/11/2007 09/11/2007 30/11/2007 8.25
12/07/2007 Interim GBX 2.75 31/08/2006 31/08/2007 08/08/2007 10/08/2007 30/08/2007 0
02/05/2007 Interim GBX 2.75 31/08/2006 31/08/2007 09/05/2007 11/05/2007 31/05/2007 0

[JuanDB]

Apologies JDot. Operating from memory, I got the year wrong. Dividend was reduced 2006-2007.

https://www.dividendmax.com/united-kingdom/london-stock-exchange/investment-trusts/henderson-far-east-income-trust/dividends

Thanks,

Juan