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Dave's HYP Update

A helpful place to also put any annual reports etc, of your own portfolios
daveh
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Dave's HYP Update

#107585

Postby daveh » January 3rd, 2018, 9:34 am

This is an update of my HYP. Previous updates were on the TMF boards (but may well have been lost with the board closures, there were links in last years update). My update for last year can be found here:

viewtopic.php?f=15&t=2365




This year I have topped up Ishares Asia Pacific dividends ETF (IAPD), Pennon (PNN), Galliford Try (GFRD) and Carrillion (CLLN) (I know, why!!!). I took up SEGRO’s rights issue and made one new addition Petrofac (PFC) as I thought the price fall was overdone and it was a chance to buy a decent income with a good chance of capital gains too.

I have invested a lot less (about 50% less) new money than previously as I am trying to get as much of my dividend income into ISA’s as possible before the dividend allowance is reduced to £2000. To that end United Utilities, Vodafone, BHP Billiton, William Hill and GSK were sold from my taxable account and bought in my ISA

The portfolio was unitised from September 2003 and the details are shown below.

Capital Performance (dividends reinvested) (Accumulation units).



Income Performance


My portfolio contains EMDV, IDVY and IAPD all exchange traded funds. These have been included to add extra diversification to high yielding companies in Emerging and non UK Markets that I am not going to be able to get by buying individual shares. I have said in the past I might add a couple of ITs in specific areas. A couple of years ago I was thinking of BRCI or BRWM (Blackrock commodities and mining ITs) as an alternative to adding to BLT/S32 and HICL as an infrastructure fund. I haven’t invested in any ITs yet, who knows it might happen this year.


Last year the yield on end of year value was 4.51% and on sum invested was 9.44%. This year, even with a number of dividend cuts the dividend has increased by 7.9% per unit and by 12% in cash terms (less than half in cash terms than last year, but I added less new money this year). This year the portfolio yield is little changed at 4.52% on the end of year capital value and 10.3% on original cost. The overall return is almost unchanged at 8.7% pa calculated with XIRR on excel since I started the HYP.

I’m reasonably happy with the performance on the income front and the capital performance was OK though much lower than for the FTSE 100 total return index which gained 32.25% over the year.

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Re: Dave's HYP Update

#107662

Postby Raptor » January 3rd, 2018, 1:42 pm

Moderator Message:
This HYP practical does not meet the "guidance" for this board. Will move to "portfolio review" with "shadow" in HYP. Raptor.

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Re: Dave's HYP Update

#107672

Postby OZYU » January 3rd, 2018, 2:29 pm

DaveH

Nice intelligent HY portfolio.

Nice historical data, but in your last sentence about the FTSE TR, maybe I read you wrong, but the FTSE TR returned 11.95% in 2017.

Also be aware that divis per acc units gallop quicker than reality, inherent to the method so nothing wrong with your data, which gives a wrong impression of the progress of underlying divis(for that divs per inc unit are needed) , I have posed on this recently and in the past. (For your type of portfolio, the 'double counting extra galloping' is about 5% per year, so over a longish period, it adds up. If you want to know chapter and verse on this, contact me by PM).

Ozyu

Moderator Message:
Redsturgeon: Post edited to remove insulting remark regarding moderator action. You may disagree with the action but using that tone is not acceptable.

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Re: Dave's HYP Update

#107691

Postby daveh » January 3rd, 2018, 4:05 pm

OZYU wrote:DaveH

Nice intelligent HY portfolio.

Nice historical data, but in your last sentence about the FTSE TR, maybe I read you wrong, but the FTSE TR returned 11.95% in 2017.

Also be aware that divis per acc units gallop quicker than reality, inherent to the method so nothing wrong with your data, which gives a wrong impression of the progress of underlying divis(for that divs per inc unit are needed) , I have posed on this recently and in the past. (For your type of portfolio, the 'double counting extra galloping' is about 5% per year, so over a longish period, it adds up. If you want to know chapter and verse on this, contact me by PM).

Ozyu



Yes I'm disappointed it was moved as it would always have been considered as a HYP at the other place, and other updates which have also contained ITs etc in the review haven't been removed. I only mention the ETFs and preference share as they are part of my High yield portfolio. If I discuss details of the ETFs etc then I would do so on the appropriate board, personally if I was going to move it I'd have moved it to High Yield Shares and Strategy, which is where I almost posted it, but all my previous updated were on HYP practical either here or on TMF.

Glad to here the FTSE TR was only up 11.95% - I did a search for the info on the web and it looks like I chose the wrong FTSE100 TR index, as looking at what I was quoting it is the FTSE ET TR index and I hadn't noticed the ET bit. Still can't find the FTSE100 TR index on the FT site, but have found it quoted on the investing.com site.

Just noticed your comment about the divis per accumulation unit, unfortunately I never calculated income units as so far I'm still in the accumulation phase and am reinvesting all the income. I'm not sure I have all the data to work out income units and have thought it might be too much work, I was planning on converting to income units when I start actually taking an income. Maybe I should look at seeing if its possible to calculate income units when I have some time to waste.

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Re: Dave's HYP Update

#107781

Postby moorfield » January 3rd, 2018, 10:17 pm

daveh wrote:I only mention the ETFs and preference share as they are part of my High yield portfolio.


As prefs are of mine too daveh, but the Mods have done good work over the last few months on clarifying the scope of the HYP board, and we should reciprocate and play ball. "Portfolio Managament & Review" is the right place for portfolios of all flavas.

A good looking portfolio btw and a nicely rising income overall.

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Re: Dave's HYP Update

#107822

Postby Dod101 » January 4th, 2018, 9:16 am

I do not unitise and so I am probably totally barking up the wrong tree but in the OP's table of capital performance, the XIRR should surely bear some relationship to the increase in the unit price? I am surprised at the high XIRRs quoted because the shares are mostly the usual suspects and the XIRRs look rather out of line. Reinvesting the dividends should not make any difference to the XIRR.

Dod

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Re: Dave's HYP Update

#107826

Postby tjh290633 » January 4th, 2018, 9:33 am

Dod101 wrote:I do not unitise and so I am probably totally barking up the wrong tree but in the OP's table of capital performance, the XIRR should surely bear some relationship to the increase in the unit price? I am surprised at the high XIRRs quoted because the shares are mostly the usual suspects and the XIRRs look rather out of line. Reinvesting the dividends should not make any difference to the XIRR.

Dod

The XIRR depends on the external cash flow of the portfolio. The OP has been injecting new capital into the portfolio.

TJH

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Re: Dave's HYP Update

#107835

Postby Dod101 » January 4th, 2018, 10:09 am

XIRR=Extended Internal Rate of Return. I always understood that it removed the anomaly of the effect of putting in a wodge of cash on 3 January in any year and then calculating the annual rate of return at 31 December. Otherwise of course that is going to produce a higher rate than someone who does not input that wodge of cash but simply relies on the underlying investments.

Dod

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Re: Dave's HYP Update

#107853

Postby daveh » January 4th, 2018, 11:05 am

Dod101 wrote:XIRR=Extended Internal Rate of Return. I always understood that it removed the anomaly of the effect of putting in a wodge of cash on 3 January in any year and then calculating the annual rate of return at 31 December. Otherwise of course that is going to produce a higher rate than someone who does not input that wodge of cash but simply relies on the underlying investments.

Dod


Also I only unitised from September 2003 but the XIRR calculation is from the start of the portfolio which includes one share purchased in 1997 and then most purchases starting in 2000.

I also calculate an annual IRR and below is a table comparing the % change in unit value with the annual IRR calculation. These seem generally very similar, with at least some (possibly all) of the difference due to rounding errors*.


* I initially calculated the % change in unit value on a calculator using the two decimal place values included in the table, but then just stuck a formulae in my spreadsheet to save time which gave a different answer (17.59% for the calculator compared to 17.81% for excel) the difference is that the spreadsheet displayed the unit values to 2 decimal places, but they were recorded to 5 decimal places. I also round the number of units purchased with a cash sum which will also add in another error.

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Re: Dave's HYP Update

#107858

Postby Dod101 » January 4th, 2018, 11:33 am

Thanks daveh. That reads much better. I must say your returns are very good. I am in the same ballpark but generally a bit behind on the capital front.

Dod

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Re: Dave's HYP Update

#107916

Postby Gengulphus » January 4th, 2018, 4:04 pm

daveh wrote:... Previous updates were on the TMF boards (but may well have been lost with the board closures, there were links in last years update). ...

FWIW, the Wayback Machine has the following two archived:

2015: https://web.archive.org/web/20160116120 ... 12972.aspx

2012: https://web.archive.org/web/20121230231 ... 10480.aspx

It doesn't have any of the other years mentioned in the first of those (2009, 2010, 2011, 2013 and 2014), at least not under the links given there. (It's conceivable that it has them under some other link, e.g. to a whole-thread version, but there are too many possibilities for such links for me to even know what they all are, let alone check them all out!)

Gengulphus

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Re: Dave's HYP Update

#107969

Postby Gengulphus » January 4th, 2018, 5:54 pm

Dod101 wrote:XIRR=Extended Internal Rate of Return. I always understood that it removed the anomaly of the effect of putting in a wodge of cash on 3 January in any year and then calculating the annual rate of return at 31 December. Otherwise of course that is going to produce a higher rate than someone who does not input that wodge of cash but simply relies on the underlying investments.

A bit more detail, as it might prove useful to some: There are two spreadsheet functions, IRR() and XIRR(). The results of both of them are the specific measure of an investment rate of return named an Internal Rate of Return (abbreviated "IRR"). The difference between them lies in how you use them in a spreadsheet:

* You give IRR() a sequence of cash flows without dates, it assumes they are spaced at regular time intervals (e.g. one per day or one at the end of each week), and it tells you what their IRR is per time interval. Slightly irregular time intervals such as at the end of each month or the end of each year can also be used: in principle that introduces an inaccuracy, but in practice that inaccuracy will be negligible. It's likely to be unsuitable for more seriously irregular time intervals for the reason you mention.

* You give XIRR() a sequence of cash flows together with the sequence of their dates, and it tells you what their IRR is per year. It is suitable for anything from very irregular cashflows through to completely regular ones, though compared with IRR(), it clearly doubles the amount of data you need to supply for the regular ones.

The cashflows in HYP portfolio records do have a tendency to be rather irregular, due to special dividends, changes of dividend payment schedules, companies leaving and entering the portfolio (even for non-tinkering HYPs, due to takeovers), etc. And in addition, one usually wants a rate of return per year rather than for any other period. So XIRR() is usually the more suitable spreadsheet function for a HYPer wanting to calculate an IRR - but not necessarily quite always!

Gengulphus

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Re: Dave's HYP Update

#109213

Postby daveh » January 10th, 2018, 12:31 pm

I'm having a go at producing a matching set of income units. It looks like it should be possible, if a bit time consuming. I'm having to make some assumptions, such as the end of month portfolio values are unchanged from previously, I'm calculating the income unit value and unit numbers monthly and calculating the number of income units purchased whenever new money was added and then calculating units purchased with dividends every quarter. Going to take a while as I'll probably do it one year at a time - did 2004 today.


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