#268542
Postby IanTHughes » December 2nd, 2019, 3:32 pm
Thanks for all the comments, mostly constructive and on-topic, and here is my follow up:
Accumulation Units
Yes, the primary aim of HYP is of course Income, its initial generation and consequent growth, as I did state in the original post albeit not in big letters. However, for those who, like myself, are not currently drawing said income but re-investing it to create more income, it is important to know that one’s chosen investment strategy is working at least as well as other possible strategies. HYP as a strategy was originally designed as a one-shot “buy and live with the consequent income” so it is important in my view to monitor its effectiveness when used as a multiple-shot “buy, re-invest, grow and only later live with the consequent income”.
Although not yet drawing income, my investment aim is to create as high an income upon retirement as possible, which in turn means that if I came to the conclusion that the HYP Strategy was inferior in that regard, I would have to consider abandoning it for whatever I believed was a better alternative. One way of measuring HYP against some other strategies, not all I grant, is to compare the capital that is available at any one time for the purchase of the required income. So, I calculate Accumulation Unit values in order to enable such a comparison.
Comparison of HYP to other Investment strategies
As I previously stated, only a comparison of HYP Dividend Units to the FTSE 100, or any other share-value index, is valid. Accumulation Units must be compared with other “Accumulation” strategies, one of which is the FTSE 100 Total Return index.
Of course, investing in a FTSE 100 fund, or any other index fund, is not the only alternative to an HYP. One could for example invest in an Investment Trust, or a basket of Investment Trusts, whether Income or Value Trusts, thus leaving it up to the “experts” to create one’s future retirement capital and/or income. It therefore follows that the success or otherwise of HYP should be compared to those Investment Trusts as well. This is something I do keep an eye on from time to time and so far can report that nothing has yet Appeared that beats my own efforts. But who knows what the future will hold?
Post Purchase Trading
I came to HYP partly as a result of not being very good at pursuing a Value strategy, particularly when it comes to an effective selling strategy. I have made a couple of unforced sales in order to further my income aims and judging simply from those two “tinkers” gives no clear decision as to whether more unforced selling should be encouraged. I am still not very good at it!
HYP Constituents
With regard to the particular suggestion that Regional REIT Ltd (RGL) “should be a banker in any high yield portfolio” my response is that RGL is too small by Market Capital to have come up in my HYP filter of possible candidates. Investing in large companies is I believe very important for an income strategy like HYP, an importance that has so far been borne out within my own HYP where the occasional forays into the lower echelons of the FTSE350 have not always turned out too well. Marstons Plc (MARS) has been ok, even good, but Talktalk Telecom Group (TALK), N Brown Group (BWNG) oh dear me. I did also go for New River Retail (NRR) which has been good for income, so far at least, but a loser of capital, especially when set against Segro Plc (SGRO), the holding I sold in order to release the funds to buy it!
Anyway, thanks for your interest in my ramblings
Ian
I would never use that expression. A recipe for the share to turn round and bite!