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New City High Yield Fund (NCYF)
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- Lemon Slice
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New City High Yield Fund (NCYF)
Sudden price fall of over 5% in NCYF today. Does anyone know of any reason for this?
Y.
Y.
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- Lemon Half
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Re: New City High Yield Fund (NCYF)
And another 5% today. Now at a nice discount.
Also CMHY down 3% today and IPE 2%.
Not XD.
Buying opportunity?
By the time we find out they'll be on the way up again.
V8
Also CMHY down 3% today and IPE 2%.
Not XD.
Buying opportunity?
By the time we find out they'll be on the way up again.
V8
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
According to another BB, John Baron has sold a few. Also HDIV. I don't have any other details.
I loaded up my wheelbarrow to overflowing with NCYF and HDIV earlier and will be happy to hold them for very many years.
Thanks Mr. Baron
I loaded up my wheelbarrow to overflowing with NCYF and HDIV earlier and will be happy to hold them for very many years.
Thanks Mr. Baron
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- Lemon Quarter
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Re: New City High Yield Fund (NCYF)
Hi Yieldhog.
All of that sub-sector are falling fairly heavily, NCIF, HDIV, IPE, CMHY. I don't know of any specific reason, other than interest rate fears - in which case it's a somewhat delayed reaction. I hold three of the four.
NAV's, if roughly accurate, appear to be holding up - so it would appear to be more sentiment related at some level. If you're in for the long term, no need to overly worry at this point I would venture.
Regards, Newroad
All of that sub-sector are falling fairly heavily, NCIF, HDIV, IPE, CMHY. I don't know of any specific reason, other than interest rate fears - in which case it's a somewhat delayed reaction. I hold three of the four.
NAV's, if roughly accurate, appear to be holding up - so it would appear to be more sentiment related at some level. If you're in for the long term, no need to overly worry at this point I would venture.
Regards, Newroad
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
I would hazard a view there are a number of things going on here longer term apart from last night Mr. Baron's followers, following him like lemmings.
We can tell it's a John Baron effect as SMIF has hardly moved.
1. For sure anything fixed income is being slowly sold off as inflation risk is higher than before. 10 year gilts have moved from around 0.2% up to 0.7% so we would expect some pullback in fixed income
2. Market is risk on. Sell gold and bonds (fixed income) to buy equities, so that's more selling pressure.
We have to make a judgement because some of the existing fixed rate notes aren't going to look great value as interest rates rise. On the other hand any new notes are going to be at a higher rate than before so that increases the yield and makes it easier to target the dividend yield currently paid. So, it's a matter of how far out we see interest rates moving up and at what speed.
Probably the sector more at risk in my view is the property sector where the cost of debt will be going up but rents will not (or at least won't be at the contract renewal date. Indeed they may even fall)
I'm not sure how things will turn out but delighted to have paid 46p today for a holding I sold at 58p a year ago. My gut is also telling me this risk on rally won't look quite so clever in 6 months time and then it will back to sell equities and buy bonds and gold.
We can tell it's a John Baron effect as SMIF has hardly moved.
1. For sure anything fixed income is being slowly sold off as inflation risk is higher than before. 10 year gilts have moved from around 0.2% up to 0.7% so we would expect some pullback in fixed income
2. Market is risk on. Sell gold and bonds (fixed income) to buy equities, so that's more selling pressure.
We have to make a judgement because some of the existing fixed rate notes aren't going to look great value as interest rates rise. On the other hand any new notes are going to be at a higher rate than before so that increases the yield and makes it easier to target the dividend yield currently paid. So, it's a matter of how far out we see interest rates moving up and at what speed.
Probably the sector more at risk in my view is the property sector where the cost of debt will be going up but rents will not (or at least won't be at the contract renewal date. Indeed they may even fall)
I'm not sure how things will turn out but delighted to have paid 46p today for a holding I sold at 58p a year ago. My gut is also telling me this risk on rally won't look quite so clever in 6 months time and then it will back to sell equities and buy bonds and gold.
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
The last time I owned these the trust had no gearing. I note it is now geared. You don't want to be buying junk when it trades at a premium. So the readjustment to a discount is welcome. If it widens enough I might be tempted. Last sold out at 53P on 11 Jan this year so well done for getting back in at 46p
Watching the Gilt/US treasury yields like a hawk as these markets don't lie on what might be coming down the track.....inflation. Which as has been pointed out is not good for bonds.....
Watching the Gilt/US treasury yields like a hawk as these markets don't lie on what might be coming down the track.....inflation. Which as has been pointed out is not good for bonds.....
Last edited by flyer61 on March 9th, 2021, 1:08 pm, edited 1 time in total.
Re: New City High Yield Fund (NCYF)
Its only 3 weeks ago the Government were telling banks to get ready for negative interest rates, and if the Official bank rates do rise from the lofty heights of 0.1% where are they going to go, when the country is in for a pay freeze lasting as long as it takes to get Government finances back to pre covid levels.
I suspect we won't see inflation busting out any time soon, 2% and above would have a serious dampening effect on an economy fighting its way back from a drop of 12% or whatever it has been, using interest rates to fight limited inflation isn't the brightest idea the central bank could have, so, the panic selling has jumped from Tech to Bonds, tomorrow it might be commodities, but for anyone with cash to spend, these days of panic could be lucrative days.
Vince
I suspect we won't see inflation busting out any time soon, 2% and above would have a serious dampening effect on an economy fighting its way back from a drop of 12% or whatever it has been, using interest rates to fight limited inflation isn't the brightest idea the central bank could have, so, the panic selling has jumped from Tech to Bonds, tomorrow it might be commodities, but for anyone with cash to spend, these days of panic could be lucrative days.
Vince
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- Lemon Quarter
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Re: New City High Yield Fund (NCYF)
I don't think there's been a single month since I discovered TMF in 1998 when scare stories about inflation 'haven't' appeared.
I agree with previous posters about where on earth this inflation could spring from. If it does go a lot above 2.5%, and given the crazy rabbit hutch - whoops - I mean house prices in the UK supported by ridiculously cheap mortgages, I think we should all should all just sit back with our popcorn and watch the omnibus edition.
Meanwhile, I agree. No harm in a few more CMHY.
Steve
I agree with previous posters about where on earth this inflation could spring from. If it does go a lot above 2.5%, and given the crazy rabbit hutch - whoops - I mean house prices in the UK supported by ridiculously cheap mortgages, I think we should all should all just sit back with our popcorn and watch the omnibus edition.
Meanwhile, I agree. No harm in a few more CMHY.
Steve
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- Lemon Half
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Re: New City High Yield Fund (NCYF)
Looking at LLPC, LLPD, STAC, SAN, SANB, GACA, BOI, they've all ticked down of late. Prices are on a gentle slide, so yields have improved.
If one is investing for income, and looking to buy, no great grief there.
If TR matters, not so good.
Over the last month, NCYF's NAV has actually risen a decimal or so. Hmmm. Don't think they hold many Prefs. Perhaps their holdings are somehow immune from inflationary pressure.
Anyway, even with inflation, FI is OK as a Steady Eddy income source provided one does not have too long a time horizon. If inflation is going to get up steam again, over the years it will take a toll.
But for anyone who lived through the 70s, inflation will be a pale shadow of what we knew.
Regards NCYF, CMHY, inclined to top up, but not go all in.
V8
If one is investing for income, and looking to buy, no great grief there.
If TR matters, not so good.
Over the last month, NCYF's NAV has actually risen a decimal or so. Hmmm. Don't think they hold many Prefs. Perhaps their holdings are somehow immune from inflationary pressure.
Anyway, even with inflation, FI is OK as a Steady Eddy income source provided one does not have too long a time horizon. If inflation is going to get up steam again, over the years it will take a toll.
But for anyone who lived through the 70s, inflation will be a pale shadow of what we knew.
Regards NCYF, CMHY, inclined to top up, but not go all in.
V8
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
88V8 wrote:Looking at LLPC, LLPD, STAC, SAN, SANB, GACA, BOI, they've all ticked down of late. Prices are on a gentle slide, so yields have improved.
If one is investing for income, and looking to buy, no great grief there.
If TR matters, not so good.
Over the last month, NCYF's NAV has actually risen a decimal or so. Hmmm. Don't think they hold many Prefs. Perhaps their holdings are somehow immune from inflationary pressure.
Anyway, even with inflation, FI is OK as a Steady Eddy income source provided one does not have too long a time horizon. If inflation is going to get up steam again, over the years it will take a toll.
But for anyone who lived through the 70s, inflation will be a pale shadow of what we knew.
Regards NCYF, CMHY, inclined to top up, but not go all in.
V8
Your post about NCYF intrigued me so I was motivated to go and do some research. According to the annual report out of the top 70 holdings only 2 are prefs. Raven Russia representing 2% of the portfolio by value and Rea representing 1%. That cannot be a co-incidence that they hold so few and the fund manager imho has called this right.
Looking at the holdings, the bonds appear to have a duration on average of around 3 years with very little over 5 years. Those over 5 years have much higher coupons. They also hold a large amount of bank/insurance Tier1/AT1 perpetuals most of which will have 5 year rate resets and call dates, so presumeably the average duration on those is around 2½ years
I'm assuming John Baron has sold on the basis of rising interest rates but I'm not sure he has looked closely enough at the portfolio given the short duration of the holdings. Sure, if interest rates go up by 2% by this time next year, then selling now would be a good idea but if it takes 3 years to go up 2%, then all that happens is that bonds run to maturity and are replaced with new bonds with a higher coupon.
It is difficult to guess inflation but I'm pretty sure inflation will run hot at 3% as the economy re-opens, perhaps persistently and for a year. After that I think it will fall back to the 2-2½ area as sadly all the tax rises and job losses that are coming down the line will reduce disposable income.
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- Lemon Half
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Re: New City High Yield Fund (NCYF)
Gan020 wrote:...out of the top 70 holdings only 2 are prefs. Raven Russia representing 2% of the portfolio by value and REA representing 1%.
It was observed elsewhere that this is perhaps a sign a desperation in terms of propping up the yield, two of the highest yielding/riskiest Prefs available.
NCYF pretty much recovered its SP today, missed the top-up boat, curses
V8
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Re: New City High Yield Fund (NCYF)
Gan020 wrote:According to another BB, John Baron has sold a few. Also HDIV. I don't have any other details.
I loaded up my wheelbarrow to overflowing with NCYF and HDIV earlier and will be happy to hold them for very many years.
Thanks Mr. Baron
I thought Baron liked to remain fully invested so presumably purchased something else with the proceeds. I would be interested to know what he sees as offering better value.
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
buffetlunch wrote:Gan020 wrote:According to another BB, John Baron has sold a few. Also HDIV. I don't have any other details.
I loaded up my wheelbarrow to overflowing with NCYF and HDIV earlier and will be happy to hold them for very many years.
Thanks Mr. Baron
I thought Baron liked to remain fully invested so presumably purchased something else with the proceeds. I would be interested to know what he sees as offering better value.
I think that's probably the point. If he was looking at NCYF at 52p against a NAV of 50p (5% premia) he could easily switched into say CMHY which was running at around a 3% discount. There were other options too.
Or he could have looked at a 5% premia in light of rising gilt yields and just decided to take some off the table. According to the poster on the other BB he reduced his position and I'm not sure if that means he has some left.
For all we know he's bought them back already at 46p!
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
John Baron sets out his re-positioning thoughts here https://www.investorschronicle.co.uk/id ... inflation/. Its behind a paywall, but you can sometimes get access by googling: Investment trust portfolio: Preparing for inflation.
Unfortunately, the article doesn't list the current holdings so I can't see if he has entirely sold off NCYF. But, he clearly thinks that inflation has the potential to overshoot the 2-3% acceptable zone and stay there.
Unfortunately, the article doesn't list the current holdings so I can't see if he has entirely sold off NCYF. But, he clearly thinks that inflation has the potential to overshoot the 2-3% acceptable zone and stay there.
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
ttt. I thought it might be useful to reflect on the John Baron sell tip a few weeks later on.
NCYF now at 51p to sell, trading above the price before the John Baron sell tip.
NCYF now at 51p to sell, trading above the price before the John Baron sell tip.
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- Lemon Half
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Re: New City High Yield Fund (NCYF)
Haha, yes.
I don't disagree that inflation is going to return. Govts will want it to return to deflate their debts.
And this will depress the prices of FI. But I think Trusts are in a better position than the average private investor to manage this situation. It's not as if we never had inflationary periods before.
So having bought in to NCFY - and Shires SHRS which is another FI play - I'm going to sit tight, or even add.
V8
I don't disagree that inflation is going to return. Govts will want it to return to deflate their debts.
And this will depress the prices of FI. But I think Trusts are in a better position than the average private investor to manage this situation. It's not as if we never had inflationary periods before.
So having bought in to NCFY - and Shires SHRS which is another FI play - I'm going to sit tight, or even add.
V8
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
HDIV seems to be in the same position as NCYF was after the John Baron article.
My guess is the discount will tighten again with HDIV.
My guess is the discount will tighten again with HDIV.
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Re: New City High Yield Fund (NCYF)
A quick note of thanks to those on this thread who raised the temporary price dislocation. I bought both NCYF and HDIV on 22nd March after reading this. Currently up 15% and 8% respectively.
Thanks again.
Juan.
Thanks again.
Juan.
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- Lemon Slice
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Re: New City High Yield Fund (NCYF)
John Barons rationale for the selling of NYCF. Nothing very surprising.
" However, during the quarter, the portfolios added more specific insurance by way of INXG – an ETF given there is no investment trust equivalent – courtesy of a reduction in exposure to HDIV and NCYF. Bonds tend not to do well as inflation rises. During the early inflationary stage, higher-yielding corporate bonds can offer better protection than gilts. However, inflation-linked bonds have traditionally acted as a good inflation hedge, regardless of the stage of inflation."
" However, during the quarter, the portfolios added more specific insurance by way of INXG – an ETF given there is no investment trust equivalent – courtesy of a reduction in exposure to HDIV and NCYF. Bonds tend not to do well as inflation rises. During the early inflationary stage, higher-yielding corporate bonds can offer better protection than gilts. However, inflation-linked bonds have traditionally acted as a good inflation hedge, regardless of the stage of inflation."
Re: New City High Yield Fund (NCYF)
Also interesting to see he only in fact sold down about half of his previous holding
Dove
Dove
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