IanTHughes wrote:The value of an Accumulation Unit calculated for my HYP, started in February 2012 at £10.0000, has today reached a new record high of £19.4441, an increase of 94.44% over 7 ¾ years. The previous high - £19.3650 - was set on 22 May 2018.
The value of an Income Unit calculated for my HYP of £13.1804 still straggles some way behind the all-time high of £14.6005 achieved on 26 May 2017, although it is ahead of the re-based value of the FTSE 100 Unit.
There has been - mostly - steady progress as follows:
Date | Accum. Value (£) | Income Value (£) | FTSE 100 Re-Based
10 Feb 12 | 10.0000 | 10.0000 | 10.0000
01-Jan-13 | 10.9153 | 10.3985 | 10.0776
01-Jan-14 | 14.2079 | 12.9293 | 11.5322
01-Jan-15 | 15.0530 | 13.1582 | 11.2195
01-Jan-16 | 15.2404 | 12.7310 | 10.6663
01-Jan-17 | 17.2406 | 13.7244 | 12.2050
01-Jan-18 | 18.8433 | 14.2403 | 13.1361
01-Jan-19 | 16.5709 | 11.8531 | 11.4964
Today | 19.4441 | 13.1804 | 12.7079
At risk of being told I am a "doubter" I wanted to raise some points about what the data appears to me to be showing. I am no expert on unitisation, so my first question is a pretty basic one, am I correct in my understanding that Income Units (despite the name) represent 'pure' capital performance, i.e. they are based on all the income from the investments being withdrawn?
Assuming that is the case I wanted to test my understanding of what the graph is showing (unfortunately I can't copy it now I am unable to reply to the original post). Does the graph show, that...
1. ...capital value (as represented by Income Units), absent income reinvestment has been flat between mid January 2014 and November 2019?
2. ...over the period between February 2012 and November 2019 capital value has increased by c.31.8% vs an increase in the FTSE100 over the same period of c.27.1%?
3. ….between February 2012 and mid January 2014 capital value had increased by c.32% vs an increase in the FTSE100 of c.17%?
If this is the case I would say the statement regarding "...mostly - steady progress..." may apply to accumulation units (Total Return?), but not to Income Units (Capital). Rather for Income Units there was a relatively short period of strong out performance of the index being used for comparison between February 2012 and mid January 2014, followed by steady under performance with since mid January 2014. If this is not a correct conclusion can somebody point me to what I am missing?
One could actually break this down further, as between February 2012 and around May 2013 the performance of the HYP and FTSE100 seems, from the graph, to have been essentially the same. All the out performance actually happened between June 2013 and January 2014.
Later on there is a graph plotting the Accumulation Units against the FTSE100 TR Index, which was deemed a fairer comparison. Looking at that graph it seems between January 2013 and November 2019 vs the increase in Accumulation Units of c.77% the FTSE100 TR has increased by c.66%. I am working on the assumption that this outperformance is driven by two things:
i) the capital out performance as shown in the Income Unit analysis, as the period covered includes the period of significant outperformance in the second half of 2013 and very early 2014; and,
ii) I assume over the period the HYP has had a higher yield and therefore generated more income to reinvest than the FTSE100 TR.
Does that seem reasonable?
It is very rough and ready as I am reading off the graph, but I take the values as of February 1st 2014 on the TR graph as, HYP £12.90 and FTSE100 TR £11.40. Again from the graph I read the final values as HYP £17.70 and FTSE100 TR as £16.50. That equates to a gain in the HYP over the period of £4.80 or roughly 37%, and in the FTSE100 TR of £5.10 or c.44%.
If all of the above is correct what it tells me is that the outperformance in terms of both Capital and Total Return is down to the period between June 2013 and mid January 2014. Over the rest of the period the HYP has underperformed the benchmark indexes.
Now I am sure I will be said by some to be just knocking HYP and if anyone can point out errors in my analysis or resulting conclusions please do so. However, if it is broadly correct what this raises in my mind is a question as to what were the conditions between June 2013 and mid January 2014 that allowed such over performance of the HYP that it has allowed it to still be out performing the relevant benchmarks so much later, despite steady under performance? If we could understand that it would be extremely helpful.