An observation about Merchants Trust

Closed-end funds and OEICs
johnstevens77
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Re: An observation about Merchants Trust

Postby johnstevens77 » December 6th, 2016, 8:32 am

Whoops! "£5.41, falling to a low of £2.96 in February 2003 rising to £4.322 in February 2005 whenI sold a tranche to reinvest elswhere. Today it is 1115.00p". Pretty obvious, but I thought that I should point it out.

john

MDW1954
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Re: An observation about Merchants Trust

Postby MDW1954 » December 10th, 2016, 8:30 pm

I'm glad you pointed it out! It was puzzling the hell out of me.

MDW1954

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » December 11th, 2016, 8:07 am

Google John Baron Portfolios and look at the "Trust of the moment" section.


I just tried to do this and the top reference is behind a pay wall. Which of the other 63,600 links returned should I choose to look at? There isn't one called "Trust of the Moment".

Tournesol, could you be more specific, please?

Arb.

Retiringat51
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Re: An observation about Merchants Trust

Postby Retiringat51 » December 11th, 2016, 5:42 pm

JB's December Investor's Chronicle piece mentions the recent introduction of MRCH into his Income Portfolio on grounds that "large cap value" should be in vogue soon.It seems only a short while ago that he was extolling "the future is small" and ditched TMPL and MYI.

I'm not sure what to make of his stance. His views seem to shift like the fabled life seasons after which the portfolios are themed.

How NCYF or any bond trust can justify a place in the Growth Portfolio defies my logic. Nor indeed why the sub- 3% yielders such as JFJ and JMF are moreso Income rather than Growth Portfolio candidates.

johnstevens77
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Re: An observation about Merchants Trust

Postby johnstevens77 » December 11th, 2016, 6:18 pm

How NCYF or any bond trust can justify a place in the Growth Portfolio defies my logic. Nor indeed why the sub- 3% yielders such as JFJ and JMF are moreso Income rather than Growth Portfolio candidates.

Please use names when writing about trusts and shares for the first time, you would get more replies then.

john

Retiringat51
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Re: An observation about Merchants Trust

Postby Retiringat51 » December 11th, 2016, 6:26 pm

NCYF= New City High Yield
JMF= JP Morgan Mid Cap
JFJ= JP Morgan Japanese
TMPL= Temple Bar
MYI= Murray International

Jon46
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Re: An observation about Merchants Trust

Postby Jon46 » December 11th, 2016, 7:57 pm

Retiringat51 wrote:JB's December Investor's Chronicle piece mentions the recent introduction of MRCH into his Income Portfolio on grounds that "large cap value" should be in vogue soon.It seems only a short while ago that he was extolling "the future is small" and ditched TMPL and MYI.

I'm not sure what to make of his stance. His views seem to shift like the fabled life seasons after which the portfolios are themed.

How NCYF or any bond trust can justify a place in the Growth Portfolio defies my logic. Nor indeed why the sub- 3% yielders such as JFJ and JMF are moreso Income rather than Growth Portfolio candidates.


Well John Baron will do his own thing, it might not be your way, but he does know how to proceed with ITs, having a deep knowledge of them and a first class access to the managers of such collectives.

The two portfolios he reports about on the IC have performed absolutely fine, for ITs, since inception Jan 2009.

The growth portfolio TR has compounded at 14.72%.

The income portfolio has compounded at 12.54%.

Either of these two would give, say, many a HYP I can think of a good run for their money. No cutters, little corporate action...

In comparison, the FTAS total return has compounded at 10.78% over the period.

You will find too that NCYF, over that period, has not done too badly, although I am sure JB will eventually switch out when/if interest rates pick up, but the very HY will protect it for a while longer than lower yielding such funds. And it has increased divis too over the period, rarer in bond based collectives.

My wife(a youngster at only 82 as I keep telling her) only invests in collectives, mostly ITs, having started to do so in 1971. She enjoys 'doing battle' with him in her HY ISA., while doing her own thing too.

We both think that his concept of investing journey in 'seasons' and the different profiles of his various portfolios is very sound. The very young pot builder in particular should take note imho.

Jon

mc2fool
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Re: An observation about Merchants Trust

Postby mc2fool » December 11th, 2016, 9:28 pm

johnstevens77 wrote:How NCYF or any bond trust can justify a place in the Growth Portfolio defies my logic. Nor indeed why the sub- 3% yielders such as JFJ and JMF are moreso Income rather than Growth Portfolio candidates.

Please use names when writing about trusts and shares for the first time, you would get more replies then.

Please use the quoting facility, rather than just copy'n'pasting sections of posts you are replying to without any distinguishing features, so that readers can easily what's whose and so that the person you are quoting will get the notification. ;)

(It's the quotes button next to the exclamation mark button at the top right of each post)

PresumingEd
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Re: An observation about Merchants Trust

Postby PresumingEd » December 12th, 2016, 8:01 am

John Baron's IC IT portfolios have done well since 2009, in generally rising markets, with the beneficial effects of gearing and discounts narrowing. How much of this is because of discounts narrowing due to a surge of buys following his recommendations? I have noted this effect which typically peaks 4 days after the IC articles are published. Then when he sells, the discounts widen. So you will not do as well as Mr Baron, buying dearer and selling cheaper. Exactly how much worse is determined by how quick off the mark you are when copying his trades.

MDS1951
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Joined: November 4th, 2016, 8:31 pm

Re: An observation about Merchants Trust

Postby MDS1951 » December 24th, 2016, 4:24 pm

Two years ago I began buying ITs as a replacement for £20k I had invested in a Cheltenham and Gloucester bond. I bought my holding in Merchants all in one go on 19/12/14.

Since then its share price has been volatile but today it is such that the capital value is only £2 less than the original purchase price, including stamp duty and commission. Meanwhile I have received 2 years of dividends from Merchants. So I shall hold on for another few years.

I'll report on the performance of my IT portfolio next weekend.

MDS1951

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » December 28th, 2016, 5:11 pm

MDS1951 wrote:
Since then its share price has been volatile but today it is such that the capital value is only £2 less than the original purchase price, including stamp duty and commission. Meanwhile I have received 2 years of dividends from Merchants.

MDS1951


I think that illustrates the subject of my original thoughts about MRCH. The capital value hasn't kept up with inflation over that time, so although you've had a good income, the price of that income has been the erosion of your capital.

Arb.

MDS1951
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Joined: November 4th, 2016, 8:31 pm

Re: An observation about Merchants Trust

Postby MDS1951 » December 29th, 2016, 7:33 am

although you've had a good income, the price of that income has been the erosion of your capital.


True, Arb! £2 down on capital and my dividend income has been £211 so I'm £209 up.

Seriously, I take your point about long-term capital erosion concerning MRCH. There have been times during those 2 years when I have wondered whether I had bought a dud in MRCH but, at the time, I fancied a bit of jam today. I might think differently about it if I have 5 years of biggish unrealised capital losses on MRCH which the dividend was compensating for less and less.

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » December 29th, 2016, 3:43 pm

I might think differently about it if I have 5 years of biggish unrealised capital losses on MRCH which the dividend was compensating for less and less.


I'm getting to that sort of point, having held for quite some years. However, I'm still holding - for now! At any rate, it still rather less capital depreciation than buying an annuity :)

OZYU
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Re: An observation about Merchants Trust

Postby OZYU » January 17th, 2017, 8:46 am

http://www.investegate.co.uk/merchants- ... 12422971U/


The Board has declared a third quarterly dividend of 6.1p per Ordinary Share, payable on 23 February 2017 to holders on the register at the close of business on 27 January 2017.

A little help on the way, about time too, but the 1.667% increase does not even match RPI.

Ozyu

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » January 17th, 2017, 11:16 am

However, I'm still holding - for now! At any rate, it still rather less capital depreciation than buying an annuity


reassuring myself, I'd say it's not total gloom. The chart of the share price is quite volatile - if you had the courage to buy at the better periods, you would have done reasonably well. If you ignore the volatility and put a regression line through those waves since 1994, the price has risen at an annual rate of 1.5%. Not great but bears out my quote above.

A little help on the way, about time too, but the 1.667% increase does not even match RPI.


No, it doesn't. But when I entered MRCH it was for the high immediate yield, and I knew the increase would be unlikely to be RPI busting. I didn't read Luni for years without learning anything :) However, my basket is well mixed with income and capital growers too.

OZYU
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Re: An observation about Merchants Trust

Postby OZYU » January 17th, 2017, 2:11 pm

A little help on the way, about time too, but the 1.667% increase does not even match RPI.


Arb said
No, it doesn't.


Arb,

I did not think there was the remotest contentious statement in my post which just quoted facts, are you agreeing or disagreeing here?

I know quite a few hold MRCH, just saw the RNS in my 'in tray list' and thought why not post it.

My thoughts on MRCH are as follows:

Having seen eight quaters held at 6p, the 6.1p is pathetic imho since in that two year period RPI has increased, post today's inflation figures,
by around 4%. But in the end 6.1p is better than 6p, hence 'a little help...'.

Of course the very expensive debt/gearing is the real cause as we all know, sapping divi increase capability, but we gradually approach the time when at least a tranche of that will be re negotiated at a likely much better rate, so divis and NAV will benefit and discount might eventually respond.

I very rarely top it up, but because of its gearing it dives nicely when markets seriously dive, offering at such times a very good yields indeed. Only four small top ups in 27 years for me. No more until it yields well north of 6% again, which might mean never of course. A very small proportion of my HY portfolio as a result, a tiny proportion of the overall investments. Just one of those holdings with an IRR(8.73%) below long term portfolio IRR(10.76%), but not as desperately below as to make me get rid, although on occasions tempted.

But there are always more important things to do( such as at the moment deciding where to transfer my BSL ISA(one of two) since I have taken a serious dislike to their new charging structure. Is HALIFAX any good by the way maybe somebody can let me know off board the pros and cons?).

Ozyu

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » January 17th, 2017, 5:28 pm

I was agreeing: I responded to your "does not even match RPI" by "No it doesn't". That means "No it doesn't match RPI - you are correct". Sorry if that rather short form reply caused some confusion.

OZYU
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Re: An observation about Merchants Trust

Postby OZYU » January 17th, 2017, 5:34 pm

Arborbridge wrote:I was agreeing: I responded to your "does not even match RPI" by "No it doesn't". That means "No it doesn't match RPI - you are correct". Sorry if that rather short form reply caused some confusion.

Thanks Arb, I am definitely getting old and should have read your post more carefully.

Ozyu

Arborbridge
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Re: An observation about Merchants Trust

Postby Arborbridge » January 17th, 2017, 5:43 pm

Having seen eight quaters held at 6p, the 6.1p is pathetic imho since in that two year period RPI has increased, post today's inflation figures,


You always have to balance that against what else you might do with the capital. Mine has increased, by around 1.5% a year, and the yield I had has been above 4.5%-5.5% most of the time. That's more than I need to pay my pension. The XIRR to last week was 8.78% - similar to yours. A couple of years ago, the XIRR was over 12% : this is just a function of the volatility. 8%-12%? - I reckon that will do for me compared with surrendering to an insurance company, which was my alternative with a pension pot.

It's the old swings and roundabouts. One can always look back and find something better, but I can point to many investments I've made which have been a whole lot worse. In other words, I'm counting my blessings of a 5% yield and some capital growth, albeit slightly less than inflation.

For now, I hold. If it dips, I will consider topping up, but at that time there will be many other ITs demanding I look at them, not to mention shares in my HYP :?


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