Arbit, HYP and OEICS 2020

[Arborbridge]

This is by way of an addendum to my usual HYP report, here: viewtopic.php?f=15&t=27126

Here follow the components of my income IT portfolio:-



HYP, ArbIT and income OEICS provide the mainstay of my self-run pension. The percentage capital weight of the three groups is: 49.7% HYP, 41.3% ArbIT, 9.0% incOEICS. This has altered over the years so that the ITs are a higher percentage - the ratio HYP:ArbIT is now 1:1.2, whereas when I began ten years ago, the ratio was around 2:1. This occurred naturally - that is the capital performance of the ITs has been better, but also I've been investing rather more in them in past three or four years.

Changes to ArbIT

In 2020, BRWM nd BERI were sold off. These were originally added as a catch all in the energy resources sector, but I find that my HYP does this quite well and those two were fairly small and disappointing contributors. The "fairly small" is just me tidying up: I can't be bothered with small holdings that give me income hardly worth entering in a spreadsheet, so that has led to bigger concentrations with nice dollops to enter up. I tolerate this with FGT which has the virtue of a good TR, and with HINT where I want to experiment with an international fund.
Another change in focus in 2020 was more capital went into overseas ITs which gained on sterling weakness, but may come back to bite me. However, the UK market has been a dreadful place to be, so I have been happy with the greater foreign input.
Other changes were the addition of HINT, and then VUKE as a benchmark for HYP (not included in the above). PLI was absorbed into Murray Income.

Income comparison

Below, I show the relative contributions of £100 worth of each income stream invested in January 2011:-



You can observe the different characteristics of each investment, and the benefit of the ITs being able to pay from reserves. However, it is important to check the total income produced over the period, which is: HYP=£214.6, ArbIT=£205.8, IncOEICS=£197.29. On this basis, HYP is still just keeping ahead of the ITs, and some might say that the OEICs have done better than people might expect who complain about OEIC management fees. All streams kept ahead of the RPI line until June of 2020.

These three streams have provided a comfortable pension income (added to the State Pension) but clearly the system has been tested this year. However, the income received is around 1.5x the income required, so there is still some headroom before I need to choose between heat and eat.
I reserve 20% of my HYP income, and that is reinvested. This year, the drop in income absorbed most of that safety margin, but I did not need to reduce my usual pension payments - though in fact, I did through sheer prudence.

We enter 2021 with great anticipation to see how the various incomes will fair, and will report in due time.

Arb.

[Dod101]

Many thanks for that report Arb. Very helpful and informative, and a very good selection of ITs I think. I need to investigate one or two as I do not know them. I too hold HFEL and cannot understand why the yield remains very attractive. Must take a look at HINT for instance.

Dod

[Arborbridge]

Many thanks for that report Arb. Very helpful and informative, and a very good selection of ITs I think. I need to investigate one or two as I do not know them. I too hold HFEL and cannot understand why the yield remains very attractive. Must take a look at HINT for instance.

Dod

I'm not a 100% convinced about HINT, but the yield meant it would at least contribute something to my income, whereas some ITs with better growth prospects ( eg Scottish Mortgage) would not.

I also bought some VHYL, so I am trialing both of them. I will consider what to do over the next couple of years: double or quit!

BTW. I'm a great believer in having skin in the game. Just checking out past performance and extrapolating doesn't get my permanent attention or care in the same way.

Arb.

[funduffer]

Arb, very interesting chart.

I would like to do the same, starting at a slightly later date, however,

I show the relative contributions of £100 worth of each income stream invested in January 2011

I am not sure what this means.

I have unitised data for my HYP, my income IT's and a dividend OEIC fund I hold, but I am not sure how to normalise it in the way you have done.

Is the starting point essentially the historic yield over the first 12 months (i.e. Jan 11 - Dec 11 in your case)?

FD

[Arborbridge]

Here's an addendum to show the capital changes for comparison, including:- HYP, ArbIT, incOEICS all rebased. Also included are the FTSE100 and rpi.




It's clear that my particular way of operating HYP does not compare well with the professional managers for capital increase!

[Arborbridge]

Arb, very interesting chart.

I would like to do the same, starting at a slightly later date, however,

I show the relative contributions of £100 worth of each income stream invested in January 2011

I am not sure what this means.

I have unitised data for my HYP, my income IT's and a dividend OEIC fund I hold, but I am not sure how to normalise it in the way you have done.

Is the starting point essentially the historic yield over the first 12 months (i.e. Jan 11 - Dec 11 in your case)?

FD

I imagined that I had invested £100 purchased on the first day at whatever the unit price was for that day. That gives me a number of units which then stays constant. Then it's just a matter of multiplying the number of units (or shares, if you like) by the income per unit price to get the total amount "paid out" for one's holding.
This gave the first pay out point as HYP £4.9, ITs £4.34, OEIC £4.55, and so on. I haven't tries to rebase or normalise these - just plotted them as they come. The important thing is, that one can see how each holding stands relative to another and also how one or the other increases faster or slower.

Note a wrinkle: you buy your units on the first day - in my case with the unit price of Dec 31st 2010 - but the first pay out point is Dec 31st 2011 - that is, showing the first year's "dividends" earned by owning for that year.


Arb.

[ReallyVeryFoolish]

Thank you Arb, sharing your investment journey is very much appreciated. There is much to learn from this.

RVF

[richfool]

Many thanks for that report Arb. Very helpful and informative, and a very good selection of ITs I think. I need to investigate one or two as I do not know them. I too hold HFEL and cannot understand why the yield remains very attractive. Must take a look at HINT for instance.

Dod

Yes, thank you for the report Arb.

I have similar reservations to Arb about HINT, in that its capital appreciation has been poor and it suffered/was very susceptible during the fallback last March/April. I like its holdings and so continue to maintain a small holding of HINT.

I've avoided HFEL as I felt that its dividend yield comes at the expense of capital appreciation. I hold AAIF, SOI & JAGI in that Asia Pacific Income sector. HFEL tends to sit at the bottom of the performance table for that group.

https://citywire.co.uk/wealth_manager/i ... ePeriod=12

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

[Charlottesquare]

Many thanks for that report Arb. Very helpful and informative, and a very good selection of ITs I think. I need to investigate one or two as I do not know them. I too hold HFEL and cannot understand why the yield remains very attractive. Must take a look at HINT for instance.

Dod

Yes, thank you for the report Arb.

I have similar reservations to Arb about HINT, in that its capital appreciation has been poor and it suffered/was very susceptible during the fallback last March/April. I like its holdings and so continue to maintain a small holding of HINT.

I've avoided HFEL as I felt that its dividend yield comes at the expense of capital appreciation. I hold AAIF, SOI & JAGI in that Asia Pacific Income sector. HFEL tends to sit at the bottom of the performance table for that group.

https://citywire.co.uk/wealth_manager/i ... ePeriod=12

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

Certainly over the longer period I have held that is so (first purchased 2013) , but timing is all, I was out of them totally for a period last March ( i was out of nearly everything last March so missed some of the pain) then I repurchased, on these purchases , 23/3/20 1000 @249.40, 25/3/20 2000@279.97 4/5/20 1000@295.95 I am currently up 23% on the capital side. Then again my Scottish Mortgage purchases are showing 116% over roughly the same period.

[Dod101]

Many thanks for that report Arb. Very helpful and informative, and a very good selection of ITs I think. I need to investigate one or two as I do not know them. I too hold HFEL and cannot understand why the yield remains very attractive. Must take a look at HINT for instance.

Dod

Yes, thank you for the report Arb.

I have similar reservations to Arb about HINT, in that its capital appreciation has been poor and it suffered/was very susceptible during the fallback last March/April. I like its holdings and so continue to maintain a small holding of HINT.

I've avoided HFEL as I felt that its dividend yield comes at the expense of capital appreciation. I hold AAIF, SOI & JAGI in that Asia Pacific Income sector. HFEL tends to sit at the bottom of the performance table for that group.

https://citywire.co.uk/wealth_manager/i ... ePeriod=12

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

I primarily seek income as an investor but not at the expense of capital. We should really all be measuring returns as total return which would provide a more accurate picture.

Dod

[funduffer]

I imagined that I had invested £100 purchased on the first day at whatever the unit price was for that day. That gives me a number of units which then stays constant. Then it's just a matter of multiplying the number of units (or shares, if you like) by the income per unit price to get the total amount "paid out" for one's holding.
This gave the first pay out point as HYP £4.9, ITs £4.34, OEIC £4.55, and so on. I haven't tries to rebase or normalise these - just plotted them as they come. The important thing is, that one can see how each holding stands relative to another and also how one or the other increases faster or slower.

Note a wrinkle: you buy your units on the first day - in my case with the unit price of Dec 31st 2010 - but the first pay out point is Dec 31st 2011 - that is, showing the first year's "dividends" earned by owning for that year.


Arb.

I got it now, thanks! I'll post my graph when it's ready.

FD

[funduffer]

OK, here is my chart equivalent to Arb's, built in the same way (as far as I am aware):



The start date is 1/1/16. I built the HYP and IT portfolios in 2014, so 2015 was the first full year of dividends.

FDHYP is my 20 share HYP:

Unilever (ULVR)
BAE Systems (BA.)
Sainsburys (SBRY)
Royal Dutch Shell 'B' (RDSB)
HSBC Holdings (HSBA)
Vodafone Group (VOD)
National Grid (NG.)
GlaxoSmithKline (GSK)
South32 Limited (S32)
Legal and General Group (LGEN)
Imperial Brands (IMB)
Lloyds Banking Group (LLOY)
Marston's (MARS)
Stagecoach Group (SGC)
SSE (SSE)
British Land Company (BLND)
WPP (WPP)
BHP Group (BHP)
Standard Life Aberdeen plc (SLA)
Vistry Group (VTY)


FDITs is my portfolio of 10 income generating IT's:

Henderson Far East Income Ltd. (HFEL)
BlackRock World Mining Trust (BRWM)
City of London Inv Trust (CTY)
Dunedin Income Growth Inv Trust (DIG)
Murray International Trust (MYI)
BMO Capital & Income Investment Trust (BCI)
Aberdeen Standard Equity Income Trust (ASEI)
Scottish American Inv Company (SAIN)
Greencoat UK Wind (UKW)
NextEnergy Solar Fund Limited Red (NESF)

FDOEIC is a portfolio of just one HY fund:
Fidelity Moneybuilder Dividend fund

The data for FDOEIC is every 3 months, whereas it is monthly for FDHYP and FDITs,

I think there is a strong similarity between Arb's experience and my own. The HYP has taken a nosedive, and the other 2 have held up quite well. In fact I have had no dividend cuts in FDITs in the last 12 months - the small dips being due to dividend drag, as most of my recent investment activity has been in IT's.

It remains to be seen how long it takes for the HYP to recover.

FD

[ReallyVeryFoolish]

Thanks FD. I think there's a pretty consistent and important trend being shown here by the various posters who have been able to keep and share the records of their portfolio evolution. I have to say, I am just too lazy to put the effort in. So I am all the more grateful that others do so.

RVF.

[Arborbridge]

OK, here is my chart equivalent to Arb's, built in the same way (as far as I am aware):

FD

Thanks for posting that FD. Most interesting to see a broadly similar result.

You've given me an idea there - I have never looked at ASEI as far as I know.

I must also post the constiutents of my OEICS basket in case anyone is curious.


Arb.