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Arbit, HYP and OEICS 2021 Q1

General discussions about equity high-yield income strategies
Arborbridge
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Arbit, HYP and OEICS 2021 Q1

#402102

Postby Arborbridge » April 6th, 2021, 6:00 pm

Here's an update on how my income has varied, up until the end of Q1 2021.

Image

This is the income generated from a £100- worth of units bought on January 1 st 2010. As you see, at the start, the income generated is greater for the HYP as the yield was higher. Since then the OEIC and IT streams have overtaken the HYP stream, and in the case of the ITs, quite decisively so since covid. Now interest will centre on whether the probably slow down in IT income will allow the other streams to overtake it - frankly, I doubt it. But as they say, it's not over "until the fat lady sings" which will presumably be at my funeral - though I won't be posting after that AFAIK.

My HYP income YOY to the first quarter is down 22% for HYP, 21% for OEICS and up 4.7% for ITs. All within manageable percentages for my pension system.

Arb.

ReallyVeryFoolish
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Re: Arbit, HYP and OEICS 2021 Q1

#402103

Postby ReallyVeryFoolish » April 6th, 2021, 6:03 pm

Thank you. Perhaps there is more than just puff behind the claims that investment trusts smooth out income returns over the longer term?

The last 5 years or so has been dreadful to OEICs in comparison.

RVF

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402106

Postby Arborbridge » April 6th, 2021, 6:12 pm

ReallyVeryFoolish wrote:Thank you. Perhaps there is more than just puff behind the claims that investment trusts smooth out income returns over the longer term?

The last 5 years or so has been dreadful to OEICs in comparison.

RVF


I've been really surprised about how well the OEIC stream has produced. Without being able to reserve income, they have taken a big knock just now, but overall they have been good.
But what you can say is that the ITs are doing a good job of smoothing one's income, which is worth paying for in some way. Not everyone can deal with a 21% drop in one year!

Arb.

ReallyVeryFoolish
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Re: Arbit, HYP and OEICS 2021 Q1

#402111

Postby ReallyVeryFoolish » April 6th, 2021, 6:34 pm

Arborbridge wrote:
ReallyVeryFoolish wrote:Thank you. Perhaps there is more than just puff behind the claims that investment trusts smooth out income returns over the longer term?

The last 5 years or so has been dreadful to OEICs in comparison.

RVF


I've been really surprised about how well the OEIC stream has produced. Without being able to reserve income, they have taken a big knock just now, but overall they have been good.
But what you can say is that the ITs are doing a good job of smoothing one's income, which is worth paying for in some way. Not everyone can deal with a 21% drop in one year!

Arb.

Not knocking the result overall. I specifically mentioned the income smoothing characteristic of ITs. I think that is self evident.

RVF

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Re: Arbit, HYP and OEICS 2021 Q1

#402128

Postby Alaric » April 6th, 2021, 7:42 pm

ReallyVeryFoolish wrote:The last 5 years or so has been dreadful to OEICs in comparison.


Unless they indulge in creative investment management by buying shares cum dividend and selling ex, Managers of OEICs are forced to pay out all the dividends they receive and no more. They may have a little flexibility in buying shares cum dividend and selling ex, or by selecting higher yielding shares. Both might impair performance.

Provided they stay within the taxation and accounting rules, managers of ITs can pay whatever dividend they want to, supplementing shortfalls with borrowings or asset sales. If they choose to smooth dividend distributions they can do so.

ReallyVeryFoolish
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Re: Arbit, HYP and OEICS 2021 Q1

#402193

Postby ReallyVeryFoolish » April 7th, 2021, 9:04 am

Alaric wrote:
ReallyVeryFoolish wrote:The last 5 years or so has been dreadful to OEICs in comparison.


Unless they indulge in creative investment management by buying shares cum dividend and selling ex, Managers of OEICs are forced to pay out all the dividends they receive and no more. They may have a little flexibility in buying shares cum dividend and selling ex, or by selecting higher yielding shares. Both might impair performance.

Provided they stay within the taxation and accounting rules, managers of ITs can pay whatever dividend they want to, supplementing shortfalls with borrowings or asset sales. If they choose to smooth dividend distributions they can do so.

And it seems to me it's that flexibility that has given ITs the edge as a pretty reliable income portfolio the last few years. Perhaps accepting a lower absolute income to begin with has, it looks to me, been a rewarding pay off against pretty much anything else with similar objectives. It is no accident therefore that anecdotally, quite a few investors here seem to be drawing a similar conclusion and putting their money to work in ITs.

RVF

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Re: Arbit, HYP and OEICS 2021 Q1

#402203

Postby Padders72 » April 7th, 2021, 9:33 am

I echo the above, I've moved quite a big chunk (circa 25%) into a variety of ITs over the past year but hindsight is a wonderful thing as ever in finance. Were we to have this discussion at any point from Dec 13 to Dec 19 then the OEIC line above would make a strong case for those being the smart move with ITs trailing even a nominal HYP portfolio like that mentioned above.

I have cut my OEIC exposure right down over the years mostly just because of the extra delays in buying and selling as they are usually priced once a day. That and the issues that can occur if everyone heads for the door (see Woodford). Lucky for me I guess.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402207

Postby Arborbridge » April 7th, 2021, 9:41 am

Whatever....

I've just checked my actual investments cash receipts for Q1 2021, and compared it with Q1 2019 and the total from these three investment streams is up by 20%.
This is actual £, not pence per unit, so in terms of what I have to live off, that looks a happy situation.
Actual £'s have increased due to re-investment, whereas pence per unit show one whether one is producing the same "bang for the buck" invested. (I know you know that, but mention it for any new people around here).

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#402283

Postby daveh » April 7th, 2021, 1:01 pm

In cash terms my Income Portfolio is well up for the 1st quarter on 2020 and is also ahead of 2019. So 2019 1st qtr cash was 1.000, 2020 was 0.703 and 2021 is 1.258. If I look at dividend per unit for the 1st qtr (using the number of dividends at the end of the qtr) then in 2019 it was 3.96p and 1.92p per accumulation and income unite respectively. For 2020 it was 2.62p and 1.21p respectively and this year it was 4.47p and 1.94p respectively.

So even wrt the income units the dividend in the 1st qtr is well up on covid year 1st qtr and just head of 1st qtr 2019 which was unaffected by covid. It will be interesting to see if the next two qtrs dividends are also better than 2019. So far it is looking as if my IP income has bounced back well from the falls seen last year and is back on track to be better than 2019. This is both better than I was expecting and better than what happened after the GFC. Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402297

Postby Arborbridge » April 7th, 2021, 1:42 pm

daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.

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Re: Arbit, HYP and OEICS 2021 Q1

#402309

Postby daveh » April 7th, 2021, 2:02 pm

Arborbridge wrote:
daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.



My accumulation units are at £3.74 last week and the previous peak was £3.70 at the end of December 2019. Like you my income unit performance has not been so good. The income units are at £1.61 now, at the end of December 2019 they were at £1.71 and back at the end of May 2017 they peaked at £1.80. They both started a t £1.00 per unit when I started unitising 30/09/2003. The income unit value is fairly flat so the majority of my gains are coming from the income and reinvestment there of and very little from the underlying capital performance.

tjh290633
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Re: Arbit, HYP and OEICS 2021 Q1

#402349

Postby tjh290633 » April 7th, 2021, 4:02 pm

Arborbridge wrote:
daveh wrote:Also my capital value is at the highest it has ever been both in cash terms and the value of accumulation units, but not of income units which are still a little below their peak value.


I hadn't thought to check this, but I find my income unit price is now 126.33p but was 128.48p at end March 2019. This was nowhere near the peak, which was in May 2017 at 145.89. The monetary value is around the same now as it was then, but only due to more investment.

Depressing!

Arb.

Don't worry about it. My maximum income unit value was £6.52 at the end of May 2017, when the FTSE100 stood at 7,519.95

Currently it stands at £6.07 as of last night, when the FTSE100 closed at 6,823.55. That is 93% of the maximum for unit value but 88% of the maximum for the index.

Income per income unit was 24.97p for the year to end March 2017 and 22.80p for that ended 1st April 2021. However I have 18% more income units now, and 8% more income this last year, despite a fall of 23.5% in income compared with the year to 5 April 2020.

My accumulation unit value is at an all-time high of £29.43.

TJH

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402351

Postby Arborbridge » April 7th, 2021, 4:10 pm

While we are at it, I thought I may as well update on the capital values. These are the values rebased for income unit prices from inception to end of March. Hyp is down with the FTSE 100 and ArbIT and incOEICs higher but similar to one another.

Image

It seems that my HYP became properly detached around the time of the referendum and never caught up.

Arborbridge
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Re: Arbit, HYP and OEICS 2021 Q1

#402354

Postby Arborbridge » April 7th, 2021, 4:17 pm

tjh290633 wrote:My accumulation unit value is at an all-time high of £29.43.

TJH


My accumulation price hasn't quite matched the high of 222.4 set in Jan 2020 - currently (end MArch) it is 217.15.


Arb.


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