Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to SalvorHardin,Loup321,pje16,AsleepInYorkshire,swill453, for Donating to support the site

portfolio of high yield IT's

General discussions about equity high-yield income strategies
Arborbridge
Lemon Half
Posts: 7359
Joined: November 4th, 2016, 9:33 am
Has thanked: 1957 times
Been thanked: 2789 times

Re: portfolio of high yield IT's

#429219

Postby Arborbridge » July 21st, 2021, 7:08 am

AshleyW wrote:Take a look at this 8 Investment Trust dividend portfolio - this provided dividend growth even after the 2008 crisis https://www.retirementace.co.uk/2020/04 ... lio-8.html


Interesting and useful link, thank for posting.


Arb.

Padders72
2 Lemon pips
Posts: 131
Joined: November 8th, 2016, 7:53 pm
Has thanked: 34 times
Been thanked: 78 times

Re: portfolio of high yield IT's

#429222

Postby Padders72 » July 21st, 2021, 7:19 am

thebarns wrote:Off the top of my head and to give you something to look at, research and take your own decision:

I hold virtually all of these, plus a couple I intend to buy shortly.

They are held as part of a specific chunk of savings used to generate income, other strategies are used for different chunks. Some are higher yielding than others, I tend to view the overall yield rather than individual elements - the overall yield is around 5.6-5.7%.

As you have specifically asked for ITs, I will leave out preference shares and high yielding individual shares and VCTs which I also use in this income part of an overall portfolio.

VSL, HONY, iHR, THRL, WHR, EPIC, SREI, SHED, DGI9, SEIT, FSFL, SEQI, JLEN, UKW, HFEL, MRCH, ASEI, UKW, CTY, BSIF, GABI, GCP, INPP, GRID, GSF, AEWU, BBGI, NCYF, MCT, NESF, SUPR, AGR, PHP, BPCR, HICL, BIPS, RECI, RAVP, RGL, BBOX.

Please do your own research and understand the iTs yourself.


Surely this is spreading your jam too thin? You must have thousands of individual holdings here so are bound to be introducing diworsification by the back door. A tracker would do the job much more cheaply. Personally I’d cull that list to 3 or 4 tops from each sector with a max of 10-15.

By holding 40 ITs you are basically backing every horse in the race.

everhopeful
2 Lemon pips
Posts: 187
Joined: November 9th, 2016, 12:18 pm
Has thanked: 7 times
Been thanked: 75 times

Re: portfolio of high yield IT's

#429269

Postby everhopeful » July 21st, 2021, 10:39 am

I hold 21 ITs. They include some of the usual higher yielding suspects such as Murray Int, Shires, Aberdeen Standard Equity Income, Merchants, Henderson Far East, European Assets, Blackrock Energy and Resources and Blackrock World Mining. I also include some high yielders which are less correlated with high yielding equities such as Princess Private Equity, Triple Point Social Housing, Gore Street Energy, Regional REIT and Invesco Bond Income. The others are more growth orientated and fish in a different equity pool to the high yield ITs. Although 21 is a highish number of ITs to hold I do not perceive a problem with duplication.Elsewhere my Fixed Interest and individual shares also do not overlap significantly with my ITs. I think it is possible to have a largish number of holdings without becoming a closet tracker.

Eboli
2 Lemon pips
Posts: 168
Joined: November 7th, 2016, 9:05 pm
Has thanked: 2 times
Been thanked: 51 times

Re: portfolio of high yield IT's

#429428

Postby Eboli » July 21st, 2021, 7:47 pm

I cannot answer the OP's original question as I do not understand the underlying reasons for 10 (ten!!! with £60K is a questionable ask) with maximum yield (that, I regret, seems a seriously short-term requirement). Others have already suggested a plethora of trusts that might continue to yield a sufficient amount.

If, however, the aim is sustainable long-term Dorisian neglect a better construction might be 3 trusts yielding a somewhat more modest yield which are likely to sustain real growth in income over decades. If that were the ask, perhaps I would choose three: MRC, MYI and BNKR - though there are many other fitting these profiles.

Eb.

scrumpyjack
Lemon Quarter
Posts: 2243
Joined: November 4th, 2016, 10:15 am
Has thanked: 179 times
Been thanked: 997 times

Re: portfolio of high yield IT's

#429435

Postby scrumpyjack » July 21st, 2021, 8:16 pm

John Baron has an article in last week's Investors Chronicle on his IT Portfolio
https://www.investorschronicle.co.uk/id ... fensively/
Don't know if its behind a paywall, as I subscribe

Also he used to hold SMT as one holding in his Income porfolio! The reason was to have balance overall, so perhaps you don't need to only have high yield ITs in such a portfolio. What matters is the overall mix.

ps apologies for the split infinitive!

AshleyW
Posts: 19
Joined: April 23rd, 2020, 5:43 pm
Been thanked: 20 times

Re: portfolio of high yield IT's

#429436

Postby AshleyW » July 21st, 2021, 8:18 pm

The AIC publishes their dividend heroes of Investment Trusts that have increased their dividends for at least 20 years. Many of these pay quite low dividends and out of all the hundreds of ITs there are only a few that yield 3.5% or more and maintained or increased dividends post 2008 crash. The AIC is a good starting point to choose by yield and then 5-year dividend growth but then some research is needed to check dividend history to find those that have increased or at the very least maintained dividends during the hard times. The great advantage of ITs is that the annual accounts are usually available on the IT´s website and most give 10-year dividend histories so just by checking out 2 published accounts you can get the 20-year dividend history. It is possible to select 8 to 10 trusts which offer geographical and sector diversification, good dividends, and consistency in payouts.

I don´t believe that there are any index/passive investments that can offer the same yield and dividend stability/growth as ITs - but it has to be accepted that these are actively managed products so it's not possible to buy and hold. Managers change or change their style as we saw with Neil Woodford and previously reliable trusts such as Temple Bar are revamped and their dividends reset to a lower level.

Arborbridge
Lemon Half
Posts: 7359
Joined: November 4th, 2016, 9:33 am
Has thanked: 1957 times
Been thanked: 2789 times

Re: portfolio of high yield IT's

#429440

Postby Arborbridge » July 21st, 2021, 8:34 pm

Eboli wrote:I cannot answer the OP's original question as I do not understand the underlying reasons for 10 (ten!!! with £60K is a questionable ask) with maximum yield (that, I regret, seems a seriously short-term requirement). Others have already suggested a plethora of trusts that might continue to yield a sufficient amount.

If, however, the aim is sustainable long-term Dorisian neglect a better construction might be 3 trusts yielding a somewhat more modest yield which are likely to sustain real growth in income over decades. If that were the ask, perhaps I would choose three: MRC, MYI and BNKR - though there are many other fitting these profiles.

Eb.


You suggest three, only THREE! ITs for £60,000 of modest yield. Well, that's risky ;)

The OP mentions high yield, and from that we may deduce he needs the yield to provide income, as I do too. No point suggesting low or medium yield in that case. And I suspect that by wanting a larger number than you would countenance, he may want to spread the risk across a bigger spectrum.

Having said that, there's not a lot wrong with the three you suggest: they may not provide enough income though.

BTW, I see no reason why one should not have more than your three - there's nothing to lose by a bigger number, and it would reduce the IT specific risk.

Arb.

Arborbridge
Lemon Half
Posts: 7359
Joined: November 4th, 2016, 9:33 am
Has thanked: 1957 times
Been thanked: 2789 times

Re: portfolio of high yield IT's

#429443

Postby Arborbridge » July 21st, 2021, 8:43 pm

AshleyW wrote:I don´t believe that there are any index/passive investments that can offer the same yield and dividend stability/growth as ITs - but it has to be accepted that these are actively managed products so it's not possible to buy and hold. Managers change or change their style as we saw with Neil Woodford and previously reliable trusts such as Temple Bar are revamped and their dividends reset to a lower level.


but it has to be accepted that these are actively managed products so it's not possible to buy and hold.

Just to be a bit pendantic here, it is possible to hold for many, many years. You pick an obvious outlier in Woodford (you are using a man of straw argument there, in my view), but many ITs have been run by the same manager or team for decades - witness City of London or Murray International, Finsbury or Temple Bar. Eventually, Temple Bar did change its manager after decades of success as the market morphed, but nevertheless one could have had the same manager for a long spell - and even now it's far from clear that the character of the IT has changed significantly as it still has a similar brief.

Although managers do change, I would say one can discount this as a worry to have uppermost in one's mind.

Arb.

thebarns
2 Lemon pips
Posts: 139
Joined: November 4th, 2016, 12:56 pm
Been thanked: 78 times

Re: portfolio of high yield IT's

#429484

Postby thebarns » July 22nd, 2021, 2:03 am

Padders -

My list of 40 ITs/REITs do consist of a number of niche areas and I have not found a tracker/passive strategy that will produce that yield with those constituent areas.

The closest funds are VT RM Alternative Income or Jupiter Monthly Alternative Income which have a number of these holdings but produce a smaller yield after their own and platform charges.

I bought some of them at distressed valuations over the last year and the current 5.6-5.7% yield is on current valuations.

So I think it is difficult to find a passive or tracker for these holdings - yes I do double or triple or quadruple up in certain of the areas, but I am fine with doing that as the transaction costs are immaterial given the size of the overall portfolio and the length of time I intend to hold.

I do this as I am not going to pick which of GRID/GSF or IHR/THRL or AEWU/SREI or GABI/RMDL or NCYF/BIPS etc is going to do better or worse and am happy taking the overall average yield.

I did once hold IUKD which was the high yield U.K. ETF and found it to be fairly useless.

For your info, I do hold other chunks of a portfolio, part of which includes a reasonable sized holding in a general world tracker so I am not knocking trackers per se, just in this particular area of my portfolio.

monabri
Lemon Half
Posts: 5151
Joined: January 7th, 2017, 9:56 am
Has thanked: 706 times
Been thanked: 1819 times

Re: portfolio of high yield IT's

#429660

Postby monabri » July 22nd, 2021, 2:48 pm

thebarns wrote:I did once hold IUKD which was the high yield U.K. ETF and found it to be fairly useless.



I'd agree with that.

gnawsome
2 Lemon pips
Posts: 218
Joined: November 6th, 2016, 4:44 pm
Has thanked: 280 times
Been thanked: 36 times

Re: portfolio of high yield IT's

#429699

Postby gnawsome » July 22nd, 2021, 4:30 pm

thebarns wrote:Padders -

I did once hold IUKD which was the high yield U.K. ETF and found it to be fairly useless.



SNAP (but still holding ~ hoping)

Wuffle
Lemon Slice
Posts: 282
Joined: November 20th, 2016, 8:14 am
Been thanked: 102 times

Re: portfolio of high yield IT's

#429880

Postby Wuffle » July 23rd, 2021, 10:55 am

I have a similar sized pf.
I have chosen to fanny about because I cant help myself and have nearer to a dozen choices.
It costs me in multiple transactions.
For me, this is cheap entertainment, I am familiar with the arguments for why this is a bad idea.

I would point out to anybody with a small portfolio the option of BMPI (and BMPG, though not relevant here).
BMO Managed Portfolio Trust in income and growth flavours to give full titles.
It holds all the likely candidates and then more.
Monthly factsheet for top ten, interim report for the full pf.
Yes, you are charged a second time for management but that is at least a choice.

W.

Eboli
2 Lemon pips
Posts: 168
Joined: November 7th, 2016, 9:05 pm
Has thanked: 2 times
Been thanked: 51 times

Re: portfolio of high yield IT's

#429990

Postby Eboli » July 23rd, 2021, 8:00 pm

Arb chastised me:

The OP mentions high yield, and from that we may deduce he needs the yield to provide income, as I do too. No point suggesting low or medium yield in that case.


No, the OP mentioned maximum yield and
sustainable high yield,
whatever that may be. You cannot begin to answer this requirements unless you know the background: e.g., sustainable for how long; what tolerance of sustainability; is it only income sustainability? We're getting seriously close to the debate about Bo8 v Bo7 and we do not need to rehearse those differences again.

As for 3 v 10 on £60K I do, on reflection, see that I may be affecting a nearness to one extreme. However, too often here we see endless and needless diversification of holdings in ITs as if there is some unwritten necessity to hold an IT in whatever category that has already pre-set. By all means diversify where you are deliberately taking punts in management and style (SMT, comes to mind), but please do not try to argue that a similar diversification is achieved between EDIN and CTY for example.

Eb.

Arborbridge
Lemon Half
Posts: 7359
Joined: November 4th, 2016, 9:33 am
Has thanked: 1957 times
Been thanked: 2789 times

Re: portfolio of high yield IT's

#430001

Postby Arborbridge » July 23rd, 2021, 8:45 pm

Eboli wrote:As for 3 v 10 on £60K I do, on reflection, see that I may be affecting a nearness to one extreme. However, too often here we see endless and needless diversification of holdings in ITs as if there is some unwritten necessity to hold an IT in whatever category that has already pre-set. By all means diversify where you are deliberately taking punts in management and style (SMT, comes to mind), but please do not try to argue that a similar diversification is achieved between EDIN and CTY for example.

Eb.

but please do not try to argue that a similar diversification is achieved between EDIN and CTY for example.


Well, I hope everyone agrees about that. However, that doesn't mean that ITs fishing in the same pond come up with the same result, not that having a couple of strings to the same bow (to mix metaphors) isn't a good idea to cut IT manager specific risk.

As it happens, I do have both Edin and CTY and I can't say I regret it. It turns out that EDIN has been doing rather better, but there's no way I could have predicted that back in 1990.

I have to admit that I have been notorious at hedging my bets and putting my eggs in many baskets, so I have a bias in that direction.

I think that's enough metaphor for one evening :lol:
Arb.

richfool
Lemon Quarter
Posts: 2975
Joined: November 19th, 2016, 2:02 pm
Has thanked: 734 times
Been thanked: 749 times

Re: portfolio of high yield IT's

#430092

Postby richfool » July 24th, 2021, 10:28 am

Personally I don't mind some overlap of holdings (through holding trusts targetting the same sector). Different managers may take different views of when to buy and sell those holdings, which helps to further spread the risk.

dundas666
Lemon Pip
Posts: 85
Joined: December 27th, 2019, 2:53 pm
Has thanked: 76 times
Been thanked: 50 times

Re: portfolio of high yield IT's

#430488

Postby dundas666 » July 26th, 2021, 1:24 pm

I think the overlap question depends on the sector, for example a lot of the ITs specialising in small/medium companies don't have similar portfolios so owning a number of them wouldn't create any duplication.

On the other hand many of the Asian ITs have similar holdings like Taiwan Semiconductor, Tencent and Samsung, and I think many of the UK income ITs have similar holdings too, so not much point holding different ones.

Arborbridge
Lemon Half
Posts: 7359
Joined: November 4th, 2016, 9:33 am
Has thanked: 1957 times
Been thanked: 2789 times

Re: portfolio of high yield IT's

#430647

Postby Arborbridge » July 27th, 2021, 8:56 am

richfool wrote:Personally I don't mind some overlap of holdings (through holding trusts targetting the same sector). Different managers may take different views of when to buy and sell those holdings, which helps to further spread the risk.


You are right not to mind, because even though they buy the same of similar companies, the managers achieve different results.
For those who are sceptical about this, all one needs to do is look at a few charts of total return plotting various well known ITs investing in UK companies together - and see the differences.


Arb.

gnawsome
2 Lemon pips
Posts: 218
Joined: November 6th, 2016, 4:44 pm
Has thanked: 280 times
Been thanked: 36 times

Re: portfolio of high yield IT's

#430720

Postby gnawsome » July 27th, 2021, 2:26 pm

Arborbridge wrote:
richfool wrote:Personally I don't mind some overlap of holdings (through holding trusts targetting the same sector). Different managers may take different views of when to buy and sell those holdings, which helps to further spread the risk.


You are right not to mind, because even though they buy the same of similar companies, the managers achieve different results.
For those who are sceptical about this, all one needs to do is look at a few charts of total return plotting various well known ITs investing in UK companies together - and see the differences.


Arb.


Parable of the talents...


Return to “High Yield Shares & Strategies - General”

Who is online

Users browsing this forum: No registered users and 5 guests