moorfield wrote:vand wrote:Was this thread started just to gloat over not owning VOD?
Let he who has never picked a badly performing share be the first to cast a stone.
On the contrary, I prefer to think of this as:
Let he who has picked many a badly performing share be the first to cast a stone.
We learn from our investment mistakes, and my investment mistakes have taught me that chasing yields > 2*CTY on the average ends with a pay cut sooner rather than later.
CLLN
VOD (2018)
IMB (2020)
SHEL (2020)
There are more.
Here is some data extracted from the Drawdown portfolio selected by
pyad in early 2019, and subsequently managed by myself. The latest review of this portfolio, together with links to its whole history, can be found here:
viewtopic.php?f=15&t=34668The following table shows, for each of the current holdings:
- Date of Purchase
- Yield at the time of Purchase
- Annual Return to date (as calculated by Excel’s XIRR formula)
- Year One % of portfolio Income
- Year Two % of portfolio Income
- Year Three % of portfolio Income
- Year Four % of portfolio Income
- To Date % of portfolio Income
Sorted by:
- Yield at the time of Purchase (Descending)
EPIC | Date | Yield | XIRR | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
VOD | 20-Mar-19 | 9.00% | -8.73% | 5.27% | 9.48% | 6.98% | 5.71% | 6.17%
IGG | 05-Apr-19 | 8.61% | 13.47% | 8.30% | 13.93% | 10.88% | 9.00% | 9.52%
ABDN | 19-Mar-19 | 7.97% | 1.09% | 8.27% | 13.88% | 7.33% | 5.88% | 8.69%
AV | 25-Mar-19 | 7.32% | 6.65% | 7.65% | 6.27% | 8.05% | 6.82% | 8.12%
IMB | 21-Mar-19 | 7.16% | 0.31% | 8.16% | 9.13% | 11.72% | 10.21% | 9.18%
WPP | 01-Apr-19 | 7.13% | 4.83% | 7.43% | 2.08% | 4.30% | 4.39% | 4.59%
HSBA | 27-Mar-19 | 6.32% | 2.81% | 3.99% | 0.00% | 3.52% | 3.85% | 3.83%
ITV | 26-Mar-19 | 6.25% | -9.43% | 6.48% | 0.00% | 0.00% | 4.26% | 3.76%
SHEL | 28-Mar-19 | 6.00% | 2.47% | 3.16% | 1.77% | 1.86% | 1.95% | 2.13%
WDS | 25-May-22 | 5.90% | 22.88% | n/a | n/a | n/a | 2.38% | 0.64%
BP | 28-Mar-19 | 5.63% | 0.88% | 3.45% | 4.02% | 2.49% | 2.52% | 2.89%
LAND | 29-Mar-19 | 5.33% | -5.01% | 1.98% | 1.72% | 1.83% | 2.34% | 2.03%
BLND | 29-Mar-19 | 5.26% | -7.92% | 2.10% | 1.25% | 1.97% | 2.16% | 1.82%
BHP | 22-Mar-19 | 5.11% | 18.94% | 6.56% | 11.26% | 14.60% | 13.85% | 10.70%
PNN | 09-Oct-19 | 5.09% | 6.68% | 1.80% | 8.18% | 3.94% | 3.69% | 3.76%
GSK | 04-Apr-19 | 5.05% | 1.52% | 3.73% | 8.79% | 6.87% | 4.20% | 5.39%
BA | 02-Apr-19 | 4.53% | 21.48% | 4.78% | 8.24% | 6.72% | 5.70% | 6.76%
SMDS | 02-Apr-19 | 4.34% | 1.22% | 4.86% | 0.00% | 4.76% | 6.62% | 4.21%
CCL | 10-Apr-19 | 3.96% | -8.73% | 4.24% | 0.00% | 0.00% | 0.00% | 1.21%
IBST | 11-Apr-19 | 3.73% | -6.79% | 3.95% | 0.00% | 2.19% | 3.55% | 3.20%
There are also two further holdings, purchased less than a year ago.
EPIC | Date | Yield | XIRR | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
DLG | 10-Jun-22 | 8.91% | -31.70% | n/a | n/a | n/a | 0.91% | 0.00%
HLN | 18-Jul-22 | 0.00% | 14.02% | n/a | n/a | n/a | n/a | 0.78%
And one final holding, sold early on as a result of an impending takeover of the company.
EPIC | Date | Yield | XIRR | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
GNK | 09-Apr-19 | 5.05% | 73.36% | 3.84% | n/a | n/a | n/a | n/a
The Annual Return to date (as calculated by Excel’s XIRR formula) for teh portfolio as a whole is 3.13%
So, what does the above tell me?
Well, it does not tell me anything useful as to whether a “High Yield” is likely to be less successful than a “Low Yield”, or vice versa. As a result, I guess it probably does tell me that portfolio diversification is important, whether selecting High or Low Yield.
I suppose one could say that, generally, the higher yields have outperformed the lower yields, certainly with regards to Income. With the notable exception of BHP Group (BHP), the majority of Income has been provided by the “High Yield” shares. Total Return too, could also be said to have been driven by the “High Yield” shares, but that is a bit of a stretch. No, the only serious conclusion that one can draw is that …..
….. some you win some you lose, whatever yield is selected.
I should also point out that the above is very much in line with other “real” portfolios under my management, the only further conclusion that I would add being: the longer one holds, the better the results seem to be. Long Term Buy and Hold seems to work, at least that is my experience.
Of course, it must be accepted that the above conclusion (or lack thereof), is solely based on what is a very small data set, and only four years of history. Although, to be fair, it is better than the research that
moorfield has reported here, thanks of course to my reporting on all yields (High and Low), and all results (Success or Failure).
If only
moorfield would report on the “High Yield” successes, together also with the “Low Yield” results (Success or Failure). There must surely have been such research and reporting it would certainly allow for a better understanding of the decision to choose what, without full research, must remain an arbitrary “High Yield” limit.
If anyone wants to do some further research in this area, and fully report it here, I would be very grateful. But any such research must look at purchases of both “High Yield” and “Low Yield”, and the results of both “Successes” and “Failures”.
Furthermore, as well as ensuring that more complete data is used, such research should not include the results of investing in any holding that would not have been selected for whatever reason other than yield. In other words, whatever selection of shares is used as the data set for such research, there must have been a filtering out of all holdings that would have failed the selection criteria.
There is little point in claiming a share would have been a “Yield Trap”, or conversely claiming a ”Yield Success”, when the share in question would never have been selected in the first place, for reasons unrelated to the Yield on offer.
Obviously, the best way to ensure the foregoing conditions of any research are met, is to report on the full results of “actual” High Yield portfolios, whether “real” or “virtual”. But even then, one is faced with the fact that different people will have differing selection criteria. For example, there are I believe many persons, posting on this board and/or the High Yield Portfolio (HYP) Practical board who, investing for income, did not and would not invest in Vodafone Group (VOD). Others myself included did.
Conducting such research is a huge task but, without it being properly undertaken, all one can possibly end up with, is maybe a conclusion that a “High Yield“ is more or, who knows, maybe less risky, than a “Low Yield”. We all know that, without doing any research to filter out shares that should never be selected, irrespective of the yield on offer, we will not be in any position to conclude which strategy, investing in “High Yield” or “Low Yield”, is likely to provide a better portfolio return, whether that be measured as Total Return, or Income alone. Well, most of us know that.
In conclusion I would suggest that, without such detailed research using more complete data, any results are frankly pretty meaningless. In my view, such incomplete research, does not provide any serious basis upon which to make investment decisions.
Enjoy!
Ian