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Is SMIF exotic?

General discussions about equity high-yield income strategies
ukmtk
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Is SMIF exotic?

#656555

Postby ukmtk » March 29th, 2024, 8:17 am

When I tried to buy some SMIF at HL yesterday I had to jump through hoops to prove that I understand risky investments and could lose all my money.
When I added SMIF to my Regular Investment for ISA at AJBell there was no issue.
As far as I can tell SMIF is basically corporate debt?
Its largest holding is a mere 2.7% of the portfolio.
Is it exotic or not?

Many thanks in advance for any enligtenment.

yieldhog
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Re: Is SMIF exotic?

#656559

Postby yieldhog » March 29th, 2024, 8:49 am

When my accounts all got taken over by ii I found they would allow me to keep the SMIF I already owned but would not allow me to buy any more. Then I saw some comments on TLF mentioning purchases of SMIF at ii and have since been able to buy more.

At the time, I noticed that information from SMIF did mention it was an institutional fund and not available to private individuals. I spoke with the man who runs SMIF who confirmed at that time that SMIF was institutional only. I can't remember his name but he was very helpful and informative.

Clearly something has changed but I'm not sure if it was SMIF that changed it's rules or brokers changing their's.

It's true that it's not your normal corporate high yield fixed income fund and does contain things like MBSs, but since I've owned it the performance has been excellent and now that interest rates appear to be headed lower we should see some further upward movement in the price along with a stable dividends.

Y

Gerry557
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Re: Is SMIF exotic?

#656562

Postby Gerry557 » March 29th, 2024, 9:01 am

Iweb wouldn't let me buy or transfer to them. There was some vague answer that I didn't understand.

I did buy some with ii

I didn't really think it exotic, just a monthly paying corporate bond fund. The plan was to put in a broker to pay out so I had some cash coming in. Obviously that plan failed as I selected iweb to be that broker.

I considered selling and moving onto something else but it's yielding 10%+ with some capital gain to boot. Maybe I shudda bought more ;)

88V8
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Re: Is SMIF exotic?

#656602

Postby 88V8 » March 29th, 2024, 12:14 pm

ukmtk wrote:When I tried to buy some SMIF at HL yesterday I had to jump through hoops to prove that I understand risky investments and could lose all my money.

I have about £70k in SMIF.
No trouble buying it via ii, ditto for the wife who is not a sophisticated investor.

I think HL have their knickers in a twist.

V8

ukmtk
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Re: Is SMIF exotic?

#656645

Postby ukmtk » March 29th, 2024, 1:55 pm

Thanks V8 - I'll rest easy with my £800 in SMIF! :)

midgesgalore
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Re: Is SMIF exotic?

#656849

Postby midgesgalore » March 30th, 2024, 11:48 am

ukmtk wrote:When I tried to buy some SMIF at HL yesterday I had to jump through hoops to prove that I understand risky investments and could lose all my money.
When I added SMIF to my Regular Investment for ISA at AJBell there was no issue.
As far as I can tell SMIF is basically corporate debt?
Its largest holding is a mere 2.7% of the portfolio.
Is it exotic or not?

Many thanks in advance for any enligtenment.

I tried to buy just enough for 1K dividend / annum via HL and was initially refused and offered a 3 part, multiple choice, questionnaire to check my level of investment sophistication. I didn't get one of the questions correct but some of the answer options for that question were much the same.

Anyway on reflection there is more than corporate debt in that IT - kind of obvious as the yield is so high and SMIF still get a decent management charge on their IT. They get involved with financing of bank CET1 capital with European Asset Backed Securities and bonds,
Investment grade bonds and also gilts
B- grade bonds that are not very liquid
Contingent Convertibles (Cocos in their parlance)
Collateralised Loan Obligations type of pooled bonds (CLOs)

SMIF have a website with layman explanations of this structured mix of debt and their acronyms. If you get one of their briefs there are links to others.
https://www.twentyfouram.com/education/everything-you-need-to-know-about-clos

Whilst I wait for my dividends to rebuild to a suitable amount (to try again later at a SMIF purchase) I bought a tracker instead whilst boning up on structured debt and satisfying myself the assets in an RMBS etc., are not toxic like in the Great Financial Crisis in 2008.
Very educational!

misgesgalore

ukmtk
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Re: Is SMIF exotic?

#656858

Postby ukmtk » March 30th, 2024, 12:28 pm

Many thanks midgesgalore.
Most of the answers to the questions were on the first page that they presented to you.
It was a multichoice that you could resit until you got it all correct. ;)

midgesgalore
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Re: Is SMIF exotic?

#656894

Postby midgesgalore » March 30th, 2024, 3:13 pm

I knew that but was a bit huffed and decided to look more into the fund and what lay beyond the 10% yield on purchase anyway.

My investment portfolio is not all income related and there was a good boost to my purchase of the S & P 500 direction for a spell after being declined the SMIF. Even so the S & P 500 will no doubt sink a little too. :lol:

midgesgalore


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