Funds for yield

[SheikYaManii]

But surely, as the fund info says they track shares in the FTSE with above average yield, the 5-6% becomes realistic?

Certainly, you were looking at a fund which tracks a subset of the FTSE 350 Index, rather than a whole index such as the FTSE 100. The potential problem and risk is that a mechanical selection of shares is liable to automatically invest in dross. One problem with searching for high yield is where companies are falling on hard times.

Surly all indexes including ftse 100 and 250 are constructed using ' A mechanical selection of shares'?
During the financial crisis most managed equity income trusts only maintained their dividend by releasing reserves, managed equity income funds had to cut their payouts. Investors can easily hold their own reserves.
The Vanguard UK equity income fund should be much less volatile than iShares IUKD because it holds more than twice the number of companies and is cap weighted both of which result in less volatility over time .
regards
Dave

[Alaric]

Surly all indexes including ftse 100 and 250 are constructed using ' A mechanical selection of shares'?

They are, but whole market indexes don't make any attempt to tilt in favour of any particular characteristics. An index that attempts to reflect only those shares with higher yields could also become an index of failing companies.

[kempiejon]

I'd not heard of a tracker that passively tracks a higher-than-average-yield subset of the FTSE; have any on here had any experiences, or know more?

Vanguard offer a global higher yield ETF VHYL. Yielding 3.5% according to https://www.hl.co.uk/shares/shares-sear ... gh-div-yld
from the supplier https://www.vanguardinvestments.dk/port ... /?overview

FTSE All-World High Dividend Yield Index

The index is a large- and mid-capitalisation-weighted index providing broad exposure to the largest higher yielding companies in developed and emerging markets.

It's 40% USA, might be a good balance against a FTSE100 biased HYP.

[UnclePhilip]

I'd not heard of a tracker that passively tracks a higher-than-average-yield subset of the FTSE; have any on here had any experiences, or know more?

Vanguard offer a global higher yield ETF VHYL. Yielding 3.5% according to https://www.hl.co.uk/shares/shares-sear ... gh-div-yld
from the supplier https://www.vanguardinvestments.dk/port ... /?overview

FTSE All-World High Dividend Yield Index

The index is a large- and mid-capitalisation-weighted index providing broad exposure to the largest higher yielding companies in developed and emerging markets.

It's 40% USA, might be a good balance against a FTSE100 biased HYP.

Interesting, I’ll have to look at comparisons of the different funds. And, as an aside, although I have some Vanguard ETFs in my iWeb a/c, I can’t find the Epic for the UK income index fund.

Probably off topic for this board, such a comparison throws up the choice between the income distribution fund and an ordinary total return fund where you sell a few now and then for income....

[SheikYaManii]

Surly all indexes including ftse 100 and 250 are constructed using ' A mechanical selection of shares'?

They are, but whole market indexes don't make any attempt to tilt in favour of any particular characteristics. An index that attempts to reflect only those shares with higher yields could also become an index of failing companies.

Yes it could, as could a HYP of individual shares even when chosen by a thinking investor.
regards
Dave

[UnclePhilip]

Completely off topic, but I feel very modern; my last post was done on a mobile phone (for the first time) while waiting in a yurt for my lunch to arrive.

Will have to let the carrier pigeon go....

[jackdaww]

Completely off topic, but I feel very modern; my last post was done on a mobile phone (for the first time) while waiting in a yurt for my lunch to arrive.

Will have to let the carrier pigeon go....

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offf topic again , does that mean there is a lemon fool APP ?

[PinkDalek]

offf topic again , does that mean there is a lemon fool APP ?

Nope, it doesn't mean that. It merely means he's posting from his mobile, as am I.

[Itsallaguess]

Surly all indexes including FTSE 100 and 250 are constructed using ' A mechanical selection of shares'?

They are, but whole market indexes don't make any attempt to tilt in favour of any particular characteristics.

An index that attempts to reflect only those shares with higher yields could also become an index of failing companies.

But that would be to ignore the internal weightings of the FTSE100 itself, and how the pursuit of an index might find someone in a much less diversified position than if they pursued improved diversification themselves by self-selecting companies and wide-ranging sectors to do so...

I'm sure these aren't completely up-to-date figures, but I think just three sectors made up over 50% of the FTSE100 the last time I looked - Financials, Energy, and Consumer Staples.

At a company level, just 5 companies across three sectors account for over 26% of the FTSE 100 index -



Source - https://research.ftserussell.com/Analytics/FactSheets/temp/7a1b3bf8-791b-4c0a-81d0-281a4f089989.pdf

Anyone 'buying the FTSE' to gain access to an 'Index-yield' instead of a 'diversified-portfolio-yield', or indeed recommending that others might look to do so, needs to fully understand just what they might be 'buying', or indeed what they are 'selling' when they might suggest such a thing....

Cheers,

Itsallaguess

[88V8]

Having regard to Mrs Uncle's disinterest, surely it has to be funds, rather than HYP.

And if one buys though a stockbroker, there is the side issue of finding one who will automatically remit divis and sales proceeds to one's bank account.
Ours used to, but nowadays we have to make transfers manually. Not a problem at the moment.

V8

[tjh290633]

Having regard to Mrs Uncle's disinterest, surely it has to be funds, rather than HYP.

And if one buys though a stockbroker, there is the side issue of finding one who will automatically remit divis and sales proceeds to one's bank account.
Ours used to, but nowadays we have to make transfers manually. Not a problem at the moment.

V8

If you go back to the OP, you will see that he specifically mentioned an HYP. Having said that, my choice would be to go for a mix of ITs, if low maintenance is a sine qua non.

TJH