Arborbridge wrote:88V8 wrote:
I shall cling to my HYP, perch on the shrinking raft, buoyed by outriggers of Fixed Interest and a few ITs. I believe HYP remains viable as a component of a mixed investment buoyancy bag.
But realistically, the HYP golden age, when AZN was a regular Luni pick, is gone. At least for the time being.
V8
But ITs - at least income ones - face the same problem as HYP, so there's no respite there, unless the are just better at it than we are. And going global isn't much help, because yields are generally worse abroad and the anti-dividend thrust is likely to be global anyway since the inter-generational feud is the same.
Arb.
Not necessarily Arb, it depends on how the managers define an “income IT”. If it’s viewed only on the basis of its output, i.e. if the IT pays out dividends at a sufficient level to give it a yield sufficient for it to be considered an income IT then managers using that definition would be perfectly entitled to throw in growth stocks from which they intend to harvest capital gains in order to finance the dividend distributions. If however a manager considers that, in order for his/her IT to be classed as an income IT it must be able to fund its divi distributions entirely from divis from the underlying investments, then you have a point.
I’m not sure if there are any industry guidelines on that one. Can anyone self-classify themselves as an income IT on the basis of yield and regardless of underlying investment strategy? Is there a benchmark for yield (some non-integer multiple of FTSE100 yield for instance) than needs to be met in terms of being classified as an income IT or is it entirely down to the managers to self-classify?
On AZN I was amazed recently to see the capital appreciation in my holding. I first bought in 2008 with top-ups through to 2011 and haven’t bought since. At the last close of 7,300 vs my section 104 price of 2,749 I’m showing a 265% increase. With so much capital gain in the price I can forgive AZN a static dividend since, now that I am no longer a pure HYP investor, I can easily top-slice gains to supplement the income I can prudently (in my judgement) harvest from AZN.
V8 - I love your suspicions about Arb’s HYP and spreadsheets. For the record, I think you might just have rumbled me too and I’m only half joking! I really enjoy building the various spreadsheets I have for monitoring my investments.
- Julian
