Constructing an hyp (no capitals)

[eyeball08]

Interesting thread.
Wizard: Murray International IT is still MYI, I think. Held since 2013, last topped up about 2 years later.

[eyeball08]

Doh! spent too long checking.....JPGI recently changed to JGGI which cast doubt and stopped my HYPTUSS working properly....

(JPMorgan Global Growth and Income IT, high yield top up spread sheet)

[Wizard]

Apologies for what seem to have been a couple of mistakes on tickers in my suggested list.

[monabri]

Don't know about you but I feel more at home here discussing complementing sources of income ...mix an' match ("income is income")

I hold no " infrastructure " and would have to start at ground zero. Is it a viable & sustainable income source? Recommendations for consideration appreciated!

[Wizard]

Don't know about you but I feel more at home here discussing complementing sources of income ...mix an' match ("income is income")

I hold no " infrastructure " and would have to start at ground zero. Is it a viable & sustainable income source? Recommendations for consideration appreciated!

I agree Monabri, as I have said for a while now I think it would be a good step if we can get more posting on this board.

Also reflecting on a point raised above, I think the ability to consider and invest in non-UK income sources is probably the single biggest benefit of not following 'the capitalised approach'. Of course that does not mean having to hold foreign shares directly, it can also be achieved by buying UK listed ITs with an international spread. But ITs are of course off limits in the 'the capitalised approach' as well.

[Alaric]

I hold no " infrastructure " and would have to start at ground zero. Is it a viable & sustainable income source? Recommendations for consideration appreciated!

HICL is a name that seems to appear in this context.

https://www.hicl.com/

HICL is a UK-listed infrastructure investment company. We invest in infrastructure for local communities and to support the delivery of essential services, working in partnership with the public and private sectors.

Our portfolio includes:

Public-private partnerships, where our portfolio companies design, finance, build, operate and maintain infrastructure to support the delivery of public services, and performance is assessed against contracted quality standards;

Regulated infrastructure, where our portfolio companies enhance, operate and maintain monopoly infrastructure where performance standards and pricing are subject to regulatory oversight; and

Demand-based infrastructure, where our portfolio companies are contracted to design, finance, build, operate and maintain infrastructure where their usage determines financial performance.

Report & Accounts
https://www.hicl.com/AnnualReport2020

[jonesa1]

To get a spread of infrastructure cover you could go for a fund such as FP Foresight UK Infrastructure. It holds many of the components of the AIC Infrastructure and Renewable Energy sectors, so equally you could buy a selection of them yourself and save Foresight's admin costs. Most of these ITs trade at a substantial premium, but generally offer around 4% to 6% yields. A couple of the infrastructure ITs specialise in debt (Sequoia and GCP), rather than owning and running assets themselves

[TUK020]

HICL is a name that seems to appear in this context.

https://www.hicl.com/

I hold.
Yield about 5%.
Seems to have been steadily trundling upwards for the last few years.
Ridden out our recent storms with very little impact.
Astonishingly little drama. Unflashy.
Wish I had more like this

[jonesa1]

HICL is a name that seems to appear in this context.

https://www.hicl.com/

I hold.
Yield about 5%.
Seems to have been steadily trundling upwards for the last few years.
Ridden out our recent storms with very little impact.
Astonishingly little drama. Unflashy.
Wish I had more like this

It had a wobble at the prospect of a Labour win at the last election, given it's high exposure to public-private partnerships and regulated infrastructure.

[AJC5001]

HICL is a name that seems to appear in this context.

https://www.hicl.com/

I hold.
Yield about 5%.
Seems to have been steadily trundling upwards for the last few years.
Ridden out our recent storms with very little impact.
Astonishingly little drama. Unflashy.
Wish I had more like this

Which is alright if you're happy investing at a 10.5% premium, I suppose.https://www.hl.co.uk/shares/shares-search-results/h/hicl-infrastructure-plc-ord-gbp0.0001

Adrian

[TUK020]

HICL is a name that seems to appear in this context.

https://www.hicl.com/

I hold.
Yield about 5%.
Seems to have been steadily trundling upwards for the last few years.
Ridden out our recent storms with very little impact.
Astonishingly little drama. Unflashy.
Wish I had more like this

Which is alright if you're happy investing at a 10.5% premium, I suppose.https://www.hl.co.uk/shares/shares-search-results/h/hicl-infrastructure-plc-ord-gbp0.0001

Adrian

The premium would give me pause for thought before buying, but very happy to hold

[Charlottesquare]

As for the UK - mmm! Anything that does not have a multinational presence I treat with caution. The outlook for the UK is (and this is my opinion) poor. The rest of the World is moving on and we are pratting about with the likes of Brexit + a government that has performed & continues to perform very badly over Covid 19. A slow decline to obscurity and "also ran" status.

I concur- I went to a Clydesdale Bank economics breakfast lecture years ago where the speaker was chief economist for Clydesdale Bank, his final words of advice were "encourage your children to learn Chinese "(Non specific re Catonese/Mandarin), this is advice I always keep coming back to, the centre of economic activity to me is now the Pacific.

The traditional factors of production can be augmented by technical know how and the rule of law, China, imho, now only falls down with the last one, it to greater or lesser extent now has the others in abundance and our first mover advantage has gone. If we have countries like India and China with their landmasses and populations then over time, in fits and starts, they will prosper. Whilst I do have some EU exposure I tend to keep it a bit lighter than say the USA, the USA with a pacific coast will possibly participate, not so sure for both the EU and the UK.

If one lives in the UK one of course ought, for currency risk, have some income sources arising from the UK, but to me, more and more, I want to spread my investment profile to the ends of the earth (except Russia- I avoid it like the plague and "developing " countries I also limit exposure.)

[Wizard]

As for the UK - mmm! Anything that does not have a multinational presence I treat with caution. The outlook for the UK is (and this is my opinion) poor. The rest of the World is moving on and we are pratting about with the likes of Brexit + a government that has performed & continues to perform very badly over Covid 19. A slow decline to obscurity and "also ran" status.

I concur- I went to a Clydesdale Bank economics breakfast lecture years ago where the speaker was chief economist for Clydesdale Bank, his final words of advice were "encourage your children to learn Chinese "(Non specific re Catonese/Mandarin), this is advice I always keep coming back to, the centre of economic activity to me is now the Pacific.

The traditional factors of production can be augmented by technical know how and the rule of law, China, imho, now only falls down with the last one, it to greater or lesser extent now has the others in abundance and our first mover advantage has gone. If we have countries like India and China with their landmasses and populations then over time, in fits and starts, they will prosper. Whilst I do have some EU exposure I tend to keep it a bit lighter than say the USA, the USA with a pacific coast will possibly participate, not so sure for both the EU and the UK.

If one lives in the UK one of course ought, for currency risk, have some income sources arising from the UK, but to me, more and more, I want to spread my investment profile to the ends of the earth (except Russia- I avoid it like the plague and "developing " countries I also limit exposure.)

I completely agree with that. Of late I have been trying to add more non-UK investments to my portfolio which has been UK dominated for too long. I am way, way too UK centred still, but over time I hope to at least create some balance, even if the centre of gravity remains in the UK for historical reasons.

[1nvest]

Diversification of income styles/sources would be my suggestion.

Safe Withdrawal Rate : For instance Berkshire Hathaway pays no dividends but if you apply a 4% SWR then you take 4% at the offset, and then uplift that amount by inflation each year as the amount drawn in subsequent years. Consistent inflation adjusted income year (or month) in, year (month) out, no matter what.

Constant Weighting : Buy £10,000 of a stock, and after a year adjust the number of shares held back to a £10,000 inflation adjusted equivalent value. Has the tendency to load the cash side with cash interest, dividends and shares being sold. Over time tends to hold fewer shares, but where the share value has paced inflation and can throw-off copious amounts of income.

Don't know much about IT's but the way they can borrow to maintain dividends and so provide a more consistent income stream seems like a good choice of diversifying income risk.

Standard HYP or tweaked variant. When only part of the whole, perhaps 10 stocks across 10 sectors might suffice. Maybe the largest stock by cap value from each sector. Three each for the others (SWR, CW, IT's) ... and around 20 holdings in total. Fewer than the 30 holdings that some hold for HYP alone. 5% risk per holding is half that of what a broader index might hold in individual stocks (largest stock in a index can rise to being 10% of the index value).

If HYP and IT's are mostly UK/£ then CW and SWR might be better held as foreign. Sometimes such as 2008 all shares might be down, but also where the £ is relatively down more, and where currency benefits dilute down the share price declines. But sometimes that will swing the other way around, stock + currency can be complimentary both in the negative and positive direction, other times will be opposing and dilute down the combined reward/loss.

At times, when the conditions are right, you might add bonds to the set. If for instance index linked gilts are paying 2% real on long dated versions, then loading some into those is reasonable.

[Charlottesquare]

One point, if setting selection rules, is a high mkt cap, for safety, that important for ITs?

[Dod101]

If I recall correctly, the entire UK stock market is about 3% and falling of all the world's stock markets. I am more convinced than ever that to ignore the other 97% of the world's markets is simply daft. I commend those thinking of HFEL (I own), MYI (thinking of owning) as a great staring point to deversify away from a totally UK centric portfolio.

RVF.

I hold both of these myself and commend them as well.

Dod

[Dod101]

One point, if setting selection rules, is a high mkt cap, for safety, that important for ITs?

If you are asking the question, it is not something I worry about for ITs. There is an argument that a very big IT is more difficult to manage than a smaller one although that probably applies much more to OEICs than to the closed end structure of an IT. Scottish Mortgage is doing fine as a very large IT.

Dod

[G3lc]

OK Dod, but would you buy Scottish mortgage today?

[Charlottesquare]

OK Dod, but would you buy Scottish mortgage today?

I am obviously not Dod, but I bought in my SIPP in March/April, they are showing a 53% gain since, but they were not bought for income.

I have also held them since 2013 in a Trust, it has a mixed focus as the income goes to a liferenter but the eventual capital goes to others, SMT is again used as a capital play blended within a portfolio with higher yields that aims for circa 3-3.25% overall income.

With the recent price run up not sure I would buy right now but I also have no current intention to sell either holding.

[Dod101]

OK Dod, but would you buy Scottish mortgage today?

I have held them first in certificated form and then for many years in an ISA. I have held them for about 25 years one way or another. I have top sliced them three times this year and am unlikely to do so again. To answer the question? It would depend on my timescale, but I might well do so if I were thinking about 'forever' or at least the next 5 years. Their yield is derisory, and I have always held them simply to try to harvest capital gains from time to time and they have been a great investment for that.

At least two of my teenage grandchildren hold them as well and they have proved an ideal investment for that situation.

Dod