Comparing CTY.L to Drawdown HYP

[MDW1954]

Recently, a poster posted a comparison of a representative HYP portfolio with the well-known City of London Investment Trust (ticker CTY).

In the light of a number of the responses received, the poster in question asked for the comparison to be pulled, and subsequently withdrew from posting on the site.

This is one of those posts, posted with the OP's permission, but at his insistence, in a manner not associated in any way with his user ID.

The post is posted unlocked, along with a small number of original follow-up posts. If history repeats itself, it will be locked.

MDW1954

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The following is a comparison between the Drawdown HYP that was set up 14 months ago (as documented here: viewtopic.php?f=15&t=16868&start=140 and as last reported here: viewtopic.php?p=297566#p297566), and The City of London Investment Trust PLC (CTY). It assumes an investment into CTY matching the same initial investment into the HYP, followed by drawing the dividends when received in the same manner as set up for the HYP. That is to say, on the 5th day of each month or, if the 5th is not a workday the preceding workday, any dividends received since the previous withdrawal date, are drawn.

The Income comparison so far is as follows:

Income |           |            |         |            |            |         |            |             |             |          
Year   | End Date  | HYP        | Inc/Dec | To Date    | CTY        | Inc/Dec | To Date    | HYP +/- (£) | HYP +/- (%) | End Date 
     0 | 05-Apr-19 |          - |       - |          - |          - |       - |          - |           - |             | 05-Apr-19
     1 | 05-Apr-20 | 14,673.22  |       - | 14,673.22  | 11,582.20  |       - | 11,582.20  |   3,091.02  |      21.07% | 05-Apr-20
     2 | 14-Jun-20 |  1,003.35  |         | 15,676.57  |  2,895.55  |         | 14,477.75  |   1,198.82  |       7.65% | 14-Jun-20

It should be noted that a number of the initial purchases for the HYP were made when the share in question was ex-dividend. All purchases of CTY were made cum-dividend.

The Capital Value comparison so far is as follows:

Value | Cash In   | 254,904.77  | Cash In     | 254,904.77  |             |            |             |          
Year  | End Date  | HYP         | Inc/Dec     | CTY         | Inc/Dec     | HYP +/-    | HYP +/- (%) | End Date 
    0 | 05-Apr-19 | 258,446.15  |   3,541.38  | 257,814.39  |   2,909.62  |    631.76  |       0.24% | 05-Apr-19
    1 | 05-Apr-20 | 184,255.31  | -74,190.84  | 186,534.54  | -71,279.85  | -2,279.23  |      -1.24% | 05-Apr-20
    2 | 14-Jun-20 | 212,917.75  |  28,662.44  | 206,041.42  |  19,506.88  |  6,876.33  |       3.23% | 14-Jun-20

Of course, it is still very early on for these two “Eternity” Portfolios but, for now at least, I do think that HYP is very much holding its own. Or maybe I should say that CTY is very much holding its own

[MDW1954]

Thanks for posting, and indeed more generally thanks for maintaining these.

For both HYP and CTY I wondered how the period 6th April to 14th June in year 2 compared to year 1? Or put another way, was the relative level of payout similar at this stage of year 1?

HYP
Year Start | Q1       | Q2       | Q3       | Q4       | Total     | Year End 
06-Apr-19  | 3,919.13 | 4,576.80 | 3,669.14 | 2,508.15 | 14,673.22 | 05-Apr-20
06-Apr-20  | 1,003.35 |     0.00 |     0.00 |     0.00 |  1,003.35 | 14-Jun-20

CTY
Year Start | Q1       | Q2       | Q3       | Q4       | Total     | Year End 
06-Apr-19  | 2,895.55 | 2,895.55 | 2,895.55 | 2,895.55 | 11,582.20 | 05-Apr-20
06-Apr-20  | 2,895.55 |     0.00 |     0.00 |     0.00 |  2,895.55 | 14-Jun-20

The HYP should receive a further £300.00 before the end of this first Quarter (05-Jul-20), making a total for the quarter of £1,303.35, substantially down on last year.

The CTY will of course receive the next dividend in the next quarter (30-Aug-20), the amount of which is yet to be announced.

[MDW1954]

Moorfield wrote:

If I understood correctly [the OP] is simply offering a comparison nothing more or less and not setting out to "win" an argument. Presumably thread readers can take that or leave it as they wish. I'd be interested in seeing an annual benchmark of [the OP's] portfolios against CTY continue.

Moderator Message:
Moorfield's post slighly edited to remove the name of the OP. -- MDW1954

[moorfield]

Thanks, I think it's a worthwhile exercise and hope we continue to see an annual comparison from the OP for this year and next at least.

[dealtn]

This is one of those posts, posted with the OP's permission, but at his insistence, in a manner not associated in any way with his user ID.

Are you intending reposting the other thread with the Income reinvested, and not drawn down?

[Alaric]

Thanks, I think it's a worthwhile exercise and hope we continue to see an annual comparison from the OP for this year and next at least.

Just comparing year by year income, we see that the HYP is about £ 3000 ahead of CTY in year 1 and likely to be a long, long way behind in year 2.

As to whether the year 1 result is superior or higher yielding stock selection or just that capital value has been sacrificed for income could be seen by comparison of the aggregate of market values and income or using a measuring rod such as XIRR. CTY would underperform on income even with the same asset choices because of IT distribution policies.

In year 2 ,the IT distributions will sail serenely on, albeit likely at the cost of borrowing or asset sales. Income from the HYP however will fall off a cliff because of dividend cuts.

[MDW1954]

This is one of those posts, posted with the OP's permission, but at his insistence, in a manner not associated in any way with his user ID.

Are you intending reposting the other thread with the Income reinvested, and not drawn down?

Yes.

MDW1954

[Wizard]

Recently, a poster posted a comparison of a representative HYP portfolio with the well-known City of London Investment Trust (ticker CTY).

In the light of a number of the responses received, the poster in question asked for the comparison to be pulled, and subsequently withdrew from posting on the site.

This is one of those posts, posted with the OP's permission, but at his insistence, in a manner not associated in any way with his user ID.

The post is posted unlocked, along with a small number of original follow-up posts. If history repeats itself, it will be locked.

MDW1954

Thank you for taking the time to edit and repost this.

If Ian is no longer posting here I guess this is the last analysis of the portfolio, which is a loss to TLF.

[88V8]

If Ian is no longer posting here I guess this is the last analysis of the portfolio, which is a loss to TLF.

Well, I hold ten of the HYP's constituents. I imagine between us collected TLFers we hold them all.
And many of us hold CTY.
Is it beyond the wit of the forum to continue capturing the data?

Even though we know pretty much how the next couple of years will go in terms of relative income, it would still seem a worthwhile exercise over the longer term.

V8

[dealtn]

If Ian is no longer posting here I guess this is the last analysis of the portfolio, which is a loss to TLF.

Well, I hold ten of the HYP's constituents. I imagine between us collected TLFers we hold them all.
And many of us hold CTY.
Is it beyond the wit of the forum to continue capturing the data?

Even though we know pretty much how the next couple of years will go in terms of relative income, it would still seem a worthwhile exercise over the longer term.

V8

Strange now that someone has felt slighted enough to leave (hopefully temporarily) the value of his contributions, either as posts, or the free time taken to measure something, we now discover how useful this is to us all.

It will be interesting to see who, if anyone, steps up to replicate that work, and the potential negativity that might come with posting it.

[MDW1954]

Recently, a poster posted a comparison of a representative HYP portfolio with the well-known City of London Investment Trust (ticker CTY).

In the light of a number of the responses received, the poster in question asked for the comparison to be pulled, and subsequently withdrew from posting on the site.

This is one of those posts, posted with the OP's permission, but at his insistence, in a manner not associated in any way with his user ID.

The post is posted unlocked, along with a small number of original follow-up posts. If history repeats itself, it will be locked.

MDW1954

Thank you for taking the time to edit and repost this.

If Ian is no longer posting here I guess this is the last analysis of the portfolio, which is a loss to TLF.

You're right: it wasn't a quick job. I won't go into the specifics, but it's a bit more complicated than might be imagined. The other post will be quicker, because it is shorter.

And yes, it is a loss to TLF. Real-data analyses are always to be welcomed.

MDW1954

[MDW1954]

If Ian is no longer posting here I guess this is the last analysis of the portfolio, which is a loss to TLF.

Well, I hold ten of the HYP's constituents. I imagine between us collected TLFers we hold them all.
And many of us hold CTY.
Is it beyond the wit of the forum to continue capturing the data?

Even though we know pretty much how the next couple of years will go in terms of relative income, it would still seem a worthwhile exercise over the longer term.

V8

Strange now that someone has felt slighted enough to leave (hopefully temporarily) the value of his contributions, either as posts, or the free time taken to measure something, we now discover how useful this is to us all.

It will be interesting to see who, if anyone, steps up to replicate that work, and the potential negativity that might come with posting it.

Exactly. As with the attacks on Luni, back on TMF, the result is that we are all poorer. Literally so, too, perhaps: I always found Luni's zones to be quite a useful way of thinking about risk.

MDW1954

[moorfield]

It will be interesting to see who, if anyone, steps up to replicate that work, and the potential negativity that might come with posting it.

Well I suspect I'm responsible for birthing the "CTY.L vs HYP" discussions over recent weeks as I've harped on about this benchmark long enough in these parts. I've backfilled 10 years of price and dividend history and applied a comparison to my own portfolio which I now intend to continue into the future. I am fully expecting to be thrashed on income by CTY this year and next, and it will be a pleasant surprise if I am not thrashed in 2022. It will be interesting to see if CTY can hold its dividend at the same time.

[Lootman]

As with the attacks on Luni, back on TMF, the result is that we are all poorer. Literally so, too, perhaps: I always found Luni's zones to be quite a useful way of thinking about risk.

If they were literally attacks on Luni, the person, then that would be wrong. Although that kind of behaviour is already covered by the "Play the ball; not the man" TLF rule. Same goes for a personal attack on anyone else.

But we should not confuse that with criticism of the methodology used, or the assumptions made or implied behind a study. They are legitimate targets if someone can make their case.

I think the issue sometimes is that the people willing to invest the time and effort into such analyses have an agenda. A study that is a genuine and objective attempt at truth discovery should always be welcomed. But if someone structures a study with the intent of backing up their own personal theories or preferences, then TLF surely has to allow counter-arguments to that, as long as the focus of those criticisms are the methods and not the promoter.

I recall another Lemon who was also a fund manager, and he rather transparently made arguments that reflected the strategy of his own fund. He also left TLF, I believe, perhaps in the fact of regular criticism of his self promotions.

It can be a fine line and I sometimes end up on the wrong side of it, as do others. But let's not throw out the role of constructive criticism merely to protect the feelings of those who advocate for a cause even if, or perhaps especially if, they put a lot of effort into it.

[MDW1954]

Well I suspect I'm responsible for birthing the "CTY.L vs HYP" discussions over recent weeks as I've harped on about this benchmark long enough in these parts. I've backfilled 10 years of price and dividend history and applied a comparison to my own portfolio which I now intend to continue into the future.

Why not share it here? Maybe someone else has it going back even further, and they could share that?

I for one would like to see the data, for a project that I've been working on for some months, which will see the light of day here on TLF quite soon.

MDW1954

[MDW1954]

As with the attacks on Luni, back on TMF, the result is that we are all poorer. Literally so, too, perhaps: I always found Luni's zones to be quite a useful way of thinking about risk.

If they were literally attacks on Luni, the person, then that would be wrong. Although that kind of behaviour is already covered by the "Play the ball; not the man" TLF rule. Same goes for a personal attack on anyone else.

TMF's moderation guidelines were different, and as I say, that is where the attacks happened.

But we should not confuse that with criticism of the methodology used, or the assumptions made or implied behind a study. They are legitimate targets if someone can make their case.

Agreed. That has never been in doubt.

I think the issue sometimes is that the people willing to invest the time and effort into such analyses have an agenda... I recall another Lemon who was also a fund manager, and he rather transparently made arguments that reflected the strategy of his own fund.

I recall him also.

It can be a fine line and I sometimes end up on the wrong side of it, as do others. But let's not throw out the role of constructive criticism merely to protect the feelings of those who advocate for a cause even if, or perhaps especially if, they put a lot of effort into it.

Agreed!

MDW1954

[moorfield]

Well I suspect I'm responsible for birthing the "CTY.L vs HYP" discussions over recent weeks as I've harped on about this benchmark long enough in these parts. I've backfilled 10 years of price and dividend history and applied a comparison to my own portfolio which I now intend to continue into the future.

Why not share it here? Maybe someone else has it going back even further, and they could share that?

I for one would like to see the data, for a project that I've been working on for some months, which will see the light of day here on TLF quite soon.

MDW1954

It's already over on Portfolio Management & Review, I'm not going to repost yet another link, folks can find it easily enough.

(That said, I may well move back to posting on HYP Practical next year, citing the "Breelander Convention", although that rather depends on your answer to the question which I think we are still waiting for )

[MDW1954]

Well I suspect I'm responsible for birthing the "CTY.L vs HYP" discussions over recent weeks as I've harped on about this benchmark long enough in these parts. I've backfilled 10 years of price and dividend history and applied a comparison to my own portfolio which I now intend to continue into the future.

Why not share it here? Maybe someone else has it going back even further, and they could share that?

I for one would like to see the data, for a project that I've been working on for some months, which will see the light of day here on TLF quite soon.

MDW1954

It's already over on Portfolio Management & Review, I'm not going to repost yet another link, folks can find it easily enough.

(That said, I may well move back to posting on HYP Practical next year, citing the "Breelander Convention", although that rather depends on your answer to the question which I think we are still waiting for )

Moorfield,

Check the HYP-P board. You may be pleasantly surprised.

MDW1954

[Wizard]

Why not share it here? Maybe someone else has it going back even further, and they could share that?

I for one would like to see the data, for a project that I've been working on for some months, which will see the light of day here on TLF quite soon.

MDW1954

It's already over on Portfolio Management & Review, I'm not going to repost yet another link, folks can find it easily enough.

(That said, I may well move back to posting on HYP Practical next year, citing the "Breelander Convention", although that rather depends on your answer to the question which I think we are still waiting for )

Moorfield,

Check the HYP-P board. You may be pleasantly surprised.

MDW1954

But you may be less pleasantly surprised to see a debate has broken out as to what the upper boundary of "circa. 5%" is But that isn't enough, it now looks like you need to answer the question "circa. 5%" of what? Current value, initial investment or some other metric yet to be suggested? The HYP-P board is priceless, there must be a comedy show in there somewhere I really do feel for anyone asked to moderate that board, I'm surprised anyone is still willing to do the 'job'.

Moderator Message:
Thank you, Wizard. The role isn't without its challenges. I have just posted a further message. But let's not say any more about it, because that would be discussing moderation, and there are better and more appropriate places to do that. -- MDW1954

[CryptoPlankton]

It's already over on Portfolio Management & Review, I'm not going to repost yet another link, folks can find it easily enough.

(That said, I may well move back to posting on HYP Practical next year, citing the "Breelander Convention", although that rather depends on your answer to the question which I think we are still waiting for )

Moorfield,

Check the HYP-P board. You may be pleasantly surprised.

MDW1954

But you may be less pleasantly surprised to see a debate has broken out as to what the upper boundary of "circa. 5%" is But that isn't enough, it now looks like you need to answer the question "circa. 5%" of what? Current value, initial investment or some other metric yet to be suggested? The HYP-P board is priceless, there must be a comedy show in there somewhere I really do feel for anyone asked to moderate that board, I'm surprised anyone is still willing to do the 'job'.

I'd say things have certainly improved over there since the change in guidelines - that particular issue only really required the application of a little common sense. Generally, from this reader's point of view, the discussions are definitely benefiting from less disruption.This board, however, would now seem to be the one to come to for the "amusing" comments - although I suspect it may eventually wear a little thin when people realise they don't get the same rise from the readership here that they could with a good wind up over there. Who knows, maybe then the discussions will become more focussed on wider high yield investment strategies.

Well, I can live in hope