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Overall portfolio yield compared to a collective IT, such as CTY

General discussions about equity high-yield income strategies
Dod101
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Overall portfolio yield compared to a collective IT, such as CTY

#366525

Postby Dod101 » December 15th, 2020, 8:14 pm

Moderator Message:
This thread demerged from this one in order to keep it on-topic. The initial citation is from here. - Chris

moorfield wrote:Several of the yields look incorrect to me - BP, RDSB, SLA, HSBA - and you have some deadwood beyond redemption - CNA, TUI (which I picked because I hold too).

A simple test here would be to compute overall portfolio yield and compare it to a collective IT, such as CTY (City of London) which also holds most of those. Using your yield numbers I make that 4.0%, compared to CTY's 5.3%. So your hard-earned and -saved is delivering a poor income, and 47 holdings (if I've counted correctly) is too many.

Time for a reboot perhaps. You could start by selling and recycling from low to high yield topping those up to one fifteenth of portfolio value at the time. Try it as a paper exercise first to see what income you could have won, to coin a Bullseye catchphrase. I'll wager you'll increase your overall income by a third next year, and that' before more dividend increases begin to flow.


I keep mentioning this and moorfield keeps ignoring it but City of London IT does not make for a good benchmark. In its year to 30 June 2020, it used nearly £13 million of its revenue reserves to achieve what moorfield calls its 'yield' of 5.30%. Without that capital augmentation, the City of London IT would have been delivering a yield of about 20% lower, so in fact it is not that much different from rhinestone's portfolio. That is hardly surprising given the scope of rhinestone's portfolio, and with that number of holdings he might just as well buy a UK income IT like City of London.

To be clear moorfield is comparing apples and oranges. I have nothing much against C of L IT except that its performance is nothing to write home about.

Dod

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366545

Postby moorfield » December 15th, 2020, 9:21 pm

Dod101 wrote:
moorfield wrote:Several of the yields look incorrect to me - BP, RDSB, SLA, HSBA - and you have some deadwood beyond redemption - CNA, TUI (which I picked because I hold too).

A simple test here would be to compute overall portfolio yield and compare it to a collective IT, such as CTY (City of London) which also holds most of those. Using your yield numbers I make that 4.0%, compared to CTY's 5.3%. So your hard-earned and -saved is delivering a poor income, and 47 holdings (if I've counted correctly) is too many.

Time for a reboot perhaps. You could start by selling and recycling from low to high yield topping those up to one fifteenth of portfolio value at the time. Try it as a paper exercise first to see what income you could have won, to coin a Bullseye catchphrase. I'll wager you'll increase your overall income by a third next year, and that' before more dividend increases begin to flow.


I keep mentioning this and moorfield keeps ignoring it but City of London IT does not make for a good benchmark. In its year to 30 June 2020, it used nearly £13 million of its revenue reserves to achieve what moorfield calls its 'yield' of 5.30%. Without that capital augmentation, the City of London IT would have been delivering a yield of about 20% lower, so in fact it is not that much different from rhinestone's portfolio. That is hardly surprising given the scope of rhinestone's portfolio, and with that number of holdings he might just as well buy a UK income IT like City of London.

To be clear moorfield is comparing apples and oranges. I have nothing much against C of L IT except that its performance is nothing to write home about.

Dod



This isn't the thread for that debate, and I'll keep ignoring you :P

Rhinestone's capital can be yielding much more income, that's the point. If it has to be a 47 share HYP, so be it, but there are simpler and more productive alternatives.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366611

Postby Dod101 » December 16th, 2020, 7:10 am

moorfield wrote:This isn't the thread for that debate, and I'll keep ignoring you :P

Rhinestone's capital can be yielding much more income, that's the point. If it has to be a 47 share HYP, so be it, but there are simpler and more productive alternatives.


Indeed it can, but you/he is basing that observation on his portfolio's natural yield. To compare that with an IT which has supplemented the natural yield with capital profits is meaningless and unrealistic. I acknowledge that is difficult currently to get a realistic measure of the yield of the FTSE100 but that is the sensible comparison surely.

Dod

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366614

Postby Arborbridge » December 16th, 2020, 7:24 am

Dod101 wrote:
I keep mentioning this and moorfield keeps ignoring it but City of London IT does not make for a good benchmark. In its year to 30 June 2020, it used nearly £13 million of its revenue reserves to achieve what moorfield calls its 'yield' of 5.30%. Without that capital augmentation, the City of London IT would have been delivering a yield of about 20% lower, so in fact it is not that much different from rhinestone's portfolio. That is hardly surprising given the scope of rhinestone's portfolio, and with that number of holdings he might just as well buy a UK income IT like City of London.

To be clear moorfield is comparing apples and oranges. I have nothing much against C of L IT except that its performance is nothing to write home about.

Dod


You are correct, but it's also possibly true to say that invested in CTY he might have produced a higher income and a better TR since 2003, despite you considering that IT nothing to write home about. That's just my gut feeling, based on my own HYP compared with CTY.
This points up the need (I believe) for keeping records in a suitable form so that comparisons can be made between ones HYP and a benchmark such as CTY. Otherwise we are flying blind.

Arb.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366616

Postby Dod101 » December 16th, 2020, 7:37 am

Arborbridge wrote:
Dod101 wrote:
I keep mentioning this and moorfield keeps ignoring it but City of London IT does not make for a good benchmark. In its year to 30 June 2020, it used nearly £13 million of its revenue reserves to achieve what moorfield calls its 'yield' of 5.30%. Without that capital augmentation, the City of London IT would have been delivering a yield of about 20% lower, so in fact it is not that much different from rhinestone's portfolio. That is hardly surprising given the scope of rhinestone's portfolio, and with that number of holdings he might just as well buy a UK income IT like City of London.

To be clear moorfield is comparing apples and oranges. I have nothing much against C of L IT except that its performance is nothing to write home about.

Dod


You are correct, but it's also possibly true to say that invested in CTY he might have produced a higher income and a better TR since 2003, despite you considering that IT nothing to write home about. That's just my gut feeling, based on my own HYP compared with CTY.
This points up the need (I believe) for keeping records in a suitable form so that comparisons can be made between ones HYP and a benchmark such as CTY. Otherwise we are flying blind.

Arb.


I agree there Arb although I have never used a benchmark. Probably like you, if I have enough income being generated (and hopefully a bit more) then that is good enough for me. Surely if HYPers are required to buy shares yielding more than the FTSE100 on purchase, then it is not unreasonable to compare the subsequent portfolio yield with the then current FTSE100 yield. Why introduce the yield on an IT? I can of course answer that question; because if you cannot at least equal that then you might just as well buy it. That works provided you are comparing the same thing. moorfield is muddying the waters. The OP could improve his yield if he sold all his non yielders and bought shares with a yield, any yield, but to compare it with the current yield of City of London, he would need to be selling some capital and adding that to his yield; that also would increase the 'yield', but plenty would then call 'foul'.

Dod

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366630

Postby moorfield » December 16th, 2020, 8:50 am

Dod101 wrote:I agree there Arb although I have never used a benchmark. Probably like you, if I have enough income being generated (and hopefully a bit more) then that is good enough for me. Surely if HYPers are required to buy shares yielding more than the FTSE100 on purchase, then it is not unreasonable to compare the subsequent portfolio yield with the then current FTSE100 yield. Why introduce the yield on an IT? I can of course answer that question; because if you cannot at least equal that then you might just as well buy it. That works provided you are comparing the same thing. moorfield is muddying the waters. The OP could improve his yield if he sold all his non yielders and bought shares with a yield, any yield, but to compare it with the current yield of City of London, he would need to be selling some capital and adding that to his yield; that also would increase the 'yield', but plenty would then call 'foul'.


I don't think I am muddying anything here Dod. I am simply observing that Rhinestone is holding a Low Yield Portfolio (LYP).

I reference CTY because for all the talk of the "FTSE 100 yield" no one can determine reliably what it is, or reference a source that does, not even the Board Guidelines. CTY is not a "hard" benchmark for me, but it is a reliable one. The internal mechanics of how it has continued to pay out a rising dividend over the last 50 years are irrelevant, that it can use reserves and borrowing facilities to do so is the "edge" its managers have over us DIYers and is reflected in that yield difference perhaps. If there is a more accurate benchmark that can be used, and determined easily, I'm all ears.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366637

Postby Dod101 » December 16th, 2020, 9:10 am

moorfield wrote:
Dod101 wrote:I agree there Arb although I have never used a benchmark. Probably like you, if I have enough income being generated (and hopefully a bit more) then that is good enough for me. Surely if HYPers are required to buy shares yielding more than the FTSE100 on purchase, then it is not unreasonable to compare the subsequent portfolio yield with the then current FTSE100 yield. Why introduce the yield on an IT? I can of course answer that question; because if you cannot at least equal that then you might just as well buy it. That works provided you are comparing the same thing. moorfield is muddying the waters. The OP could improve his yield if he sold all his non yielders and bought shares with a yield, any yield, but to compare it with the current yield of City of London, he would need to be selling some capital and adding that to his yield; that also would increase the 'yield', but plenty would then call 'foul'.


I don't think I am muddying anything here Dod. I am simply observing that Rhinestone is holding a Low Yield Portfolio (LYP).

I reference CTY because for all the talk of the "FTSE 100 yield" no one can determine reliably what it is, or reference a source that does, not even the Board Guidelines. CTY is not a "hard" benchmark for me, but it is a reliable one. The internal mechanics of how it has continued to pay out a rising dividend over the last 50 years are irrelevant, that it can use reserves and borrowing facilities to do so is the "edge" its managers have over us DIYers and is reflected in that yield difference perhaps. If there is a more accurate benchmark that can be used, and determined easily, I'm all ears.


But the OP can have that 'edge' as well but is choosing not to use it. In fact it is no 'edge' at all, we can all use it if we want to extract some capital to add to the natural yield. As I said earlier, you have to compare the same thing, the natural yield, not the natural yield with the natural yield plus some return of capital. Obviously an IT does not have an unlimited opportunity to return capital and call it a dividend but they have a lot of scope. Murray Income for instance has, since the merger with Perpetual Income, now quite modest Revenue Reserves in relation to its assets, but the Chairman has said 'Don't worry, we will just be asking you shareholders to allow us to change the rules to allow us to use our Realized Capital Reserves to supplement the natural yield'.

There is nothing wrong with ITs doing that if the shareholders agree, but they are not then paying out the natural yield. And it is not a matter of a more accurate benchmark, your benchmark is measuring something very different from the OP's yield.

Dod

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366656

Postby dealtn » December 16th, 2020, 9:46 am

Arborbridge wrote:
The original HYP (as if we need reminding!) was to buy a group a shares and just let the market do the trading, and not constantly worry about how we could improve it - for that way lies frying pan to fire decisions.



And yet it seems most "HYPs" aren't of this construction at all, like this one, where shares are constantly added to it in what is known as "the building phase". So we have a portfolio of around 50 shares, as opposed to one of just a few, such as HYP1. Both contain low/no yielders, both have concentrations of capital/income.

How are followers of such an Investment Strategy supposed to seriously comment?

Where the OP has done well, and may have done equally as well, or better, or worse with an alternative strategy (and it appears HYP isn't the sole strategy), is in recognising the need to do "something" with respect to planning for the future of retirement. I am sure the alternative outcomes of doing nothing, or saving in a bank account and buying an annuity upon retirement, will have been worse.

From a "practical" perspective, since this is what this board should be about, the OP needs to decide whether he is happy dealing with a (near) 50 share portfolio, and any admin that brings with it, or prefers things to be simpler. If a trend towards simplicity is desired there are plenty of ways of achieving that. If its irrelevant, then carry on, leave things be (especially now the "building phase" where most of the work would be is now in the past).

Enjoy the income, enjoy the (pending or current) retirement, and remain (strategically) ignorant.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366709

Postby tjh290633 » December 16th, 2020, 12:19 pm

moorfield wrote:I don't think I am muddying anything here Dod. I am simply observing that Rhinestone is holding a Low Yield Portfolio (LYP).

I reference CTY because for all the talk of the "FTSE 100 yield" no one can determine reliably what it is, or reference a source that does, not even the Board Guidelines. CTY is not a "hard" benchmark for me, but it is a reliable one. The internal mechanics of how it has continued to pay out a rising dividend over the last 50 years are irrelevant, that it can use reserves and borrowing facilities to do so is the "edge" its managers have over us DIYers and is reflected in that yield difference perhaps. If there is a more accurate benchmark that can be used, and determined easily, I'm all ears.

I keep records of 3 indices as yardsticks. The FT Ordinary (FT30) index, The FTSE100 Index (UKX) and the FTSE350HY Index (HIX).

Why the FT30? Because when I started the others did not exist. Why the HIX? Because in my view it is the index more aligned to an HYP. Let's just look at some of the data, using my unitised portfolio figures since 1987, when I first started building my HYP in a PEP. The FT30 and UKX are the yardsticks here, because the HIX did not come in until later.

.            Income Units              Accumulation               
Year to Unit Value Div/Unit Unit Value FT30 FT100
21-Apr-87 1.00 0.00 1.00 1.00 1.00
05-Apr-88 0.91 2.86 0.94 0.92 0.91
05-Apr-89 1.18 2.72 1.28 1.10 1.05
05-Apr-90 1.21 4.24 1.40 1.13 1.14
05-Apr-91 1.34 5.42 1.69 1.28 1.26
05-Apr-92 1.30 7.52 1.75 1.24 1.26
05-Apr-93 1.51 6.91 2.13 1.44 1.46
05-Apr-94 1.70 6.27 2.50 1.65 1.65
05-Apr-95 1.66 7.48 2.55 1.57 1.62
05-Apr-96 1.95 7.38 3.13 1.80 1.90
05-Apr-97 2.16 8.40 3.62 1.85 2.21
05-Apr-98 3.31 10.00 5.72 2.45 3.05
05-Apr-99 3.44 8.46 6.12 2.47 3.21
05-Apr-00 3.32 11.33 6.13 2.42 3.35
05-Apr-01 3.29 12.42 6.32 2.05 2.89
05-Apr-02 3.37 13.02 6.76 1.65 2.69
05-Apr-03 2.29 12.10 4.85 0.85 1.85
05-Apr-04 2.92 13.38 6.56 1.22 2.25
05-Apr-05 3.46 13.06 8.10 1.33 2.51
05-Apr-06 4.30 17.42 10.57 1.68 3.06
05-Apr-07 4.91 19.42 12.63 1.90 3.31
05-Apr-08 4.14 24.32 11.21 1.58 2.93
05-Apr-09 2.28 21.17 6.46 0.87 2.01
05-Apr-10 3.69 11.06 10.86 1.33 2.91
05-Apr-11 4.16 16.71 12.76 1.43 3.03
05-Apr-12 4.40 17.73 14.19 1.33 2.96
05-Apr-13 5.27 21.83 17.01 1.54 3.29
05-Apr-14 5.34 23.05 18.88 1.75 3.38
05-Apr-15 5.91 24.98 21.84 1.91 3.47
05-Apr-16 5.92 22.67 21.72 1.79 3.17
05-Apr-17 6.62 26.21 25.47 2.10 3.76
05-Apr-18 6.12 33.19 24.66 1.79 3.62
05-Apr-19 6.35 31.25 27.04 1.95 3.82
05-Apr-20 4.50 31.57 20.59 1.44 2.77
16-Dec-20 5.62 14.16 27.24 1.64 3.37

The dividend income per unit and the accumulation unit value are irrelevant in this case, as I do not look at the Total Return versions of the indices here.

I compare the dividends per income unit with the RPI, as follows:

.             Ordinary    Rebased     RPI    
Year to Divs/unit Divs/unit Rebased
05-Apr-88 2.86 100.00 100.00
05-Apr-89 2.72 94.81 112.28
05-Apr-90 4.24 147.94 122.89
05-Apr-91 5.42 189.25 130.75
05-Apr-92 7.52 262.34 136.35
05-Apr-93 6.91 241.32 138.11
05-Apr-94 6.27 218.85 141.65
05-Apr-95 7.48 261.07 146.37
05-Apr-96 7.38 257.48 149.90
05-Apr-97 8.40 293.36 153.54
05-Apr-98 8.88 310.04 159.72
05-Apr-99 8.46 295.34 162.28
05-Apr-00 11.33 395.51 167.09
05-Apr-01 11.73 409.64 170.04
05-Apr-02 13.02 454.50 172.59
05-Apr-03 12.10 422.26 178.00
05-Apr-04 11.62 405.63 182.42
05-Apr-05 12.07 421.42 188.21
05-Apr-06 13.12 458.13 193.03
05-Apr-07 14.04 490.19 201.77
05-Apr-08 24.32 849.07 210.22
05-Apr-09 21.17 739.15 207.76
05-Apr-10 11.06 386.20 218.86
05-Apr-11 16.71 583.44 230.26
05-Apr-12 17.46 609.34 238.21
05-Apr-13 19.91 694.93 245.09
05-Apr-14 20.47 714.45 250.29
05-Apr-15 21.33 744.60 253.44
05-Apr-16 21.67 756.58 256.78
05-Apr-17 24.93 870.11 265.82
05-Apr-18 29.23 1,020.51 274.75
05-Apr-19 29.25 1,020.97 283.10
05-Apr-20 31.57 1,102.06 284.38
05-Apr-21 14.16 494.35 288.31

The latest year is incomplete, and the latest figure for the RPI is for October, 293.5 rebased as indicated in the table. Regarding the HIX, I only started recording it at the start of 2010, and on 1st April it stood at 3052.0 and the UKX was at 5744.89. The latest figure is 2934.15 and the UKX last night was at 6513.32. Somewhere I had the start date for the HIX, when it stood at 1,000, but I cannot lay my hands on it now.

TJH

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366868

Postby csearle » December 16th, 2020, 8:59 pm

moorfield wrote:The internal mechanics of how it has continued to pay out a rising dividend over the last 50 years are irrelevant, that it can use reserves and borrowing facilities to do so is the "edge" its managers have over us DIYers and is reflected in that yield difference perhaps.
I'm not totally convinced of this argument. Imagine I took my HYP, sold units in it, and managed it in such a way that for the next 50 years my clients perceived a superior dividend return (at the expense of, say, selling the assets). I could claim my Super-HYP was a greater income investment than a "standard" HYP. Apples, pears? C.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366871

Postby IanTHughes » December 16th, 2020, 9:47 pm

moorfield wrote:I reference CTY because for all the talk of the "FTSE 100 yield" no one can determine reliably what it is, or reference a source that does, not even the Board Guidelines. CTY is not a "hard" benchmark for me, but it is a reliable one. The internal mechanics of how it has continued to pay out a rising dividend over the last 50 years are irrelevant, that it can use reserves and borrowing facilities to do so is the "edge" its managers have over us DIYers and is reflected in that yield difference perhaps.

I cannot speak for 50 years but I can say that, since its inception in November 2000, an investment in HYP1 would have provided 27.55% more income that the amount that would have been produced by a similar investment in The City of London Investment Trust plc (CTY). The capital value of HYP1 would also be well ahead, by 35.78%.

Maybe it is the DIYers that have the edge?

With a strategy like HYP, where one selects the highest yield that one considers sustainable, subject of course to diversification, why does one need a benchmark? Total nonsense in my opinion.


Ian

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366877

Postby Arborbridge » December 16th, 2020, 10:31 pm

IanTHughes wrote:Maybe it is the DIYers that have the edge?

With a strategy like HYP, where one selects the highest yield that one considers sustainable, subject of course to diversification, why does one need a benchmark? Total nonsense in my opinion.


Ian


That will depend on the DIY-er ;)

Why does one need a benchmark? In order to show whether or not one's HYP is working as well as any alternative invesment which you might have used instead. Seems pretty obvious to me, unless one is going to take the efficacy of the HYP method as being self evidently better as an act of blind faith.

Arb.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366879

Postby 88V8 » December 16th, 2020, 10:40 pm

Well, I think one needs some sort of benchmark. Even if it's as unambitious as the Top 100.
Unless HYP is a complete hobby and neither the capital nor the income really matter.

As said, the OP's HYP needs a prune. Cut out the dead wood. Then a further period of vegetation can ensue.

V8

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366883

Postby IanTHughes » December 16th, 2020, 10:46 pm

Arborbridge wrote:
IanTHughes wrote:Maybe it is the DIYers that have the edge?

With a strategy like HYP, where one selects the highest yield that one considers sustainable, subject of course to diversification, why does one need a benchmark? Total nonsense in my opinion.


That will depend on the DIY-er ;)

Of course, as it will also depend on the IT manager as well!

Arborbridge wrote:Why does one need a benchmark? In order to show whether or not one's HYP is working as well as any alternative invesment which you might have used instead. Seems pretty obvious to me, unless one is going to take the efficacy of the HYP method as being self evidently better as an act of blind faith.

But I believe that is not how moorfield uses CTY as a benchmark. Rather moorfield suggests that any selection for an HYP should, at the time of purchase, have a yield greater than that for The City of London Investment Trust plc (CTY). Either that or else an HYP portfolio should have a yield greater than that offered by CTY. As I stated previously, the HYP strategy does in fact suggest one should select the highest sustainable yield available, subject to diversification of course. The yield of CTY, any Investment Trust or other asset for that matter, is totally irrelevant to such a decision.

I do of course agree that anyone managing their own investments, whatever strategy is employed, should periodically measure their returns against what might have been achieved by another route, including of course so-called professional IT Managers. How else would I know that HYP1 has beaten CTY into a cocked hat? :)


Ian

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366903

Postby Dod101 » December 17th, 2020, 12:34 am

88V8 wrote:Well, I think one needs some sort of benchmark. Even if it's as unambitious as the Top 100.
Unless HYP is a complete hobby and neither the capital nor the income really matter.

As said, the OP's HYP needs a prune. Cut out the dead wood. Then a further period of vegetation can ensue.

V8


Not quite vegetation I would have thought, as much as a period of untrammelled growth. A period of vegetation usually means standing still but that is not what I would want anyway.

Dod

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366912

Postby idpickering » December 17th, 2020, 4:16 am

88V8 wrote:Well, I think one needs some sort of benchmark. Even if it's as unambitious as the Top 100.
Unless HYP is a complete hobby and neither the capital nor the income really matter.

As said, the OP's HYP needs a prune. Cut out the dead wood. Then a further period of vegetation can ensue.

V8


Agreed. Every day I compare my HYPs capital performance against the ftse100. Often I beat it. Yesterday, ftse100 up 0.82%, my HYP up 1.34%. Although I get HYP is about the income. The dividend paid by RDSB yesterday is not included in my figure above. Some days I lose to the index, but it’s all part of the game to me.

Ian.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366920

Postby Arborbridge » December 17th, 2020, 7:41 am

IanTHughes wrote:But I believe that is not how moorfield uses CTY as a benchmark. Rather moorfield suggests that any selection for an HYP should, at the time of purchase, have a yield greater than that for The City of London Investment Trust plc (CTY). Either that or else an HYP portfolio should have a yield greater than that offered by CTY. As I stated previously, the HYP strategy does in fact suggest one should select the highest sustainable yield available, subject to diversification of course. The yield of CTY, any Investment Trust or other asset for that matter, is totally irrelevant to such a decision.


Ian


Forgetting moorfield's raher specific focus on CTY, I believe he makes a more general point sometimes, which has legs: why invest in a HYP share (a top-up, for example) which has a yield lower than one could receive from various ITs? That is a dicussion I often have with myself :?
A single share at the same yield as a pooled investment would seem a riskier business. I know that begs several questions, but he has a thought provoking point, unless one is particularly wedded to HYP as an article of faith.

Arb.

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366931

Postby IanTHughes » December 17th, 2020, 9:08 am

Arborbridge wrote:
IanTHughes wrote:But I believe that is not how moorfield uses CTY as a benchmark. Rather moorfield suggests that any selection for an HYP should, at the time of purchase, have a yield greater than that for The City of London Investment Trust plc (CTY). Either that or else an HYP portfolio should have a yield greater than that offered by CTY. As I stated previously, the HYP strategy does in fact suggest one should select the highest sustainable yield available, subject to diversification of course. The yield of CTY, any Investment Trust or other asset for that matter, is totally irrelevant to such a decision.

Forgetting moorfield's raher specific focus on CTY, I believe he makes a more general point sometimes, which has legs: why invest in a HYP share (a top-up, for example) which has a yield lower than one could receive from various ITs? That is a dicussion I often have with myself :?
A single share at the same yield as a pooled investment would seem a riskier business. I know that begs several questions, but he has a thought provoking point, unless one is particularly wedded to HYP as an article of faith.

But as you well know, an HYP is not a single share. Even a top-up will be selected as part of the overall portfolio.

Furthermore, in order to settle on a lower yield than offered by a particular collective, I am fairly certain that an HYPer would have rejected many higher yielding shares, whether to maintain appropriate diversification or as a result of concern for dividend sustainability. How many of such shares would be contained within that collective with the higher yield?

Finally, I am most certainly not wedded to the HYP strategy as the only possible way to invest. It does present a method that I feel capable of following with reasonable success and I do enjoy the challenge of running my own investment strategy. But, if I were to discover that a particular income collective, or more likely a pool of income collectives, could surpass my own efforts, I would most certainly ditch HYP and switch to that other method. So far, I have not found any such collective and certainly not a pool of them! And, believe you me, I am looking!


Ian

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366963

Postby Gengulphus » December 17th, 2020, 10:51 am

Dod101 wrote:
88V8 wrote:Well, I think one needs some sort of benchmark. Even if it's as unambitious as the Top 100.
Unless HYP is a complete hobby and neither the capital nor the income really matter.

As said, the OP's HYP needs a prune. Cut out the dead wood. Then a further period of vegetation can ensue.

Not quite vegetation I would have thought, as much as a period of untrammelled growth. A period of vegetation usually means standing still but that is not what I would want anyway.

A most peculiar meaning, in fact: what vegetation tends to do when left to itself is untrammelled growth, not standing still - ask anyone who has had to tackle a neglected garden! ;-)

Gengulphus

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Re: Overall portfolio yield compared to a collective IT, such as CTY

#366966

Postby moorfield » December 17th, 2020, 11:00 am

moorfield notes he is being requoted a lot today and has asked me to post... He hadn't intended to hijack rhinestone's thread into a debate about CTY and will refrain from continuing it, other than to say that he hopes folk understand that he is simply challenging diy investors with this comparison to ask themselves why they buy, or hold portfolios of, shares yielding less than, and selected largely from the same indexes as, portfolios constructed by professional investors who have been able to payout a rising income from their portfolios for the last half century.

(Moorfield's PA)


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