Arbit, HYP and OEICs 2022 Q1

[Arborbridge]

Latest update on my "Three Streams" of income below. I've plotted the income for £100-wirth of units in each fund at the beginning of the period. Each point is the sum of the previous 4 quarters so, in effect a year's income. The scale is in pounds sterling per unit.



All three streams are now below the RPI curve, but notable is that the OEIC stream has come back strongly whereas the IT stream ('Arbit') has dipped. This is what we all expected: OEICS pay income without reserving so is more volatile but the IT stream is more stable being paid from reserves. However, when ITs start to run through their reserves, income paid out will bounce back less quickly.

The HYP income for the year ended Q1 was exactly the same as the year ended Q4 21, a fact which I didn't believe at first. Looking back at the individual quarters, there have been ups and downs, changes of company composition etc, but weirdly they have balanced out to end up at the same result. A result which is a disappointment compared with the OEIC stream.
Income provided by each stream 2021 as a percentage of the total was: ArbHyp 55%, Arbit 37%, OEICS 8%

The capital story is shown below:-



Arbit and OEICs are locked in a battle for top dog place, with ArbHYP more or less a closet FTSE tracker, at the moment below RPI. My HYP troubles very much seem to have grown worse around Brexit times and haven't recovered from that period.

As I haven't posted the IT portfolio recently, I may do that separately.

Arb.

[BullDog]

Thanks very much for taking the trouble to document this. It's reassuring to those of us who subcontract some or all of their portfolio to professional IT managers.

[Arborbridge]

Thanks very much for taking the trouble to document this. It's reassuring to those of us who subcontract some or all of their portfolio to professional IT managers.

I agree, and the surprise for me has been the OEICS. We hear so many complaints about managers and their fees, but sometimes (if you are not brilliant yourself at this stuff) it is better to pay up. The OEICS I thought would lag way behind the ITs, but they have done rather well.


Arb.

[Arborbridge]

Here's the list of ITs in the Arbit basket:-



Here's the list of OEICS



I don't believe this has been posted previously, but since they are all sitting in my HL account, it's easy to past and copy them. To plug in the yields needs more effort, so I haven't bothered for the moment . The gain is since first purchase: it happened to be shown in my HL account so easy to post, for what it's worth. THe income from the OEICS has never been drawn as I regard it as part of my Safety Margin. The income is reinvested in whatever OEIC I believe to be most appropriate at the time based on some ideas about their TR performance over various periods - plus a wet finger in the air.

Arb.

[BullDog]

Thanks very much for taking the trouble to document this. It's reassuring to those of us who subcontract some or all of their portfolio to professional IT managers.

I agree, and the surprise for me has been the OEICS. We hear so many complaints about managers and their fees, but sometimes (if you are not brilliant yourself at this stuff) it is better to pay up. The OEICS I thought would lag way behind the ITs, but they have done rather well.


Arb.

Yes, I find some folks tend to be rather sniffy for some reason about unit trusts or OEICs. Indeed, you sometimes see it here at TLF actually. For quite a number of years whilst pot building I ran a basket of accumulating income unit trusts back when the asset class was a good, long term steady performer. Eventually, it pretty much stopped working and I switched emphasis to more growthy stuff. But I wasn't disappointed in the slightest during those years.

[Itsallaguess]

Latest update on my "Three Streams" of income.

I've plotted the income for £100-worth of units in each fund at the beginning of the period.

Hi Arb,

Are you planning on posting a Q2 update on your Arbit, HYP, OEIC 'three-income-stream' chart?

Cheers,

Itsallaguess

[BullDog]

Latest update on my "Three Streams" of income.

I've plotted the income for £100-worth of units in each fund at the beginning of the period.

Hi Arb,

Are you planning on posting a Q2 update on your Arbit, HYP, OEIC 'three-income-stream' chart?

Cheers,

Itsallaguess

I hope so!

(No pressure then.....)

[Arborbridge]

Latest update on my "Three Streams" of income.

I've plotted the income for £100-worth of units in each fund at the beginning of the period.

Hi Arb,

Are you planning on posting a Q2 update on your Arbit, HYP, OEIC 'three-income-stream' chart?

Cheers,

Itsallaguess

Yes - I've just returned from holiday and have only just downloaded my dividends. I will update sometime in the coming week.

[micrographia]

Just a post to thank everyone for this thread. A chance remark about retirement planning in an annual review at work made me realise that it was closer than I'd thought (though still some way away). With a bit of time off on holiday I've revisited the 3-pronged approach I set up a long time ago, when I decided that when I left work I didn't want to be paying for housing and wanted to have a good pension that was topped up by a passive income from equity investments.

With the finish line in sight if not yet in reach, the first 2 prongs are sorted. The last morphed early on into building a HYP in an ISA that I'm very happy with. I have a minimum income target for the HYP that should be easily reachable in the time available. I was idly pondering the drop in income from it during the market upheavals it has existed through, wondering if I should do something about this (aside from the "keep a pile of cash handy just in case" approach) or even if it was worth doing so, given that I don't intend to be reliant on it.

After seeing how your basket of ITs has performed during the last of these events (and a bit of DYOR) I've decided to invest in a portfolio of ITs that will sit alongside my HYP, which will continue much as before. It's main purpose will be to mitigate drops in HYP income since going by past performance I hope to be living through another 4 or 5 once-inna-century market shenanigans. It will also let me add some income from markets other than the UK and investments other than equities, even if I have to come to terms with paying someone else to invest some of my money for me while they keep a pile of cash handy on my behalf just in case . I'll be sticking to just the two streams of income though .

Cheers for the nudge, EEM

[Itsallaguess]

After seeing how your basket of ITs has performed during the last of these events (and a bit of DYOR) I've decided to invest in a portfolio of ITs that will sit alongside my HYP, which will continue much as before.

It's main purpose will be to mitigate drops in HYP income since going by past performance I hope to be living through another 4 or 5 once-inna-century market shenanigans.

How is Transylvania at this time of year?

:O)

Cheers,

Itsallaguess

[moorfield]

I've decided to invest in a portfolio of ITs that will sit alongside my HYP, which will continue much as before. It's main purpose will be to mitigate drops in HYP income since going by past performance I hope to be living through another 4 or 5 once-inna-century market shenanigans.

Just a thought - why not mitigate drops in HYP income by not having a HYP at all, and just a portfolio of ITs? Or is that too left field!

[kempiejon]

I've decided to invest in a portfolio of ITs that will sit alongside my HYP, which will continue much as before. It's main purpose will be to mitigate drops in HYP income since going by past performance I hope to be living through another 4 or 5 once-inna-century market shenanigans.

Just a thought - why not mitigate drops in HYP income by not having a HYP at all, and just a portfolio of ITs? Or is that too left field!

My HYP offers a good return and I like the income but one could avoid the vagaries of a HYP and just buy a global tracker and attract similar gain, as can be said for many strategies.

[micrographia]

Just a thought - why not mitigate drops in HYP income by not having a HYP at all, and just a portfolio of ITs? Or is that too left field!

Income is usually higher and management fees are always lower with my HYP than with the ITs I'm targeting (CTY, MYI etc) . Pretty certain my fund manager isn't going to unexpectedly bugger off to pastures new either .

I like the idea that with a modest IT portfolio I'll still be getting a decent income stream that I can reinvest until it's needed along with greater exposure to other markets, which wouldn't be the case with cash. Not averse to the idea of investing a chunk of my retirement lump sum into ITs when the time comes either - my AVCs currently have to be invested in funds anyway.

EEM

[funduffer]

Just a post to thank everyone for this thread. A chance remark about retirement planning in an annual review at work made me realise that it was closer than I'd thought (though still some way away). With a bit of time off on holiday I've revisited the 3-pronged approach I set up a long time ago, when I decided that when I left work I didn't want to be paying for housing and wanted to have a good pension that was topped up by a passive income from equity investments.

With the finish line in sight if not yet in reach, the first 2 prongs are sorted. The last morphed early on into building a HYP in an ISA that I'm very happy with. I have a minimum income target for the HYP that should be easily reachable in the time available. I was idly pondering the drop in income from it during the market upheavals it has existed through, wondering if I should do something about this (aside from the "keep a pile of cash handy just in case" approach) or even if it was worth doing so, given that I don't intend to be reliant on it.

After seeing how your basket of ITs has performed during the last of these events (and a bit of DYOR) I've decided to invest in a portfolio of ITs that will sit alongside my HYP, which will continue much as before. It's main purpose will be to mitigate drops in HYP income since going by past performance I hope to be living through another 4 or 5 once-inna-century market shenanigans. It will also let me add some income from markets other than the UK and investments other than equities, even if I have to come to terms with paying someone else to invest some of my money for me while they keep a pile of cash handy on my behalf just in case . I'll be sticking to just the two streams of income though .

Cheers for the nudge, EEM

I have done exactly what you are suggesting - running a HYP alongside a portfolio of income-generating IT's. The behaviour of these portfolios during the pandemic crash, is very similar to arb's, so I would say you are on the right lines, if you want to offset the size of your cash pile and have a steadier income flow.

FD