Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Where to invest from HYP

Closed-end funds and OEICs
TopOfDaMornin
Lemon Pip
Posts: 92
Joined: November 27th, 2016, 9:56 pm
Has thanked: 10 times
Been thanked: 31 times

Where to invest from HYP

#279157

Postby TopOfDaMornin » January 22nd, 2020, 11:53 am

Within the HYP world, we can look at various factors such as yield and dividend cover, to see what HYP shares represent value.

Is there something similar within growth / income ITs that we can do? i.e. what ITs are currently good value.

I am looking at reinvesting some of my HYP dividends into other areas but am undecided where best to invest. If nothing, stands out I will reinvest into existing HYP shares.

BrummieDave
Lemon Slice
Posts: 818
Joined: November 6th, 2016, 7:29 pm
Has thanked: 200 times
Been thanked: 378 times

Re: Where to invest from HYP

#279168

Postby BrummieDave » January 22nd, 2020, 12:43 pm

How about yield and dividend cover, just a thought... :roll:

You could also throw in discount too, which some folk think is a indicator of value.

moorfield
Lemon Quarter
Posts: 3523
Joined: November 7th, 2016, 1:56 pm
Has thanked: 1546 times
Been thanked: 1402 times

Re: Where to invest from HYP

#279188

Postby moorfield » January 22nd, 2020, 1:37 pm

TopOfDaMornin wrote:Within the HYP world, we can look at various factors such as yield and dividend cover, to see what HYP shares represent value.

Is there something similar within growth / income ITs that we can do? i.e. what ITs are currently good value.

I am looking at reinvesting some of my HYP dividends into other areas but am undecided where best to invest. If nothing, stands out I will reinvest into existing HYP shares.



Turn the question around - why not save yourself the analysis and just buy City of London IT (CTY) on the basis that it is a reasonable substitute for the minimum acceptable performance you should expect from your HYP, ie. a well diversified portfolio of FTSE350 shares and of course a long reliable income that has preserved its spending power.

Put differently, if you can't beat CTY with your own HYP, then you might as well join it ...

kempiejon
Lemon Quarter
Posts: 3488
Joined: November 5th, 2016, 10:30 am
Has thanked: 1 time
Been thanked: 1145 times

Re: Where to invest from HYP

#279208

Postby kempiejon » January 22nd, 2020, 2:58 pm

moorfield wrote:Put differently, if you can't beat CTY with your own HYP, then you might as well join it ...


Or what about a UK collective like the Vanguard ETF VUKE - a well diversified portfolio of FTSE100 shares that has a historic yield of 4.31% beating the 4.23% of CTY if the high yield IT can't beat the yield of the index nor beat it for TR over the past 5 years you might as well buy the index.

Of course over 10 years CTY looks better and of course it does reserve back some of your income from you and keep IT managers and admin staff in housing and dinner so it's not all bad.

BrummieDave
Lemon Slice
Posts: 818
Joined: November 6th, 2016, 7:29 pm
Has thanked: 200 times
Been thanked: 378 times

Re: Where to invest from HYP

#279210

Postby BrummieDave » January 22nd, 2020, 3:10 pm

kempiejon wrote:
moorfield wrote:Put differently, if you can't beat CTY with your own HYP, then you might as well join it ...


Or what about a UK collective like the Vanguard ETF VUKE - a well diversified portfolio of FTSE100 shares that has a historic yield of 4.31% beating the 4.23% of CTY if the high yield IT can't beat the yield of the index nor beat it for TR over the past 5 years you might as well buy the index.

Of course over 10 years CTY looks better and of course it does reserve back some of your income from you and keep IT managers and admin staff in housing and dinner so it's not all bad.


I celebrate the fact that the OP is asking about Investment Trusts on the 'Investment Trusts and Unit Trusts' Board, yet in a single response you can propose an ETF and follow this with a cynical comment about Investment Trusts.

We're a liberal lot here in IT-ville, try doing that on the HYP Board... :lol:

Dod101
The full Lemon
Posts: 16629
Joined: October 10th, 2017, 11:33 am
Has thanked: 4343 times
Been thanked: 7534 times

Re: Where to invest from HYP

#279213

Postby Dod101 » January 22nd, 2020, 3:19 pm

TopOfDaMornin wrote:Within the HYP world, we can look at various factors such as yield and dividend cover, to see what HYP shares represent value.

Is there something similar within growth / income ITs that we can do? i.e. what ITs are currently good value.

I am looking at reinvesting some of my HYP dividends into other areas but am undecided where best to invest. If nothing, stands out I will reinvest into existing HYP shares.


I think you are tackling this from the wrong end. What do you want from your IT? If it is just generally good value you need to look at the premium/discount, the revenue reserves, the past record, who is the manager and for that matter which management house is involved or is it self managed. An analysis of these factors and maybe others will maybe throw up a trust or three that might be expected to do OK in the next few years.

But ITs are much more than international generalists. There must be an investment trust for almost every geographical division you could imagine plus every sector of the business world and a few more besides. Are you looking for an income trust or a growth trust or what?

It is certainly not a case of 'if nothing stands out'. I could name a few of the trusts that have done well for me over the last few years but that will not help you if you do not know what you want or why you want to hold it. I can assure you that if an IT 'stands out' I will be buying it and tell you afterwards but generally ITs are not like that.

Fundamentally do you want to replicate your HYP with an income trust or would you like to complement it with a primarily growth trust? Do not just go for the much vaunted City of London as though that is the panacea for any indecision on ITs.

Dod

Backache
2 Lemon pips
Posts: 220
Joined: November 8th, 2016, 7:26 pm
Has thanked: 17 times
Been thanked: 85 times

Re: Where to invest from HYP

#279285

Postby Backache » January 22nd, 2020, 10:41 pm

I think the standard way of looking at value in an IT is looking at Discount to NAV, if you are being sophisticated you might want to look at Discount to average discount over a five year period..
Some people look at reserves but I think this is double counting as they are included in the NAV and of little relevance now IT's can pay divis out of capital gains.
If I was looking where to invest from a HYP background my own opinion would be to diversify away from HYP style shares . Either by going overseas or by going for small companies.

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10023 times

Re: Where to invest from HYP

#279303

Postby Itsallaguess » January 23rd, 2020, 4:45 am

TopOfDaMornin wrote:
Within the HYP world, we can look at various factors such as yield and dividend cover, to see what HYP shares represent value.

Is there something similar within growth / income ITs that we can do? i.e. what ITs are currently good value.

I am looking at reinvesting some of my HYP dividends into other areas but am undecided where best to invest.


I'd start with the AIC data for Investment Trusts, where you can list IT's by global sector, discount, and yield, along with things like 5-year dividend growth-rate.

I try to do regular tabular updates of the AIC data using yields over 2.5%, and post them here with some clear instructions on how people can access the AIC site data themselves if they want to gather the latest information.

The last update I did was in December 2019, and the post is here if you're interested -

High Yield Investment Trusts - AIC Sector and Yield table (December 2019) -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=21036

When investigating individual Investment Trust options for income, I find that the Trustnet site contains most of the granular information that I'm interested in, including a breakdown of the top-ten holdings of each Investment Trust. Here's an example for the City of London (CTY) IT. -

https://www.trustnet.com/factsheets/t/hj01/the-city-of-london-investment-trust-ord

Note that the OCF figure on the Trustnet site gives the 'Ongoing Charge Figure' for each Investment Trust, which is the price we pay to allow IT-managers to manage this capital for us. It's worth keeping an eye on that, especially for some of the more exotic IT options.

If you want to compare things like historical total-return, between a number of IT options, then the link below can be used as a starting point, and then you can delete the Fundsmith option and add in a number of IT options -

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

Like you, I wanted to diversify away from my single-share HYP many years ago now, for a number of reasons, and I've currently got around 42.5% of my invested capital sitting in income-IT's of various flavours. I've found that they tick all the boxes that I was looking to tick by diversifying income and invested-capital away from a pure-HYP approach, and I'm now continuing to flow new capital and reinvested dividends into that area of my portfolio.

Whilst there's often a slight cost in terms of pure-yield when we compare the majority of income-IT's with many of the single-share HYP stocks discussed around these parts, I've found that there's a big benefit in being able to access single-shot income-Investment Trusts that operate in market or geographical sectors that are often well outside the reach of more traditional FTSE100 income-options, as well as taking advantage of other IT-related aspects such as one-shot, 'instant diversification', income-reserves, discount-control mechanisms, and sometimes NAV discounts themselves if we're lucky.

As my income-portfolio has grown over the years, I also see some benefit in being able to 'diversify-away' some of the day-to-day 'management' to the various IT-managers in charge of these investments. Overall, as my income-IT exposure has grown, I've seen a big improvement to the general capital and income volatility that I used to experience when holding a portfolio of purely single-share HYP stocks.

I mentioned earlier that there's often a price to pay with regards to available-yield when taking this approach, but whilst this is undoubtedly true when we look at many of the relatively high yields available with some single-share HYP stocks, I can also say that given the other benefits such an approach has brought to me personally, then that price is one that I'm more than happy to 'pay'....

Cheers,

Itsallaguess

DavidM13
Lemon Slice
Posts: 423
Joined: October 12th, 2018, 5:01 pm
Has thanked: 46 times
Been thanked: 405 times

Re: Where to invest from HYP

#279452

Postby DavidM13 » January 23rd, 2020, 4:16 pm

And of course the AIC site also has OCF and top holdings too! :ugeek: You cant blame a man for trying :lol:


Return to “Investment Trusts and Unit Trusts”

Who is online

Users browsing this forum: No registered users and 23 guests