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HFEL

Closed-end funds and OEICs
Dod101
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HFEL

#410271

Postby Dod101 » May 8th, 2021, 2:03 pm

This trust seems a popular hold for income and I bought it in August 2018 at £3.675, a price not achieved since then. Currently quoted at £3.28, a drop of around 10.75% on my buying price. The current yield is a bit more than 7% if my calculations are correct. I suppose I am on the right side but it is not a trust to write home about. I will hold on since I have only held it for less than three years and they have been rather tumultuous ones. At least it modestly increased its dividend for its last financial year to 31 August, and has (very) modestly increased it so far this year. They even managed to increase their revenue reserves very slightly.

I am surprised that in their definition of the Far East, they include Australia and New Zealand where they have nearly 20% of their assets.

Could be worse.

Dod

staffordian
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Re: HFEL

#410278

Postby staffordian » May 8th, 2021, 2:35 pm

I hold as one of a basket of eleven IT's, and it's one of the two or three which are underwater in capital terms.

But as you say, good income, and I take the long view. In five years it might be up with the best and today's frontrunners might be the laggards.

Happy to hold and to increase when it's turn comes.

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Re: HFEL

#410279

Postby ReformedCharacter » May 8th, 2021, 2:36 pm

I have a largish holding, bought in 5 tranches since Mar 2014. I've bought them when they seemed 'cheap', my last purchase was in March 2020 at 228.9. They currently show an IRR of c. 8% which is good enough for me.

RC

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Re: HFEL

#410280

Postby staffordian » May 8th, 2021, 2:42 pm

Me, 6 tranches from September 2017 onwards, currently showing a mere 2.7% IRR.

digitaria
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Re: HFEL

#410286

Postby digitaria » May 8th, 2021, 2:58 pm

HFEL is about 6.5% of my holdings, also acquired in multiple tranches. I see it as income decoupled from the US, UK, Europe and Japan.

It generally trades at a small premium to NAV. 7% is an impressive yield to get from what is essentially a selection of markets, albeit markets with less of a track record than those others I mentioned.

I note that its largest geographic constituent is now China, at 25%. I note also that they're holding significant Samsung and Taiwan Semiconductor - which seem to crop up everywhere - and the Australian listings of BHP and Rio - presumably to boost the income, but I have UK-quoted mining shares, so should be careful of over-exposure there.

The manager seems to know what he's doing.

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Re: HFEL

#410292

Postby Arborbridge » May 8th, 2021, 3:28 pm

I knocked the following up from my records:-

Image


The XIRR varies quite a bit according to the market and no doubt my own buying habits, but the point may be made: if one's XIRR is only showing 3% now, it could be showing 12% in the future - and conversely if you rejoice in a 12% XIRR it could be 3% next year 8-)

HFEL is one I have considered giving the boot to, but I've hung on, and at present the returns have justified keeping it in the basket on average. The capital has not been brilliant - I am about at breakeven, that is to say underwater by inflation, but the income is high and has increased by 1.67x since I bought 10.5 years ago - so certainly faster than RPI.

So, judge for yourself whether that makes it worth keeping or there is something else which would justify supplanting it. I think it's been OK and given me the high and increasing income I am looking for - with the question mark about eating into capital. But, since I don't intend to sell but pass it on, that probably doesn't worry me too much.

If I may suggest an alternative for those who do not need as high a yield, have a look at SOI. This has held up on the capital front well, with similar dividend increases to HFEL. However, you would have around half the income to live on. My current XIRR since 2012 for SOI is over 11%.

Arb

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Re: HFEL

#410302

Postby ReformedCharacter » May 8th, 2021, 3:51 pm

Arborbridge wrote:
If I may suggest an alternative for those who do not need as high a yield, have a look at SOI. This has held up on the capital front well, with similar dividend increases to HFEL. However, you would have around half the income to live on. My current XIRR since 2012 for SOI is over 11%.

Arb

I hold SOI too, but only bought fairly recently in Dec 2019. More capital appreciation than HFEL over a much shorter period.

RC

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Re: HFEL

#410311

Postby TUK020 » May 8th, 2021, 4:41 pm

I also hold.
Attraction was two fold:
- geographic diversification
- exposure to semiconductor manufacturing

Still think this combo should come good, unless China goes and does something stupid over Taiwan

ian56
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Re: HFEL

#410326

Postby ian56 » May 8th, 2021, 6:08 pm

I was fairly late to this party only buying in January and March last year at an average price of £3.20, currently showing an IRR of 8.2% most of which is, obviously, dividends as the price is only just hovering above my average.

There is a short video by Mike Kerley at:

https://www.janushenderson.com/en-gb/in ... dividends/

filmed in January in which he gives an account of the trust's performance over the last year. He is quite optimistic on the prospects for valuation and dividends in the region going forward in 2021. I will continue to hold and may add when funds and opportunity allow.

Ian

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Re: HFEL

#410485

Postby scotia » May 9th, 2021, 10:33 am

But is the yield from HFEL (Henderson Far East Income) a real dividend, accrued from long-held, high dividend companies? 7.01% seems too good to be true - is that really the average dividend yield from the companies they hold? Or are they simply using devices like call options, or short term holdings to harvest dividends etc? This would account for a relatively poor growth performance.
So I looked at JAGI (JPMorgan Asia Growth and Income) - yield 3.19% and SDP (Schroder Asia Pacific ) - yield 1.27%. Yet both have the same top 4 holdings. And HFEL has two of them as its top 2. My suspicions deepen on how yields are generated.
On 5 year total returns (although I know this is of no concern to some investors), HFEL = 61%, SDP = 161%, JAGI = 188%.
I currently hold JAGI, but am planning to invest in SDP.

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Re: HFEL

#410488

Postby monabri » May 9th, 2021, 10:47 am

ian56 wrote:I was fairly late to this party only buying in January and March last year at an average price of £3.20, currently showing an IRR of 8.2% most of which is, obviously, dividends as the price is only just hovering above my average.

There is a short video by Mike Kerley at:

https://www.janushenderson.com/en-gb/in ... dividends/

filmed in January in which he gives an account of the trust's performance over the last year. He is quite optimistic on the prospects for valuation and dividends in the region going forward in 2021. I will continue to hold and may add when funds and opportunity allow.

Ian


With a current price of 328p per share and a year's worth of dividends, I'm surprised that your IRR is as high as 8.2%.

I've held since Sept 2017 with an average price of 329p and an XIRR of a mere 5.3%.

Dod101
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Re: HFEL

#410494

Postby Dod101 » May 9th, 2021, 11:11 am

scotia wrote:But is the yield from HFEL (Henderson Far East Income) a real dividend, accrued from long-held, high dividend companies? 7.01% seems too good to be true - is that really the average dividend yield from the companies they hold? Or are they simply using devices like call options, or short term holdings to harvest dividends etc? This would account for a relatively poor growth performance.
So I looked at JAGI (JPMorgan Asia Growth and Income) - yield 3.19% and SDP (Schroder Asia Pacific ) - yield 1.27%. Yet both have the same top 4 holdings. And HFEL has two of them as its top 2. My suspicions deepen on how yields are generated.
On 5 year total returns (although I know this is of no concern to some investors), HFEL = 61%, SDP = 161%, JAGI = 188%.
I currently hold JAGI, but am planning to invest in SDP.


They say in the most recent Annual Report (August 2020) that they write call options to supplement the income and it seems they have been doing so for a long while. IN all I will keep an eye on HFEL but will do nothing in the short term. It has performed well enough for me throughout the pandemic.

Dod

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Re: HFEL

#410499

Postby MaraMan » May 9th, 2021, 11:26 am

I have had a reasonable holding in HFEL since 2017. I felt it was doing ok until the pandemic but since then I am about 4.5% underwater. Of course I have enjoyed the dividends which I take out, but I am unimpressed with the capital situation. I have a larger holding in J P Morgan Asia Growth and Income (JAGI) with which I am much happier. Thanks for starting this discussion Dod, it has reminded me to take a good look at the alternatives to HFEL. I feel after 5 years it's time to reevaluate.

MM

monabri
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Re: HFEL

#410578

Postby monabri » May 9th, 2021, 4:55 pm

monabri wrote:
ian56 wrote:I was fairly late to this party only buying in January and March last year at an average price of £3.20, currently showing an IRR of 8.2% most of which is, obviously, dividends as the price is only just hovering above my average.

There is a short video by Mike Kerley at:

https://www.janushenderson.com/en-gb/in ... dividends/

filmed in January in which he gives an account of the trust's performance over the last year. He is quite optimistic on the prospects for valuation and dividends in the region going forward in 2021. I will continue to hold and may add when funds and opportunity allow.

Ian


With a current price of 328p per share and a year's worth of dividends, I'm surprised that your IRR is as high as 8.2%.

I've held since Sept 2017 with an average price of 329p and an XIRR of a mere 5.3%.



Having seen Ian56's numbers (PM), the XIRR figure he quotes is indeed correct. My lower XIRR figure is due to having bought initially at a price above the current shareprice but then further tranches during March last year.

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Re: HFEL

#410611

Postby AshleyW » May 9th, 2021, 7:22 pm

I have held HFEL for a number of years now. When I did my comparative analysis only Henderson and Schroder Oriental passed through for final consideration of the basis of historic dividends and total return. HFEL was the ultimate winner. I´ll take a new look in a year or two to see how Covid has impacted dividend performance. The 5-year total return and revenue reserves of SOI have been superior so I may very reluctantly consider swapping. It will be interesting to see if HFEL manage to cover the dividend payout from income in 2020-21, it did manage it 2020 but Covid hadn´t hit the full year. Logic dictates that they will end up in a far weaker position than SOI.

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Re: HFEL

#411209

Postby torata » May 11th, 2021, 11:25 pm

I've held HFEL in my SIPP since 2013, with occasional top-ups since, and the annualized return is 6%, but that's all from dividends. Capital gain is zero.
I've also held a half holding in my HYP ISA since 2006 and not touched it. That annualized return is 9% made up of about 1/3 capital appreciation and and 2/3 dividends.
I'm not a chartist at all, but I have noticed that HEFL has fluctuated in a range for the last 10+ years of a low of around 2.60 and a high of 3.80 although if you want to wait for the low periods that may mean a wait of several years!

torata

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Re: HFEL

#411304

Postby richfool » May 12th, 2021, 11:21 am

I flirted with HFEL a couple of years back, but opted for other trusts in that sector for the combination of their yields and their better capital appreciation.

I hold: AAIF, SOI and JAGI.

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Re: HFEL

#411348

Postby monabri » May 12th, 2021, 12:58 pm

A comparison of AAIF, SOI, JAGI & HFEL over the last 5 years in terms of total return.

Data plotted using HL tools here

https://www.hl.co.uk/funds/fund-discoun ... ion/charts


Image


JAGI removed from the comparison!

Image

JAGI holders are probably pretty pleased with that performance!

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Re: HFEL

#411373

Postby JuanDB » May 12th, 2021, 2:04 pm

HFEL is an income trust with the possibility of capital appreciation. As an income trust it seems pretty consistent and predictable with above inflation growth (3.7% over 5 years). Compounded it will deliver income increasing at around 9-11% per year. That’s what I bought it for and that is what it has delivered. I think judging it by any other measure is a mistake and overloading it with objectives it isn’t trying to deliver.

I write this as someone who recently, reluctantly, topsliced about 10% of capital from HFEL because my equal-weighted-by-income portfolio of income ITs had gotten out of balance due to above average yield and yield growth of HFEL.

Cheers,

Juan

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Re: HFEL

#411385

Postby SalvorHardin » May 12th, 2021, 2:31 pm

For me Henderson Far East Income (HFEL) does what it says on the tin. It produces a very high yield, currently 7.2%, in part by selling options but mostly by holding a lot in high yieldering sectors, notably banking, mining and telecoms. It provides massive diversification away from the UK, Europe and America, whilst steadily increasing its dividend. Don't invest in it for capital growth though.

A big plus for me is that HFEL increased its dividend last year, whilst UK companies were hitting shareholders with all manner of dividend cuts and suspensions. IMHO HFEL is the sort of company that the HYP purists would benefit from, but they won't since it's a "Nasty Foreign Share" (say this in Gollum's accent!).

A few years ago a friend wanted to dip their proverbial toe into the stockmarket, but didn't want to risk too much and wanted a much larger income than he could get from a building society account. HFEL met his requirements and has continued to do so. He doesn't compare HFEL with other funds, rather it's HFEL vs savings accounts.

Like many on this thread I also own some JPMorgan Asia Growth & Income (JAGI), roughly three times my HFEL stake. JAGI is an interesting income option since it pays out 1% of its NAV every quarter, so that's notionally a 4% yield subject to some fluctuation. A growth investment which produces a reasonably high income without requiring holders to regularly top-slice to generate an income.

What about buying HFEL and JAGI for a 5.6% yield? Or HFEL in combination with another fund(s)?


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