HFEL

[Dod101]

Honestly thinking I will be topping up more HFEL soon.

I know the last 5 years have been poor with a 1/3 capital loss, but I reckon the worst is hopefully behind us and the future is somewhat brighter. it is fulfilling its primary purpose very well which is to provide steady income.

And from my own experience since I have been a holder just during the last year it has still done better than many of my individual holdings during that time, being down -8% YoY (but slightly +ve if you include reinvested dividends).

I mean, sure, other funds have done better but isn't that always the case, and I am not about to go fund hopping and chasing performance. HFEL is a solid holding that I think can do pretty well over the next few years from its modest starting point today.

I would not touch HFEL but I am thinking along the same lines with one or two of my poorly performing shares but it takes quite a lot of courage to throw good money after bad.

Dod

[Arborbridge]

Honestly thinking I will be topping up more HFEL soon.

I know the last 5 years have been poor with a 1/3 capital loss, but I reckon the worst is hopefully behind us and the future is somewhat brighter. it is fulfilling its primary purpose very well which is to provide steady income.

And from my own experience since I have been a holder just during the last year it has still done better than many of my individual holdings during that time, being down -8% YoY (but slightly +ve if you include reinvested dividends).

I mean, sure, other funds have done better but isn't that always the case, and I am not about to go fund hopping and chasing performance. HFEL is a solid holding that I think can do pretty well over the next few years from its modest starting point today.

I would not touch HFEL but I am thinking along the same lines with one or two of my poorly performing shares but it takes quite a lot of courage to throw good money after bad.

Dod

When I think about changes, often at this time of year, I remember the old maxim of running your winners and cutting the losers. Then I think: what the heck does that mean? It seems simple at first sight, but very often it is diffcult to decide what is winning and what is losing.
Some people might think the answer is obvious: what an idiot, not to know the difference! But when you take into consideration the different purposes for which one might buy an investment, plus the different purchase and holding times etc - it isn't quite so easy. We see various funds doing well in given periods, and then having some disastrous ones. Have you noticed how the performance seems to switch from bad to good as soon as you sell out, or vice versa?

In my case, I take the long view and only make changes after several years of disappointment as defined by TR compared with my average. But this is far from foolproof, so I often end up a rabbit in the headlights.
Then there's the other thought: reversion to the mean. A fund which has been doing badly can often be re-vitalised and start doing well. This happened with Temple Bar - did I have the courage to invest when it was knocked for six? - of course not! - but I should have done so as it has improved since. Anyone who first bought in the dip would have deemed it a "winner".

Such dilemmas will always remain, and all we can do is settle for a diversity of funds which means we win some and lose some, while at the same time making a few changes as and when they seem to make some sense.

Arb.

[Dod101]

I agree with all of that Arb. 'Running your winners'? I did that with Smithson . It went to £20 so I let run. Where is it now? About £13. Had I let Scottish Mortgage run it would have been the same story so I now have a policy of topping winners occasionally to secure at least some of the gain. I did so with Shell at £24.49 in June 2022 which I do not regret and since Unilever is currently by some margin by biggest holding I am thinking of doing the same with it and maybe Alliance Trust.

Apologies for straying out of the IT arena.

Dod

[Arborbridge]

For info:


My XIRR since buying HFEL in August 2012 at present is 4.63% - which I am sure is below my average yield over the years - so at least some of this yield must come from paying my back my own capital. However, that's better than any annuity would give me for my total loss of capital, so ultimately this is suits me better even if it isn't the best performer in my stable.

The XIRR problem can always be reversed - for example, up until 2019-20 the XIRR was about 10%, then deteriorated due to market conditions, presumably.

My current yield (last year's dividends over current price) is 8.7%.

Arb.

[88V8]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

This works very well for tjh, does it not?
And I'm sure it is equally applicable to ITs.
Which doesn't mean that I have the discipline to do it, but equally doesn't prevent me from recognising that it would be a good idea...

As regards HFEL, that has never been a winner for me in the capital sense and I certainly won't be buying any more.

V8

[monabri]

I'm hoping for a change of fortune re HFEL driven by China's realisation that it cannot keep perpetually in lockdown. Hopefully the other "China" ITs that I hold ( JCGI , BGCG ) will recover somewhat after a truly horrible performance over the last 2 years.

eg.
https://www.hl.co.uk/shares/shares-sear ... lc-ord-25p

[Arborbridge]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

This works very well for tjh, does it not?

V8

Well, doesn't that bring us back to how you define a winner?
Terry doesn't top up winners, neither does "HYP": it looks for high yielding shares, which in conventional terms can be a loser as the share price will have fallen. When a share becomes too large in a HYP portfolio like Terrys - i.e. has become a "winner" in terms of selling price - it then becomes a candidate for trimming.

HYP is counter-intuitive, a contrarian process, because it leads to cutting winners and topping up losers.

Arb.

[Dod101]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

This works very well for tjh, does it not?
And I'm sure it is equally applicable to ITs.
Which doesn't mean that I have the discipline to do it, but equally doesn't prevent me from recognising that it would be a good idea...

As regards HFEL, that has never been a winner for me in the capital sense and I certainly won't be buying any more.

V8

I guess I may have subconsciously have absorbed something from TJH, but I do not feel comfortable doing it! However it does conform to another old saying, sell high and buy low. I am not sure that any of these sayings really mean a lot, except when they work of course.

Dod

[Arborbridge]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

Is there some confused caused here? I think Dod mean "trimming" winners rather than "topping {up}" winners.

Arb.

[Dod101]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

Is there some confused caused here? I think Dod mean "trimming" winners rather than "topping {up}" winners.

Arb.

Ah but I did not say topping up. I said topping as in cutting off the head! I am not used to this wording as I do it so seldom but Unilever, Alliance Trust and possibly Astrazeneca are all due for a trim. The question is what to do with the proceeds

I will probably report in due course but maybe not on this site which is for ITs

Dod

[Arborbridge]

.. so I now have a policy of topping winners occasionally to secure at least some of the gain.
Apologies for straying out of the IT arena.

Is there some confused caused here? I think Dod mean "trimming" winners rather than "topping {up}" winners.

Arb.

Ah but I did not say topping up. I said topping as in cutting off the head! I am not used to this wording as I do it so seldom but Unilever, Alliance Trust and possibly Astrazeneca are all due for a trim. The question is what to do with the proceeds

I will probably report in due course but maybe not on this site which is for ITs

Dod

Well, the use of "topping" when we usually say "topping up" or "trimming" caused the confusion.

I'm having thoughts about AZN too, which is a winner but can hardly justify its place in a HY portfolio.

Arb.

[kempiejon]

I'm having thoughts about AZN too, which is a winner but can hardly justify its place in a HY portfolio.

Well AZN is in my HYP, being bought at above average yield and more or less sat on its dividend for a decade while the sp tripled or so. I could redeploy this capital gain and have had such thoughts.
As we're on the IT/UT board I'll save those thoughts

[moorfield]

I'm having thoughts about AZN too, which is a winner but can hardly justify its place in a HY portfolio.

Well AZN is in my HYP, being bought at above average yield and more or less sat on its dividend for a decade while the sp tripled or so. I could redeploy this capital gain and have had such thoughts.
As we're on the IT/UT board I'll save those thoughts

Exactly what I already did with AZN last year !

[monabri]

Held since 2017...slight positive TR (with XIRR 1.0%). It surprised me that the return was positive...better than Admiral with XIRR of a meagre 0.4%.

[Arborbridge]

Held since 2017...slight positive TR (with XIRR 1.0%). It surprised me that the return was positive...better than Admiral with XIRR of a meagre 0.4%.

A great illustration of the problem: to me Admiral is one of the winners, XIRR 15%

[Gerry557]

Just checked my HFEL and was surprised that with dividends included, it's now showing a gain. I bought and topped up along the way as the price fell. The capital kept falling but the dividend kept it close to zero and gave funds to add more.

So things must be improving but I've not looked in detail. My PF is looking green this morning but I'm expecting prices to be lower than now in feb/Mar time.

I tried a topping system. When the gain equalled 5 years dividends. It sounded OK and the trial had mixed results. The idea is to put that gain into something better or buyback when the share price falls.

One sold share kept rising and I've never got back in. Another rose and did eventually drop back to my sold price for a time and then went back up. Another I kept and its still paying out the dividend so look good on the spreadsheet. Trying to buy low, if you are lucky it just means you sell your winners. I now tend to hold unless I can identify something much better, which is rare.

I also started Admiral which is under water and on the top up list. More money after bad or cost averaging downward?

Holding over a long period winner's can become loosers and vice versa. Hopefully though the dividends keep coming to allow me to have another swing.

[BullDog]

On total return basis, I got out of here at even or very small loss. Nobody knows the future, obviously. But I think there's better prospects elsewhere than here albeit with a lower headline yield. No free lunches available in income investment.

[staffordian]

I hold HFEL as part of an eleven share IT portfolio, mainly bought with income in mind but including three growth shares for ballast.

I don't draw the income yet, but reinvest it, together with odd top ups, and in the past I have always topped each in turn, so my purchase cost for each one is roughly similar. My IT portfolio only dates from 2016, when I moved from an HYP based policy and since then my return has been an underwhelming 3.6%, with that for HFEL currently showing as 0.8% Ironically, my worst performer by far was bought as a growth punt, BRGE (Blackrock Greater Europe) which is currently -15.4% but has only been owned for 18 months or so. But that's another story.

I do have doubts about HFEL, so whilst I'm not prepared to sell it, I have relegated it to the back of the queue, together with BRGE, for further top ups. Possibly we'll have a clearer picture of whether it's going to recover it's capital value or sink further by the time it gets to the top of my queue.

As others have opined, it's hard to know what to do without a crystal ball, so doing nothing seems the best bet.

[Darka]

With dividends included I'm on a gain of 3.1%, not great but hopefully they will recover.
Total dividends sit at 21% of capital invested.

Don't intend to buy anymore, but won't sell at the moment either.

[Arborbridge]

With dividends included I'm on a gain of 3.1%, not great but hopefully they will recover.
Total dividends sit at 21% of capital invested.

Don't intend to buy anymore, but won't sell at the moment either.

Here we are, just for fun. THis is my XIRR experience with HFEL since just after purchase:-



The XIRR has been in decline from around 2016 (that year again, oddly around the date of the referendum result ), which is unfortunate, but if it gets back to around the 7-8% I shall be happier: as retiree that would acceptable.

Arb.