Rate my IT portfolio strategy please

[dundas666]

Hi all, I'm close to retirement, what do you think of my IT portfolio and strategy to provide a steady and increasing income?

As you can see it's mostly quality high yield plodders with the exception of JGGI for lower yield but long term dividend growth.

Sector              %Capital         Investment Trusts
UK Income              40%           Merchants Trust (13%), JP Morgan Claverhouse (13%), Aberdeen Equity Income (13%)
Global Income          40%           JP Morgan G&I JGGI (20%), Linsell Train (5%), Schroeder Oriental Income (5%), 
                                     Murray Int'l (5%), Henderson Int'l (5%)
Infra + Renewables     20%           UKW,BBGI,INPP (3.5% each), TRIG,JLEN,NESF,FSFL,BSIF,JLEN,TRIG (1.5% each)

Thanks in advance for your comments and suggestions!

[Mememe]

Depends on income need in retirement, risk tolerance etc etc but a few general comments:

Too much in the UK, it’s 4% of the global market

Given where bonds are at the moment personally I think you’re missing a trick if you’re investing for income by not having an allocation to bonds. Bonds are back in business. Would prob get exposure to gov bonds through etf’s, look at high yield through ITs. Would also look at corporate bonds oeics or ETFs. You could easily add 20% + plus to bonds

I would add some sort of commercial property exposure given where their vakuations are too. Loads of yeild, big discounts. Could do 5/10% overall

Could add commodities or energy IT, BRWM or something. Dividends yields are decent

Too high an allocation to infrastructure. Too many holdings. I would cut back to 3/4

There’s tons of scope to diversify across other asset classes outside of equities while the valuations are better than they’ve been for years

[Nocton]

I had a similar problem over 10 years ago. I would suggest a maximum of 10 ITs or ETFs - since they are selecting lots of different cos. You already then have a lot of diversity. Unless you want a particularly high income, I should include some of the generalist trusts, e.g. Alliance, F&C, Bankers, which will give you a reliable and rising income. And I'd definitely include Scottish Mortgage, which although fallen back from its heady days 2-3 years ago still has much potential.

I would not invest in specific areas like Japan, property or infrastructure, unless you want to spend more time on checking your investments - just leave it to the IT managers who are paid to do the job.

[dundas666]

I would not invest in specific areas like Japan, property or infrastructure, unless you want to spend more time on checking your investments - just leave it to the IT managers who are paid to do the job.

Sometimes I think to put the whole lot into JGGI on that basis - they have the whole world to choose from, let them do the selection for me, because as you say I don't want to have to check on my investments all the time.

The problem would be a lower yield in the short term and more income volatility, but OTOH JGGI has already gone up 20% for me in the last 12 months, so when they adjust the dividend the yield should go up from 4% to 4.8% - catching up fast to the 5-6% plodders.

[tacpot12]

I have a diversified portfolio of 20 ITs, ETFs, and Unit Trust Funds. I don't think you must have a concentrated pofolio if you want one that it more diversified. It might not perform any better, but it could help you sleep better.

I hold JGGI, Claverhouse, Schroder Oriental Income, Murray International.

I'm not sure I would want to go much lower than 40% on UK holdings, as you need income in Sterling for your retirement. Larger UK corporations derive their income from all over the globe. However, if most of the Infrastructure & Renewables income is also coming from the UK, you are perhaps a bit overweight in the UK and should look to have more exposure to Europe and North America. You might acheive this by increasing the amount held in the global trusts, or you might want to look at more specifically focused Trusts such as EAT and NAIT. (Both of which I hold).

You might also look at the IUKD (EFT). This has done well for with an average yield over the last five years of 5.7% with a very low charge. (It is UK focused though).

You don't have any assets other that equities, so you might want to take a look at the SMIT and BIPS ITs.

The potential to increase income over the years is harder to judge. The ideal situation would be to have more income than you need to withdraw, and to invest further in existing holdings to increase the amount of income year on year, but this may not be possible.

[kempiejon]

Hi all, I'm close to retirement, what do you think of my IT portfolio and strategy to provide a steady and increasing income?

As you can see it's mostly quality high yield plodders with the exception of JGGI for lower yield but long term dividend growth.

Sector              %Capital         Investment Trusts
UK Income              40%           Merchants Trust (13%), JP Morgan Claverhouse (13%), Aberdeen Equity Income (13%)
Global Income          40%           JP Morgan G&I JGGI (20%), Linsell Train (5%), Schroeder Oriental Income (5%), 
                                     Murray Int'l (5%), Henderson Int'l (5%)
Infra + Renewables     20%           UKW,BBGI,INPP (3.5% each), TRIG,JLEN,NESF,FSFL,BSIF,JLEN,TRIG (1.5% each)

Thanks in advance for your comments and suggestions!

Do you know what your blended returns from these investments have been? I recognise a few other names and can guess at the holdings so I expect there's a bit of duplication going on. In my ETF/IT portfolio I have somehow got to over 20 holdings, except for 2 stinkers all seemingly good ideas but I started with a very well thought out 6. Those 6 are still solid choices and those extra 13 have not moved the needle on my returns or cut volatility compared to without them.
I intended to trim back down to those core 6. Another handy exercise is to compare each pick with a global ETF over 1, 3, 5 and 10 years. Doing this I am convincing myself I no longer need to select themes.
You specifically said to provide a steady and increasing income the global tracker can do that but did you specifically mean a high starting yield?
Merchants offers about 5% today but long term income growth has been around 1.5% Murray is doing better at similar yield and twice the growth.

[Dumbo]

Hi all, I'm close to retirement, what do you think of my IT portfolio and strategy to provide a steady and increasing income?

Looks as reasonable a selection as anyone else's I've seen.

All I would say is make sure you review your portfolio once a year maybe. Weed out those you consider duds and re-invest in those you think have better opportunities. As an example I recently dumped Lindsell Train IT for Artemis Global Income, an OEIC. More than pleased with the result of that transaction.

Also you might want to look at a few ETF's when you do your review.

Good luck.

Eddie

[moorfield]

Hi all, I'm close to retirement, what do you think of my IT portfolio and strategy to provide a steady and increasing income?

As you can see it's mostly quality high yield plodders with the exception of JGGI for lower yield but long term dividend growth.

Sector              %Capital         Investment Trusts
UK Income              40%           Merchants Trust (13%), JP Morgan Claverhouse (13%), Aberdeen Equity Income (13%)
Global Income          40%           JP Morgan G&I JGGI (20%), Linsell Train (5%), Schroeder Oriental Income (5%), 
                                     Murray Int'l (5%), Henderson Int'l (5%)
Infra + Renewables     20%           UKW,BBGI,INPP (3.5% each), TRIG,JLEN,NESF,FSFL,BSIF,JLEN,TRIG (1.5% each)

Thanks in advance for your comments and suggestions!

You're on the right track. I started a PHY of 15 high yield income oriented ITs with the same aim to provide a steady and increasing retirement income. I suggest two more things you can do to finesse your retirement planning from here (at the moment it's just a list of ITs...)

Firstly, have a clear view of overall (forecast) income and extrapolate it forward using a guesstimated growth rate (I have written plenty of posts about this here) - very few people attempt this, but that is the best guage of what your portfolio is doing and what your retirement may look like as far as 5-10+ years away. Secondly, use the AIC sectors and sector types to give yourself a diversification view, but remember you have a portfolio of ITs which are themselves diversified, ie. you don't need to get too precious about this.

By the way, you have TRIG and JLEN listed twice ? And how close to retirement may I ask ?