dealtn wrote:tjh290633 wrote:You have to bear in mind that, for some considerable time, using higher yield shares gave a better total return than using low yield shares. Just look at the comparison between the FTSE350 HY and FTSE350LY TR indices.
Yes let's look!
Starting in 1999, up until 2022, there have been 23 years you could have invested in either index and patiently waited whilst observing which of those indices has delivered the better Total Return.
High Yield "wins" in just 5 of those long run observation periods, against a victorious Low Yield in the other 18.
I think that you are misleading yourself. You are looking at annual changes, whereas I am looking at the actual numbers. It happens that I have kept copies of some of the tables from the FT, which illustrate my point:
Date HIX-TR LIX-TR Ratio
31-Dec-97 1,851.80 1,789.91 1.03
02-Jan-15 5,411.20 3,451.00 1.57
16-Jun-15 5,521.38 3,761.70 1.47
02-Jan-16 5,115.82 3,707.64 1.38
01-Jun-16 5,278.47 3,697.75 1.43
01-Feb-17 6,353.07 4,016.56 1.58
01-Jun-17 6,775.79 4,448.71 1.52
04-Jun-18 7,226.79 4,816.76 1.50
03-Apr-20 5,230.85 3,828.57 1.37
26-Sep-20 5,072.90 4,751.06 1.07
20-Apr-21 6,448.82 5,047.81 1.28
01-Sep-21 6,953.52 5,794.85 1.20
24-Jan-22 7,587.84 5,687.61 1.33
06-Apr-22 8,015.19 5,522.51 1.45
01-Oct-22 7,478.11 4,826.98 1.55
I am not sure of the date when the TR indices began, but I believe that they started on the same day with the same value (1000). If you look at the data, you will see that, for a LTBH investor, the HY index has been ahead of the LY index all the way. There was a time in 2020 when it nearly overtook the HY index, but in general the HY TR index has been up to 50% ahead and continues to be so.
There are ups and downs in the ratio, but the lead is maintained. I'm sorry that I do not have data for all of the earlier period.
TJH