MrFoolish wrote:tjh290633 wrote::
There is nothing wrong with having two or more portfolios side by side. It's like having a Growth Fund and an Income fund, both as accumulation units. You can then tell which is the better bet after a decent time has elapsed.
TJH
Let me know when you have the answer
I was unable to respond because the thread was locked. This may be a good place to comment on what is essentailly a Total Return topic.
Back in the 1970s my main vehicle for investment was Unit Trusts. I had a number running on monthly subcription plans, plus the odd lump sum purchase. At that time there were much higher yields available from Commodity trusts of one sort or another, compared with the less specific trusts aiming for growth plus some income. My first investment was in the then Investment Trust Units (ITU), and began in 1959 with a £3 per month subscription. In 1969 I took out a unit-linked life assurance plan with Prudential, investing £5 per month in their then Prutrust units (PRU). In 1970 I bought a block of Ebor Capital Accumulator fund (ECA) and a block of Ebor Commodity units (ECU), now JP Morgan Natural Resources. These were followed in 1971 by blocks of Jessel Plantations & General Trust (JPG), Jascot Commodity Units (JCU) and Jascot Compound Fund (JCF - Which had a philosophy not unlike that of the HYP or High Yield Portfolio well known on these boards). The latter was a block purchase, followed by a monthly subscription plan in their accumulation units.
I don't have all the calculations available, as it was a pen and ink job in those days, and there was the matter of tax on distributions. Yields that I have noted include 3.82% for ITU, 3.15% on PRU, 2.41% on ECA, 7.45% for ECU, 9.65% for JPG, 10.50% for JCU and 5.61% for JCF. Those yields were gross (pre-tax) on the purchase price. Note that all distributions were reinvested in the same units.
By late 1973 I had decided to dump ECA, as it was an obvious laggard, and invested in some shares of my then employer, Babcock & Wilcox. In 1975 I bought a block of M&G Dividend Fund (MGD), yielding 10.52%. Meanwhile Jessel had sold out to Slater Walker, and in 1976 the Plantations & General fund was merged with their Commodity share trust (SWCST). In 1977 I need some cash for a deposit on a house, in advance of our current house being sold, so ITU, JCU (by now taken over by Arbuthnot) and JCF income units (Likewise taken over) were sold to provide the wherewithal. ITU realised about 45% more than their cost after 17 years, JCU 105% more after 6 years and JCF about 40% more after 6 years.
We now roll on to 1984, when I became computerised. JCF had become Arbuthnot High Income, (AHI) and the value was now about 65% above the total invested and reinvested.Slater Walker had gone to Britannia, and the now BCU was up about 75% on the original cost. MGD was now 121% above the original cost. PRU was almost double its cost. ECU was now S&PCU, and was about 85% of cost, i.e. down 15%.
in 1987 I started moving into a PEP, Arbuthnot had gone to Royal Trust as RTHI, PRU was now Holborn Equity Trust (HET). Now RTHI was up 134%, M&G was up just 2%, but I had done a Bread & Breakfast, so in fact it was up nearly 8-fold, SPCU was up 107% and HET was up 201%.
I see that I sold RTHI in 1989 and it was about 200% above the cost. The PRU/HET policy matured in 1997, and gave me an XIRR of 12.5% over nearly 29 years. That is just on the net premiums paid, because I got LAPR. The rest continue to this day. MGD has given me an XIRR of 7.9% over 55 years, but I withdrew dividends until 1994, then moved it into a PEP and reinvested until 2005, so complications there. JPMNR has given me profit on 4 occasions, which I used to top up my PEP or ISA, in 1993, 2002, 2004 and 2007 and the XIRR is 10.82%. Distributions effectively ceased in 1995.
Yields in 1998 were MGD +3.39%, SPCU was zero and HET was 1.35%. My 19-strong HYP PEP was yielding 2.25%. Move on to 2002 and the yields were: MGD 5.5%, JPMNR 1.13% and my PEP 4.02%. The HYP has given an XIRR of 8.85% over 33 years, having been up to 13% at times in the past.
You cannot draw any firm conclusions from these figures, except to say that things vary with time. I decided that the funds which gave me better returns were those paying higher distributions, and concentrated my efforts that way. The only pure growth fund was the PRU/HET, which had a tax advantage. I paid less than £5 per month because of LAPR and invested £5 each month. Reinvested distributions were approximately 6 times the premiums paid in teh last year before maturity, which shows the power of compounding.
TJH