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high income fund?
Comments
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The spread between bid and offer on a unit trust includes the initial commission. That commission is not generally actually paid when a discount broker is used, so the spread is greatly reduced.Sorry I don't understand, it has something like 6.4% spread between the bid and the offer price. Sure you do not pay the initial charge by going to a discount broker but can a broker allow you to buy at the bid price?
You may not get the bid price either, because there are creation and other costs involved, as well as the question of whether the price is on offer or bid basis, but it's not as large a spread as it appears. If you don't know what offer or bid basis means, it's effectively a small extra charge made when there are many more buyers than sellers of a fund. You can get a slightly cheaper buying price if you're buying at a time when more people are selling.
OEICs do it by adjusting their single price based on the relative volume of buyers and sellers. Both will get the same price on the same day but the buyers or sellers may be paying a premium for unfortunate timing that could go away on the next day or after some temporary surge of buyers or sellers passes.0 -
If you do actually want income rather than maximum total return, something like Newton Higher Income SIS has delivered and has a historic yield of 7.23% with quarterly payouts, but you're paying for that with an even lower total return than Artemis Income.
Artemis Income pays out only twice a year and has a historic yield of 4.20%.
Invesco Perpetual Monthly Income Plus has a distribution yield of 6.60% and pays monthly interest (the other two pay dividend/distribution). It's also outperformed the other two in total return terms, and beaten the FTSE All Share Index on total return.
Invesco Perpetual High Income pays out twice a year with a historic yield of 3.97% but it scores on total return, delivering the best result of the funds here and also with lower volatility than the FTSE. It's done less well recently because the manager took a deliberately cautious stance in 2009, so the fund grew less that year than the FTSE.
Here's a comparison of total return for the funds:
Yellow is Invesco Perpetual monthly Income Plus
Green is Invesco perpetual High Income
Red is Artemis Income
Pale blue/gray is the FTSE All Share Index
Blue is Newton Higher Income SIS
Of the funds I've mentioned, Invesco Perpetual Monthly Income plus looks like the one to go for to get the high income level and good total return. But I'm wary of bond-based funds at the moment and would want to have a large proportion in Invesco Perpetual Income to reduce the bond percentage, even though that means less frequent and lower income payments.
Newton Higher Income and Artemis Income also avoid high bond holdings, getting their income from dividends and in the Newton case, option sale profits.
A mixture of the four funds would cover things pretty well.0 -
I've always found it strange to treat capital and income like chalk and cheese. This must be one of the greatest marketing cons since bottled tap water.
Always consider the total which you are likely to gain in relation to what you might loose in relation to inflation (3-5%).
Perhaps most of these blue chip companies are relatively secure, but if the market goes pear shaped everything seems to dive. If inflation increases these income funds and high dividend payers can be hit severely. Moreover, with all the pension funds desperate for income could this lead to overvaluing of these types of company?
Things to consider.0 -
Of the funds I've mentioned, Invesco Perpetual Monthly Income plus looks like the one to go for to get the high income level and good total return.
A mixture of the four funds would cover things pretty well.
James, only from a novice point of view. If I view a Trust Net report of Income Funds there are a number of funds that are ranked higher than say the Invesco Perpetual High Income (38th for growth and 67th for yield, over the last year). Why not go with some of the funds that have more growth and yield?
Just trying to understand.0 -
Perpetual High Income is the only fund I have never switched since taking out a pep for £6000 around 12 years ago, now it is near £23000.
It slips in the odd year but over 5 to 10 years has been unbeatable taking the crown from Jupiter Income in this sector, amazingly with the same manager over this length of time. He was too cautious in 2009 which accounts for the recent figures slip but his long term record is the best in sector. No guarantees for the future but then who do you trust with your money...:)0 -
Why not go with some of the funds that have more growth and yield?
How do you know that the yield and growth will be higher in future? The figures show the past. Remember that different funds in the same sector cover different risk levels. So, you shouldnt just be looking at the past performance. It may be that they did better as they took more risks and that period was one where risk paid off.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Four reasons:nxdmsandkaskdjaqd wrote: »If I view a Trust Net report of Income Funds there are a number of funds that are ranked higher than say the Invesco Perpetual High Income (38th for growth and 67th for yield, over the last year). Why not go with some of the funds that have more growth and yield?
1. viny1 expressed a desire for income and we don't yet know whether viny1 is happy to use some capital sales to generate income from capital value changes.
2. I prefer to stick to well known funds, in general. There's no shortage of other choices but these are some of the most mentioned and it's interesting to compare them.
3. Invesco Perpetual High Income had a bad year in 2009 due to a deliberate cautious stance. Deliberate caution is often what is wanted by those who also want income, since they are often retired or relatively cautious. I think it's possibly the best buy out there for combined income and capital value appreciation use by those who want to be somewhat cautious.
4. Bond funds have shown capital value increases that I think are likely to be reversed, I just don't know when. I don't know how much monitoring viny1 will do or what chance there is of a switch out of such funds when circumstances change against them.
There are more options in Trustnet and I use it myself. Not sure how useful it is to get into the pros and cons of say emerging market or subprime bond funds and explain that their capital values vary more like shares at this point in the process. I know that I don't want to do it for all of the funds that currently are ranked higher than Invesco Perpetual High income because of it's bad 2009.
As dunstonh mentioned, I'm trying to look into the future and avoid some of the more obvious traps, applying knowledge of why certain funds performed as they did in the past.
Personally I did very well in 2009 through emerging market and commodities funds, including borrowing to invest more. But that's way above the risk tolerance of just about everyone who would post here and wasn't intended to generate income, though the total return was very nice.0 -
Sorry I don't understand, it has something like 6.4% spread between the bid and the offer price. Sure you do not pay the initial charge by going to a discount broker but can a broker allow you to buy at the bid price?
HL are quoting the following prices for Artemis Income, 14p difference between buy & sell prices which looks to me to be just over 6%. HL also offer 5.25% discount on the initial charge so does that mean they would give you a buy price nearer 219p?
Sell : 219.56p | Buy : 233.21p | down 1.49pRemember the saying: if it looks too good to be true it almost certainly is.0 -
HL discount the full initial charge, so for the figures you've given, the calculation is as follows :-HL are quoting the following prices for Artemis Income, 14p difference between buy & sell prices which looks to me to be just over 6%. HL also offer 5.25% discount on the initial charge so does that mean they would give you a buy price nearer 219p?
Sell : 219.56p | Buy : 233.21p | down 1.49p
233.21 * 100 / (100 + 5.25) = 221.577p0
He's below my risk tolerance otherwise I'd have a lot of money in his funds. 
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