Monthly income

JohnRo

I'm totally relaxed about the performance of all these, I had a moment of clarity a few months ago when I realised the valuations now just don't matter over the longer term. I decided to stop fretting about whether to purchase or wait a bit longer (and then a bit longer) for further falls or the long expected crash. They are what they are, and simply reflect the market. The clock is ticking and life's too short.

I do check and compare other similar funds from time to time just to check these aren't doing something wrong but have had no worries on that score with these investments.

I'm comfortable with investments showing a capital loss, indifferent really, in fact the prospect of averaging down is quite exciting in itself to the point I'm hoping AAIF and NAIT don't recover for some time...

I can't say that for all my investments elsewhere but here the only thing that matters is the income, and of course reinvested capital growth over a far longer time scale. The cheaper that can be obtained in the short term though the better.

Looking forward to the rebalance and hopefully reducing the average price paid for AAIF and NAIT substantially if the 6 rebalance trades in April include them.

TCA wrote:

I was extremely tempted given the premium was almost completely wiped out. My spreadsheet had the premium at 0.31% at close of business on 31st January.

I check the aic website periodically and they're showing MYI currently on a 6.6% premium? That's dropped from an 8.7% premium according to the trusts own literature from the end of last year.

Linton

JohnRo wrote: »

update for those interested

Looking at adding some UK property income. I've been watching Picton property income trust for a couple of months and it's gained 10% in that time. Premium is high though, as with all uk property and infrastructure. Looking at filling a 4% portfolio slot with it, if anyone has any thoughts on alternatives I'd be interested to hear them.

Has to be a share based investment though. I've decided to stick with Charles Stanley and to a rigid schedule, rebalancing using 6 trades 6 monthly to cap total charges at £120pa
........

Two thoughts come to mind on your investments.....
1) Are these 6 trades X 6 monthly just buys from contributions? If they were sell & buys then ISTM that this is too many given your enlightenment on what long term investing means.

2) Are you just buying ITs that look like good investments or do you have some top level strategy. For example have you used the portfolio analysis tools that are available for free from Trustnet (or rather better ones I think for a charge from Morningstar) to understand your overall % allocations to geographies, sectors, and company sizes? If not I think you may find them useful.

TCA

JohnRo wrote: »

I check the aic website periodically and they're showing MYI currently on a 6.6% premium? That's dropped from an 8.7% premium according to the trusts own literature from the end of last year.

AIC and Morningstar are usually accurate IMO. Albeit there's always a delay in them being updated. If I'm that interested I'll calculate my own using the NAVs reported on the LSE website.

I didn't monitor MYI at the calendar year-end but bought in when it was down to just under a 3% premium on the 3rd December. It was back up to nearer 7% when I stopped looking a week later. For about 3 weeks from mid January the premium hovered between 2% and 3%, with a couple of dips including the one I mentioned which almost wiped out the premium completely.

Since the end of January it's been more or less on an upward trajectory. From the LSE website I see they issued equity on both the 19th Feb and 20th Feb, perhaps in an effort to control it. The NAV for yesterday hasn't been updated yet but you might see a small dip, everything else being equal. Maybe.

JohnRo

Are you just buying ITs that look like good investments or do you have some top level strategy.

You asked the same thing a while ago, I don't have any rigid framework or grand scheme that I'm trying to fit investments into.

No plans to sell anything, just annual top up made six monthly. The recent sales were just an attempt to tidy things up.

Charles Stanley have a charging structure on shares, ETFs and ITs that if trading at least 6 times every six months there is no platform charge. If I didn't trade at all the platform charge would be £150 maximum (£20 Minimum) but clearly any trading less than 6 times every six months incurs the dealing costs and the platform charge on top. It's an odd structure but is what it is.

I'll just use that as an incentive to rebalance (partially and with new money) every six months or so using six trades.

I buy ITs that look likely to provide a good sustainable income, introduced some regional and sector variation and of the opinion that drilling down into the minute detail is not worth the effort. We already had the discussion that regional allocations are somewhat flaky (in my opinion).

I've selected based on broad themes of regional variation leaning towards smaller companies. I'm looking at adding another US investment at some point with smaller company exposure there. Ideally to have two investments in each of Asia, Europe & US also Global covering large and small cap though small cap seem to be less well suited to income generation. I realise there is overlap, it doesn't concern me. I'm looking at holding the different trusts as a slight risk adjustment.

Selection process has been based on looking at recent, 5 and 10 year performance, premium/discount, cost, dividend yield, yield growth, gearing, and a gut feeling if I'm honest, primarily to support the theme of income.

I've an allocation spreadsheet for rebalancing and the regional allocations are percentage based. I posted the trustnet analysis at the top of this page.

At present the broad regional structure I'm aiming for is:

Asia : 8% (inc. EM)
Europe : 16%
Global : 12% (incl. EM)
UK : 44%
US : 8%
specialist : 8% (mining, property)
cash pool : 4%

Entirely arbitrary based on a sense of what I perceive a reasonable balance.

JohnRo

update for those interested... day 258

Still undecided about property, whether to go for a UK centric investment, with a property price obsessed and dependant economy, or something a bit further afield. I have global property securities growth elsewhere and it hasn't done well this last year.

Debating whether to plump for Picton or go Europe wide with TR, leaning towards TR but UK policy values house price above everything which must have some effect on retail, not sure how much though.

No regrets dropping Bankers, City of London, Finsbury and Temple Bar. NAIT continues to confound me... but sticking with that. I may look at a US dividend aristocrat ETF at some point for some diversity in that region.







comment welcome.

mike88

I'm always interested to read about others views on geographical allocations. This portfolio is 44% invested in the UK. I believe this is far too low for income generation exposing the portfolio to excessive currency risks. On the other hand my own sizable portfolio is geared mainly towards UK stocks - currently 77.7% with the balance spread between Asia, the USA and Europe. Even so the Trustnet portfolio tool shows my portfolio ahead of most indices over 1, 3 and 5 years even though "I'm a steady as she goes" kind of investor. Also I am happy to invest in non income funds in the knowledge that income can be drawn from growth if required.

How did you arrive at your geographical allocation?

JohnRo

mike88 wrote: »

How did you arrive at your geographical allocation?

Short answer, more by default than design. I'm not convinced that geographical allocations are quite what they seem anyway.

I'm also not so sure that currency risk is worth losing any sleep over in developed economies. The GBP has just as much risk in the other direction, looking at current and historic exchange rates and taking a global view in terms of USD & EUR investment. Rebalancing should address most of that (eventually) anyway assuming these things fluctuate and aren't on a one way street?

I want limited US income exposure, that might be a mistake but they look expensive. I do want a decent chunk in the Eurozone, Greece is looking like it's on the road to rehabilitation and the attempted EUSSR expansion into Ukraine aside, it appears on the surface to be far more settled in the PIIGS than it has been for years.

I also want decent EM and Asian income exposure on the expectation of a recovery there, which may not materialise for years, and some specialist areas for diversification, that leaves the rest in UK equity income.

It's an evolving process, I'm not pretending I know what's best or what's going to prove the most productive. That said I'm not going to be chopping and changing much either, but have to be adaptable.

Ultimately it'll boil down to picking relative winners, so I'll just muddle through, try and keep charges low, rebalance, and see where things go.

graemech

I'm still following this with interest too.
From the chart it looks to be heading in the right direction - so it will be interesting to see how the changes you have made affect this.
Is it me, or do most of the property investment trusts look pricey, with premiums and bigger ongoing charges?
Have you ruled out funds altogether? - The L&G UK property fund caught my eye recently with a 3.8% yield and 0.64% TER - it looked like it might be a steady earner?
I'm a newbie at this so i might be talking out of my...........
GC

mike88

http://www.trustnet.com/News/503538/analysts-warn-most-bought-property-trust-heading-for-a-fall/

sorcerer

I just have to say I am reading this thread with much interest, because I have been doing a similar thing generating monthly income and then reinvesting the income for about a year now. And Whilst I have a different profile to yours 6% yield , 75% Fixed Bonds, 25% Equity Income. BTW I also bought a property fund, which in fact is about 8% down now.


So I haven't been overly impressed by it so far. But since it has another 15 years to recover I have time. That was Schroder global property max. Yield target of 6.93% on it at the moment. But it only makes up about 1% of my portfolio.