Monthly income

JohnRo

I have a blackrock property securities index tracker elsewhere that's well over 10% down this last year with only a 3% yield...

I did briefly look at some European direct property trusts but the fees are eye watering. That leaves securities and TR seemed the stand out candidate with at least some direct UK property exposure included. I'm in no hurry to make this purchase though (or MYI for that matter given the premium).

The thing what makes TR attractive now, apart from the geographical aspect is the discount, given the hefty premiums in UK property ITs as the link from Mike indicates. The downside is a much lower yield from TR but it is at least growing at a decent rate and appears sustainable which is what I'm aiming for in the final analysis.

Charles Stanley have a 6 month windows starting in April and October where 6 stock purchases negate any platform fee, that effectively makes the platform fee 0.22% on a £54K portfolio but there is also money in a GIA so the overall platform fee is currently about 0.12% and that number will hopefully fall each year as the allowance goes in and valuation rises, assuming they don't hike prices or change the way it works.

I'll aim to use that for quarterly rebalancing using 3 trades, with the flexibility to make no trades or up to 6 in any one quarter with up to half the annual allowance. It enforces some discipline and provides a framework which I need at times because I'm a bit of a gambler at heart.

Graeme, for better or worse I've ruled out fund investment for now, trusts and shares only for this portfolio. I've already looked at infrastructure income with some good suggestions early in the thread but, rightly or wrongly, the premiums scared me off.

JohnRo

Looking to add some fixed interest, TwentyFour Income stands out to my uneducated eyes.

Also introduced a half baked idea of mine into the rebalance. Trying to take premiums / discounts into account by adjusting the target allocations by a relative amount. Such that a hefty premium decreases the relative target allocation and a hefty discount increases it.

Not convinced I've properly understood the relationship but the theory is to gain some value when rebalancing by going underweight or overweight by an amount that the premium or discount (relative to the other holdings) dictates.



The NAIT rebalance went through at 799.5p which has reduced the price paid per share a decent amount.



Six months lump sum went in, I'll make those core purchases and forget about it until October when hopefully I'll have some worthwhile quarterly, half yearly, rebalancing to do at that point.

Here's the plot of dividend payouts and equivalent monthly income.

JohnRo

update for those interested, day 366

added Aberdeen Latin American Income to reduce dividend cash pool and diversify. Attractive yield and comfortable with the regional diversification. Looking to add Japan and emerging Europe in the future if they can accommodate the income theme, target of 20 trusts at that point. May look to consolidate UK IT holdings to just one or two but personal preference is to hold a few.

Scheduled rebalance in October looking like this at current valuations.



Income still hasn't settled, new additions and adjustments last round mean it'll probably be 6 months or so before the income plot starts to top out and look relatively stable.



(do these posted image links look massive on your screen or shunk to fit?)

all comment welcome

TCA

Thanks for the update John. Aberdeen Latin American Income is an interesting one. I looked briefly at it last year but was put off by its (perhaps naturally) heavy weighting towards Brazil, of which a substantial amount was fixed interest holdings. Wasn't sure quite what to make of that. Plus I was looking at Templeton Emerging Markets for my growth porfolio and inevitably a little bit of crossover there which I didn't fancy (at the time).

Its relative newness was also a concern, although they appear to have paid the same annual dividends since inception, so some comfort there. Might be a good time to buy in given its taken a bit of a battering recently. The tidy yield and nice discount are quite appealing.

I think I'll take another look.

P.S. The images you posted above look fine from here.

JohnRo

TCA, I looked at this Latin American IT the same way you have, EM has taken a beating and Brazil perhaps more than most recently. It has great potential but like so many EM regions the corruption is difficult to quantify. It'll be held for many years so the only worry looking forward is whether it folds completely which I think unlikely.

The quoted yield and quarterly payout swung it for me when looking at Blackrocks Latin America alternative which has similar stats but with even more exposure to Brazil.

The OCF a bit steep but to be expected in EM I suppose. Will see how it pans out anyway, with hindsight I should have doubled up on JEMI back in [STRIKE]April[/STRIKE] January but that's always an easy decision in the the rear view.

TCA

JohnRo wrote: »

Will see how it pans out anyway, with hindsight I should have doubled up on JEMI back in April but that's always an easy decision in the the rear view.

JEMI is still on my buy list. You bought at a good time I think. Looking back at my posts in this thread I can't fathom why I didn't buy in January. Hindsight, as you said, is wonderful. At that time I think I was focused more on Henderson Far East Income, which I also failed to buy!

JohnRo

I meant January not April, blimey, how time flies. The plan was to put half in then the rest when it fell a bit further, but it never did. Still time for that of course.

This is the performance, hasn't done much at all recently as you might expect. NAIT is still the one I find perplexing but I'll just stick with it now come what may. At least the opportunity to average down the unit price is there and the income is what it's all about.

TCA

JohnRo wrote: »

It has great potential but like so many EM regions the corruption is difficult to quantify. It'll be held for many years so the only worry looking forward is whether it folds completely which I think unlikely.

The quoted yield and quarterly payout swung it for me when looking at Blackrocks Latin America alternative which has similar stats but with even more exposure to Brazil.

Holding long term is the key I think. Last thing I read about Brazil was to do with elections and the prospect of a new president. I think it was still odds on for the current incumbent being re-elected, which some were saying would not lead to the economic reforms many are hoping for.

The main difference for me re ALAI versus the BlackRock equivalent, BRLA, is the fact that ALAI's portfolio is comprised by over 40% of government bonds from various Latin American countries. BRLA is almost 100% equities. Did that figure in your choice at all?

JohnRo

I'm not worried about mixed assets, I expect if a major correction does come everything will be hammered hard anyway and given the MA exposure is limited I'm prepared to just let it run.

I'm fully prepared for a double digit pull back in the near term. The dilemma as always is what to do in the mean time. I'm building a cash pool alongside my investments, just trying to hedge bets really at this stage.

I read this from Stockman today, no doubt not everyone's cup of tea but makes some important observations. I'm inclined to think we're in a new era where central banking has now taken over completely and all but become the market, I just don't understand enough to make sense of it all but seems something is going to give sooner or later.

http://davidstockmanscontracorner.com/the-junk-bomb-ticking-beneath-the-sp-500/

JohnRo

This is the only "worry" I have, that I'm trying to be clever, massively over complicating things, can't see the wood for the trees and getting lost in the process, then just making a complete sows ear of things.

I'm not doubting what I'm doing just the effectiveness of it.

I realise the uk index is flattered in the chart by the timing of the start point and that this portfolio isn't even up and running properly yet, given the recent additions and dividend lag. Perhaps the end of January this year would have been a more representative start point but the reason for posting here is to look back and see it for what it is, warts and all.

I do wonder though, a simple, boring, cheap, zero effort index tracker...

I have bigger LTBH holdings elsewhere but I'm honestly expecting great things from this portfolio in the future when the dividend momentum and selective rebalancing starts to kick in, that's obviously a good few years off yet and much can, and will, happen in that time.

Any thoughts?