Monthly income

bowlhead99

JohnRo wrote: »

I suppose longer term there's the online trend to consider and whether profits from retail shopping centres are set to decline over the longer term.

Whether people still shop at traditional malls and shopping centres, or at out of town hypermarkets versus metro minimarts, or bricks n mortar versus online, what they all need is logistics and distribution.

That was my motivation for putting a bit more into Tritax Big Box Reit in their placing last month. Big boxes indeed, 300k-1million square foot facilities, with the client list including DHL, Tesco, Sainsbury, Morrison, Ocado, M&S, Dunelm, Matalan, Next, Argos etc. You can't really guarantee they'll all remain succesful businesses, but what those businesses won't be doing is regressing from the concept of having huge state of the art warehouses at prime connected sites.

They were looking to raise £100m with upper limit of £150m but ended up taking £200m in the end and claim they have the pipeline for it. They were placing at what ended up being a discount to the market price - but over the month since, the market price has gone back up to 134p from 124p placing. As with Target and PHP its not generalist property (which you already have) but a play on a particular part of the property sector which may do well.

Of course, transportation and logistics generally is a cyclical thing to get involved with because it swells and subsides with the state of the economy and how much people are buying and selling. However, having these sites on long leases to big customers means you aren't really looking at low occupany percentages in quiet periods like you might in a shopping mall when some of the units can't be rented. To get a void period requires a customer to have gone spectacularly bust or find cheaper and better premises on a very large scale.

JohnRo

I'll keep an eye on this, I've looked at it in the past very briefly, as I have most trusts, but for some reason this coincided with me reading about self storage investment, store first and the like, then for some reason I've conflated the two, overlooked it and never revisited.

It could be a suitable alternative for the infrastructure I've pencilled in to the specialist slot I'm struggling to fill, performance looks impressively stable given the market backdrop but the income is a little on the low side to really enthuse me.

I've added it to the watch list, thanks. The first tranche of my 2016 ISA allowance will be going to top ups and new purchases for the debt and EM allocations but later this year or early next I'll have to pick one of these suggestions or some other for that elusive specialist slot.

The drug royalty post is the one that caught my attention but I do wonder how successful they'll be at finding replacements for the seed drugs and their limited income life. I suppose the thing there is just to dip a toe in and see how it feels.

JohnRo

I see the Drug Royalty IPO fell through, pity, i was looking forward to watching it with interest.

I thought about a new thread for this but will post it here.

Unitization, the unit value and what it tells me?

Here's an image of my unit value calcs, can some kind soul tell me if I have made a mistake. If not what exactly is the unit value telling me because it doesn't seem to relate to the return which is what I always assumed it was doing.



To date I've paid in 79124.75 and the account currently stands at 83990.49 which gives me a total return of +6.15% on the money paid in, so assuming the unit value above is calculated correctly what the heck is it telling me?

george4064

When you're depositing new momey, thus creating new units which you've 'purchased'. Are you calculating the latest unit price to use to determine how many units you've acquired with the new momey?

JohnRo

The start point is the bottom of the table, I do this with all my tables to save endless scrolling when adding or looking at new entries in the spreadsheets, starting with the first entry at the bottom, I've created an arbitrary unit value of £100, a £1000 deposit has then purchased 10 units.

The next entry point was a deposit of £10520 which also shows those first 10 units now having a value of £1020.60 at that point, an individual unit value of £102.06.

The calculation I've used is that the £10520 deposit then purchased 103.0766 units at a value of £102.06 which when added to the 10 already purchased gives a new total of 113.08 units.

Rinse and repeat working upwards.

JohnRo

DAY 1034 - update for those interested

Portfolio Details - Google Sheets

Purchased UKML to obtain the first dividend payout since inception, due on 29th April. Targeted yield for UKML is claimed to be 6-10% so will have to see how that develops. No stamp to pay so that's a small bonus although investing in leveraged RMBS is probably asking for trouble at some point but that's the risk I'm willing to take. UK mortgages are a solid debt vehicle anyway in all economic conditions so I will have to trust twentyfour management are only offering what they claim to be.

Also reached a portfolio milestone with this UKML purchase, the first time a scheduled stock purchase has had a larger internal dividend component (54%) making up the total than ISA allowance seed capital (46%). A welcome sign of things to come.

Next scheduled purchases in June.



Valuation performance has been much improved recently

randomer1

John, sorry if this has been asked before. What platform do you use and how much does it cost you to reinvest dividends?
Have you got a rough plan of how often you are changing investment trusts?

green_man

John, I have been following your musings quite closely as I also have a similar ish portfolio.

My aim is for 4% div return with a view to provide £500 per month when I start drawing my pension at 55 (in 5 years) There will be approx £150k invested by that point. My other criteria is that I keep uk based equity investment low as my pension is overweight in this area.

My current portfolio is

Murray International. IT £20k
Artemis global income fund. £11k
Artemis Strategic Bond. £20k. **
Black rock world mining IT £3k
Aberdeen Asian Income IT £2k
Aberdeen Latin American Income IT £3k

Cash £30k @@

Next purchase likely to be Scottish American IT (SCAM)

** I'm not particularly confident that bonds are great value at the moment, but a strategic fund like this at least has some flexibility in a falling bond market.

@@ This isn't a strategic cash position it's just I have transferred a cash ISA into my S&S ISA and will move this into the market on any weekness.

I will probably end up with approx 12 holdings to keep dealing costs low and management easy.

JohnRo

randomer1 wrote: »

John, sorry if this has been asked before. What platform do you use and how much does it cost you to reinvest dividends?

I'm using CSD which ordinarily isn't the cheapest option but I'm utilising their somewhat quirky annual fee waiver if six trades in each six month period are made. At present I like their platform enough to accept that the extensive account features come at a slight premium to some of the competition. The aim is to only trade those minimum six times each six months and so reduce the net dealing costs to a minimum, or as much as possible.

That allows me to get new money paid in at varying intervals and also use dividend income parked in the cash account as a compounded boost to whatever purchases are scheduled, twelve times each year for the cost of the trade and stamp only. It also means a token purchase, just to meet the six trade requirement is possible, which might prove useful for the odd fine adjustment at some point. Without this fee structure the astronomical dealing cost percentage on a small trade would be prohibitive.

randomer1 wrote: »

Have you got a rough plan of how often you are changing investment trusts?

I've no plans to change investment trusts at all.
That said I ditched BNKR, CTY, FGT, TMPL as part of the early thrashing around for a method, then LWI and more recently MRCH, to allow some portfolio restructuring but other than that the plan going forward is to pick, hold, collect dividends, reinvest and let rebalancing hopefully capture at least some undervaluation from time to time, within the selections made.

bowlhead99

JohnRo wrote: »

To date I've paid in 79124.75 and the account currently stands at 83990.49 which gives me a total return of +6.15% on the money paid in, so assuming the unit value above is calculated correctly what the heck is it telling me?

It tells you that anyone who chose to buy in to the JohnRo Fund on 20/6/2013 and didn't buy any more units since would be sitting on a gain of 11.43%.

If instead they had solely subscribed on 16/10/2015 when the price was 109.72, they would now be sitting on a 1.56% gain (as the current price of 111.43 is 1.56% higher than it was last October)

If instead they had solely subscribed on 6/5/2015 when the price was 114.16, they would be sitting on a 2.4% loss, because the current price of 111.43 is only 97.6% of what they paid for their units.

Obviously, you did not buy in only at £100 a unit and you did not buy in at only£109 and fortunately you did not only buy in at £114. You have bought at a blend of prices, putting in a relatively small amounts at the £100 cost and relatively small amounts at the £114 or £116 price last May, and most of the money somewhere in between- call it 'pound cost averaging'.

Overall you spent about £79k on buying 753 units in your fund so on average you bought in at about £105, and as now they are 'worth' £111.43, then on average you have made a profit of a little over 6% on each pound invested (the £84k value today being greater by 6% than the £79k paid in). But if I was a customer in your fund I might have made an 11% return or a negative return depending on when exactly I had bought in.

Clearly, as you are only running it for a single customer, yourself, and you participated 100% in every funding round, you can obviously work out your total return by looking at the cash on cash returns to and from your bank statement, or work out your IRRs just from the cashflows and dates on your bank statement without worrying about unitising it.

However, by unitising it you can graph the performance of the JohnRo Fund by plotting its unit price over time, and realise that its peak value was at the end of last May and the portfolio as a whole has performed negatively between then and early April 2016. Back last May you had an overall value of £75k and now you have a bigger overall value of £84k, but clearly you've suffered a loss in that time period because the portfolio only rose in value by £9k despite you putting £12k in over that time period.

While the £75k that you had at that point has dropped over 4%, losing a little over £3k in the process, most of the later contributions have made a few pounds of profit here and there rather than yet more losses because most of them didn't go in at high April/May 2015 prices. So overall you're only down £3k of losses offset by £12k of new money producing your rise in 'fund size' of circa £9k over the ten months from end of May 2015 to start of April 2016.

Does that help?