Monthly income

JohnRo

Thanks, it helps and explains the unit valuation nicely.

The portfolio is still in the construction phase, three years on, although the first year was mostly a lot of thrashing around as I expected it would be, trying to settle on a semi-coherent and clear plan of action. Within the next year or so it will enter into a straight forward accumulation and rebalancing phase which should set the intended compounding process in full motion for the foreseeable, all being well and barring catastrophe with any of the IT components it'll be full steam ahead.
How that affects the unit valuation, amongst other things, remains to be seen.

JohnRo

DAY 1110 - update for those interested

tl;dr added BRFI and VNQ , SLET is going and the UK equity allocation reducing.

Portfolio details here - Google sheets

Purchased BRFI to fill the EM allocation, timed to obtain the dividend soon after. Also purchased VNQ via HL, held unwrapped so no ongoing custody fees. That fills the property allocation, timed likewise. It makes record keeping a bit more difficult but nothing too complex. I don't like HL's account portal one bit, information is light and retrieval is very fragmented compared to CSD but I only intend holding VNQ with HL so it's not a problem.

Small gamble on the eve of brexit, sold SLET intending to buy back immediately after, since it gained 5% that day I expected a pull back at some point. I figured if we remain, the rises elsewhere would compensate and if we exit it would provide a small consolation, the latter proved to be the case. With hindsight I should have done this with all my UK focused ITs and bought back later but didn't want to expose the UK portion of the portfolio to too much risk of being left behind by a rising UK market if things had gone the other way.

I've also taken a decision after brexit to reduce the UK allocation to 16% of portfolio total and shift the difference to global debt and US equities. That will tie in with an intended BRNA purchase at some point in the near future, probably next year depending how the ratios settle over the next few months.

Next scheduled purchases in August. Planned new addition will be infrastructure of some sort, 3IN or HICL looking likely at this stage. HICL with quarterly payouts, lower charge, no performance fee and a higher yield has the edge on the basis the higher premium will allow the purchase of cheaper income if it shrinks, all else being equal, which it never is but that's my flawed logic. Truth is it's more of a coin toss, I've no idea which will prove the better choice long term.



October brings the new allowance of six trades, enabling some of the restructuring discussed above. All looking a bit messy on the allocation front at the moment but it will adjust over time, I'm just going to avoid using any more than the six trades each six months which keeps chipping away at the expense ratio. It is currently a fair bit higher than it should be due to the year one churning.

Overall the valuation performance has weathered brexit quite well thanks to the GBP weakness. The standout for me is BRWM which has had a spectacular rally, in GBP terms, over the last few weeks and especially days helped in no small part by a top up in February.

Time to see what brexit holds for the future, over and out.

green_man

A quick question John.

For EAT the dividend is declared in euros, does your platform automatically ,convert this to £ for you?

JohnRo

Yes, it's always been paid on the due date in GBP. I haven't investigated the exact process or what the exact costs of the exchange / prevailing rates are though for each transaction. I just accept it is what it is.

Some of the ITs pay out dividends in the form of a cheque denominated in a foreign currency and those payments can be delayed up to a week as the broker, CSD, has to process and distribute them internally.

Examples of that are BEE and PEY, although others like EAT have always paid out on the same day the dividend is due.

george4064

I too am a holder of EAT, below is an extract from their official website;

http://www.fandc.com/uk/private-investors/investment-trusts/european-assets-trust/dividend-history/

Dividends are declared in euros (€) and paid in sterling (£) to UK registered shareholders.
The sterling equivalent figures are rounded and determined close to the payment date.

green_man

Thx John/George, I've never had a company that didn't just declare in £ so was just wondering. I shall keep this on my watch list for potential purchase.

Thrugelmir

green_man wrote: »

Thx John/George, I've never had a company that didn't just declare in £ so was just wondering. I shall keep this on my watch list for potential purchase.

Shell pays it's dividends in €.

george4064

Thrugelmir wrote: »

Shell pays it's dividends in €.

Not entirely true. Majority of UK shareholders hold the B class shares, explanation below.

For Royal Dutch Shell, there are two share classes;

- A shares, where dividends are paid in € EUR by default. (ticker RDSA)
- B shares, where dividends are paid in £ GBP by default. (ticker RDSB)

Source: http://www.shell.com/investors/dividend-information/latest-dividend-announcement.html

JohnRo

DAY 1150 - update for those interested.

SLET has gone. No more rebalancing scheduled until after 1st October now which means missing a couple of ex-dividend dates but I've decided the six trades every six months will be paramount going forward. If things pull back between then and now that will more than cover them and if valuations keep on marching upwards then so be it. Pulled the SLET sale and accumulated dividend cash to earn interest for a couple of months. To be redeployed later.

Planned to add HICL this round but 'computer says no' so it will have to wait until the next round some time after April 2017.



The recent performance improvement hasn't yet dragged the annual moving averages very far.




I use the rolling averages to project the potential portfolio performance into the future so the recent upturn should tighten the curve towards hitting the target once it filters through into the averages, assuming valuations don't start to nosedive again.



This projection is based on the current annual -3.6% moving average which is unlikely to persist over the long term given the last twelve months of volatility. I'm expecting the portfolio projection to swing significantly upwards towards the target over the next year or so, as always time will tell.

Over and out.

JohnRo

DAY 1226 - update for those interested.

tl;dr - big upheaval, a few complications and lots of extra platform related costs.


I started this thread intending to provide a warts and all account, here's a few warts. Charles Stanley's platform related pricing changes prompted me to make some significant changes that haven't come cheaply. To some extent a knee jerk reaction but the pressure to switch a few things around had already been building for a year or so.

I've been part utilising a second ISA account/allowance at CSD for the income portfolio trusts. After the CSD announcement I intended shifting the entirety of the ISA IT income portfolio in two accounts to TD but that's now changed.

Instead the index porfolio is moving to TDDI, unwrapped. The bulk of the ISA stays with CSD. What is transferring to TD are the trusts available with their regular monthly investment facility.

That's been further complicated by me needing to shift capital from one ISA account to the other which required sales of some trusts I'd rather not have sold at this time.

Having contacted TD about these transfers/changes I received conflicting information from their telephone staff, which hasn't helped to get this upheaval ironed out.

One didn't even seem to understand the ISA account opening / contribution rules. Then I was told in no uncertain terms that TD's regular investment facility is FTSE 350 exclusive, which is what prompted the rethink and cancellation of one intended ISA transfer since many of the trusts I've chosen are FTSE Fledgling and FTSE Smallcap listed.

Having checked via their account portal I see that's clearly not the case, although exactly what does qualify and how looks like it will remain a mystery known only to TDDI.

In short I've inflicted a whole heap of less than welcome short term extra trading costs on the portfolio but I'm convinced it's for the best longer term.

I was never thrilled about transferring away from CSD and the shift to a single monthly dealing regime shouldn't be as onerous as I initially thought.

The relatively large number of holdings, the regular income and contribution rebalancing, alongside my interest in seeing the entire thing through to some sort of conclusion, shouldn't make keeping on top of monthly purchases a problem. Effectively 12 trades a year for £138 plus any stamp duty all in.

I'll use cash accounts and P2P bridging loan investments as an interim measure for the sale proceeds until the capital gets redeployed as per the plan / dividend schedule for those trusts currently sold.

A virtual loss on the sold/repurchased trusts looks assured but the share price was always a secondary concern and any losses as a result of this should become relatively insignificant over time, I might even get lucky on SP but not banking on it and it's all about maintaining the dividends and contributions so i'll just take any virtual losses to capital on the chin.

One thing that's surprised me is the anxiety I've experienced being out of the market, even though it's only partial.

It has far exceeded my reactions to negative news and past price drops in excess of 60% with some of the trusts held, which I find perversely exciting, given it offers the prospect of significant reductions in book cost.

I'll edit and post a few pictures later detailing the damage.