Monthly income

JohnRo

I did debate at some length whether to just sit on it and rebalance, ride out the dip.

The yield is good, discount attractive, but it had got to the point over the period I held it that it was just returning lost capital. I may well have misjudged it, I know 2.5 years is too short a time to be drawing conclusions but it seemed to have a lot of promise that had stagnated, it hasn't even been particularly volatile which might have helped sway me towards holding on and rebalancing, just a fairly steady decline so in that situation I'd just rather have cash earning some interest ready to be deployed.

I've kept it on the watchlist so I'll see whether it was a mistake to bin it in time but don't think I'll be revisiting it.

Still debating whether to ditch the debt allocation entirely and hold a larger cash pool, in an ideal world it would then be used to buy a market crash but I'm not at all convinced that's going to happen in the way I'd like to imagine.

A lot will depend on how the RDL dispute pans out and what sort of damage if any it does to the valuation.

JohnRo

Thrugelmir wrote: »

Seems to be trading at a discount of 13-15%.

I took this at face value but having looked briefly I can't see that there is one?

It appears to be trading at a slight premium to NAV and the SP has been consistently tracking the NAV lower as the outstanding loan book shrinks over time.

JohnRo

DAY 2021 - (01/01/19) update for those interested.

tl;dr - Good riddance 2018. A tough year, bring on 2019...

Trump continues to exploit divisive populist themes with his conflict driven agenda and juvenile tweets, aimed primarily at a rising China. He appears to become more erratic, unhinged and orange by the day.

US and world markets don't seem to like it much, more uncertainty, in what appears to be an increasingly uncertain world.

Trump's latest tantrum; pointing an accusing finger at the money printers in the FED. After seeking adoration for years of FED inflated QE share price and stock market gains as a direct result of his own populist agenda. Then squealing like a stuck pig when markets inevitably start heading in the wrong direction.
If nothing else it provides an insight into the binary thought processes of a narcissistic demagogue leading the most powerful militaristic country on Earth.

Could Trump be the catalyst that finally gets a long anticipated global stock market price crash underway, as QE continues to unravel? Who knows..

One thing that is certain, this income portfolio's rolling monthly rebalance schedule will continue for better or worse, regardless.



The rebalancing opportunities that disappeared briefly around last update in August have been well and truly reinstated in the recent off/on/off again rally and current downturn. Hopefully they stick around long enough for the scheduled monthly rebalancing to capture some heavily reduced prices and ideally, lower average costs into the bargain.



Here are the scheduled purchases made to date since the last update in August.

2018-09-03 242 VOLTA FINANCE 7.20 S Date 05/09/18

2018-10-01 1313 ABEN LATI .62 S Date 03/10/18

2018-11-05 235 EDINBURGH IT 6.50 S Date 07/11/18

2018-12-14 264 INT BIOTECH 6.16 S Date 18/12/18

There are still allocations requiring considerable adjustment but the next 6-12 months should see things becoming substantially aligned as target weightings get much closer to being balanced, notwithstanding market volatility.



Uncertainty about the eventual net contribution or much more likely, the damage from RDL persists. I plan for now to keep the current debt allocation in the other debt trusts and adjust them accordingly when RDL eventually goes.



Trailing annual income continues to progress as new capital is added alongside internal dividend reinvestment.
The current monthly equivalent income based on the trailing annual average now sits at £608.93, well above the income target of £600 pcm predicted by end of March 2019 at last update, unfortuately as mentioned above this has only been achieved at the expense of RDL capital, as that trust winds down with a series of substantial dividend payouts.

Another chunky RDL special dividend due in January 2019 will see the monthly income number peak higher and then begin to subside as the short term income boost provided by these large RDL dividend payouts declines over the longer term. How quickly and to what extent that monthly equivalent number then pulls back will be interesting to see as income from new capital and dividends rolls in to offset the post RDL reversion.

Capital input has not managed to offset significant capital losses in recent weeks and the planned reductions to the various ongoing cost percentages have suffered as a result of the sharp downturn in December.



Alongside a spike in the relative cost percentages the long run projections have also suffered, as have rolling return and Unit Price metrics.







Not surprisingly the discrete annual performance chart is now firmly into negative territory with 2018 easily the worst CY in capital performance terms since this portfolio began in mid 2013. Hopefully it stays that way going forward.



That's all folks, apologies for any errors, things are still a little hazy. Hope everyone had a good Christmas and here's hoping 2019 brings a little more to cheer for investors than 2018 did. Next update around mid 2019.

..HNY, over and out.

green_man

Good info John, and yes some of us are still interested :-)

I also had RDL but got shut after the first of the special dividends and before it delisted. I ended up losing 11% on capital but over the 18 months or so I had it took about 25% in dividends so a pretty successful punt, but it’s absence will affect my ongoing income somewhat.

takesyourchances

Happy New Year John, enjoyed your update as always. It has been a bumpy lot of weeks, think keep the head down and keep at things. Hopefully 2019 is a better year than this year. I am plugging away too at my IT's and always enjoy reading.



Best wishes for this year.

JohnRo

DAY 2119 - (09/04/19) update for those interested.

tl;dr - Planned reorganisation and some new additions. 2019 on the way back up so far..

This income portfolio forms one quarter of an investment whole. The others being global index tracking (VWRL,WOSC), global growth and cash. All held in various accounts, some tax wrapped, some not, it's still a bit of a mess but work is in progress to sort it.

The ISA allowance contribution is expected to continue and the resulting income increase deployed as necessary to help maintain component weights internally and externally. The Income portfolio is now at that point of being required to contribute to the other components.

With that in mind the projection chart at the bottom may prove to be somewhat optimistic, depending how global growth and interest rates work out over the next few years, time will tell.

So far portfolio capital has behaved largely as predicted from the outset, bouncing around a ±10% bound, there will obviously come a point where this isn't the case, I expect normal service to be restored in due course, post any crash.



The length of the current drawdown is almost certain to be the longest but almost wasn't, equally certain not to be the largest in percentage terms either but almost was, then wasn't, then was again and.. you get the idea. A strange few months, a backdrop of much uncertaintly makes markets 'volatile' seems the only conclusion.

The Unit Value is now close to hitting a new peak, whether it gets there or not will be seen in the drawdown chart next update. If the US and China can strike a deal or at least paper over the cracks, that will likely determine the outcome. Least said about the other thing closer to home the better...



I've made a new addition to the Japan category. The intention for better or worse is to hold a trio of trusts in each category simply as a way of further diversification and to try and mitigate the effect of any potential management debacles further down the road.

The selected investments in the rebalance schedule are simply a sketch of the next years intended purchases, the new additions are placeholders pending further consideration. A few ETFs have appeared, Vanguard's UK250 VMID looks to be a reasonable addition as a proper domestic play with a decent yield, I'm set on adding that fairly soon. Likewise HPRO for global property securities exposure.

ASLI is obviously not an ETF and much more of a placeholder, when VNQI eventually goes the property category will shrink in favour of specialist allocations and ASLI is intended as a possible bridge between the two.

Here are the transactions made to date since the last update at the start of 2019.

2019-01-04 BUY 3394 EURO ASSE .95 S Date 08/01/19
2019-02-15 SELL 64 @ 6616.77 Vanguard Index Funds Reit Vipers
2019-02-18 BUY 912 HICL INFR 1.69 S Date 20/02/19
2019-03-04 BUY 594 PRER GLOB 1.23 S Date 06/03/19
2019-03-15 SELL 593 EDINBURGH INV TST ORD GBP0.25
2019-03-25 BUY 52 CALL RENS INFR OPEN OFFER @GBP1.14
2019-03-25 BUY 104 CALL RENS INFR OPEN OFFER @GBP1.14
2019-04-05 BUY 859 JPMN JSC 3.81 S Date 09/04/19

Some of these transactions are scheduled and some are part of the ongoing reorganisation mentioned above, aiming to get them all ISA wrapped and paying tax free dividends eventually.



The RDL payout in Feb reduced the debt allocation further, eventual outcome still uncertain. I've resolved to hold RDL to a conclusion and try to learn something from the eventual outcome. Plan with the rest of the debt allocation for now, HDIV in particular, is to shrink it organically as RDL unwinds and ongoing purchases increase other category weights.



Forecast monthly equivalent income had around this time last year been expected to hit ~ £600 pcm by this time but that target has been exceeded as a result of the RDL wind up and some hefty payouts, the Trailing annual income has been given a significant boost.
The associated monthly equivalent income currently now sits at £703.44, well above the target predicted for end of March 2019, it will be 'interesting' to see how the RDL wind up resolves in terms of the effect on monthly income. The initial payout uplift is clearly evident so whether the eventual resolution is as obvious remains to be seen.

The opportunity hoped for, to snaffle a few bargains in an extended market dip, didn't last very long at all, many of the significant capital losses reported last time have once again evapourated. As a consequence the trend in reducing ongoing cost percentages has been somewhat restored.



The long run projections, rolling return and Unit Price metrics have also recovered some ground.







Discrete annual performance has also had quite a turn around, how it finishes the year will be anyone's guess but so far 2019 looks on course to be a decent 12 month period



That's all folks, hope it provides some interest. Any insights are always welcome.

.. over and out.

Thrugelmir

JohnRo wrote: »

2019-03-04 BUY 594 PRER GLOB 1.23 S Date 06/03/19
2019-03-25 BUY 104 CALL RENS INFR OPEN OFFER @GBP1.14
2019-04-05 BUY 859 JPMN JSC 3.81 S Date 09/04/19

What was your rationale behind these particular buys?

JohnRo

Thrugelmir wrote: »

What was your rationale behind these particular buys?

PGIT was a simple scheduled rebalance.

I've mixed views on the trust itself but prepared to give it a few years and see if it comes good. This purchase reduced the [STRIKE]net[/STRIKE] average cost a chunk.

TRIG is held accross two accounts

Took up the open offer in both as a steady performer and I like the theme, with the 1 for every 9 shares held offered at a slight discount with no trading fees it was too tempting to pass on.

JSC offers a decent yield paid quarterly, current discount is reasonable, and broadens exposure to include Japanese smaller cos. within that category, not sure where a third Japanese holding will eventually come from. To answer the question it fills that gap quite neatly imo.

The JSC purchase itself fell in to place as part of the scheduled single trade each month using XD as a deadline.

I didn't use any of the new ISA allowance on it so the weight is a little lower than required by the spreadsheet but that gives scope to top up later and reduce the net cost if it goes downhill, or just to let it inflate it's own weighting if the recent dip in performance is restored.

I'm relaxed about either outcome.

JohnRo

Twentyfour Income Fund Ltd
Open Offer

The company is proposing an open offer whereby shareholders on the register as at 15 April 2019 can apply for new shares on the following basis:

1 new share for every 4 existing shares held at a price of GBP1.157 per share.

Shareholders can apply for shares in excess of their basic entitlement, although applications may be subject to scaling back.

This portfolio's TFIF holding is due a scheduled rebalance sometime in July ahead of the next scheduled XD and I'm not sure how best to play this offer.

I'm assuming the open offer won't dilute share values if nothing else changes, my first thought was it will effectively reduce the value of existing shares by approx. 20% if fully subscribed? but then I assume the new money generated will be used to purchase more loans and increase the NAV at some point so approx. maintaining existing share value?

The plan was to buy ~£3K at the start of July but I don't currently hold enough existing shares in TFIF in the ISA to use this offer for that amount anyway.

The buy price today is at 114p which also seems at odds with this offer which is set at a buy price of 115.7p

If my assumptions about the effect of this share offer are ballpark it doesn't seem to make much sense opting in, just to purchase for a higher price?

Is it better to buy some more shares ahead of the event and then take up the offer with the newly increased quantity to make up the £3K in aggregate or just buy the whole intended £3K amount after the event in July? Either way it only cost one transaction fee.

How would you play this if you wanted to buy £3K TFIF in July but don't have enough existing shares to fully utilise this offer?

The deadline is 3pm 2nd May, I've used my single monthly April purchase so that leaves one day, the stock market is open on Wed 1st May, that gives time to buy enough then use the offer to make up the difference but the higher offer price and how that relates to a lower buy price on the open market is confusing me, which doesn't take much doing.

Anyone?

george4064

Do you know how the 115.7p offer price was calculated?

It seems the shares are trading at a premium so can't be NAV, maybe its either some sort of average or the market price at a particular point in time prior to the announcement?

Personally I would let the offer lapse and make your purchase as you would normally.