Any recommendations for income and slight growth?

stringer_bell

Also, I forgot to mention and this is probably important. I'm self employed, its an internet based sales business, so can have good years and bad years. I thought investing for income would be good, but not a deal breaker. This means if I ever sold my ltd company, I could then turn the dividends on and off, sort of like a tap, whenever I need a little extra money

whether it works that way in real life is another matter

Thrugelmir

Around 60% of the return is made from reinvesting the income generated. You can't have your cake and it as they say.

TheTracker

As an example, the FTSE 100 dropped about 30% during the 2008 GFC, 25% in 2002 following the dotcom debacle, and 15% after 9/11. How would you take another loss like this in 2016?

stringer_bell

TheTracker wrote: »

As an example, the FTSE 100 dropped about 30% during the 2008 GFC, 25% in 2002 following the dotcom debacle, and 15% after 9/11. How would you take another loss like this in 2016?

I would probably buy more, of course its easier to say that, than do it in real terms

I have topped up existing holdings though during this mini " crash "

stringer_bell

Aberforth Geared Income Trust plc

seems decent enough, HL says premium/discount - 10 %, is that good or bad?

The Nav also seems higher than the current price

http://www.hl.co.uk/shares/shares-search-results/a/aberforth-geared-income-trust-ord-gbp0.01

Linton

stringer_bell wrote: »

Aberforth Geared Income Trust plc

seems decent enough, HL says premium/discount - 10 %, is that good or bad?

The Nav also seems higher than the current price

http://www.hl.co.uk/shares/shares-search-results/a/aberforth-geared-income-trust-ord-gbp0.01

Have you read the Factsheet? Do you understand the implications of gearing and the role of the ZDP shareholders with regards to the 30 June 2017 wind-up date? If you do, you should be able to answer the question yourself. If not there is a good investing maxim - "Dont invest in things you dont understand". I dont and wouldnt touch it.

stringer_bell

Linton wrote: »

Have you read the Factsheet? Do you understand the implications of gearing and the role of the ZDP shareholders with regards to the 30 June 2017 wind-up date? If you do, you should be able to answer the question yourself. If not there is a good investing maxim - "Dont invest in things you dont understand". I dont and wouldnt touch it.

I was about to post the ZDP thing, I read it 2 minutes after starting this, it's put me off

bowlhead99

AGIT:

The NAV is indeed higher than the current price : that's what the 10% discount is all about. Depending on supply and demand and peoples perspectives on whether they want to be in the fund or in other things instead, the price might be at a discount to (ie lower than) or a premium to (ie higher than) the underlying bet asset value of the assets of the fund. So as of last night the assets are "worth" 201p per ordinary share but could be bought for only 180p.

This is a fund that in the good times can produce relatively high levels of income and growth, but the reverse is possible in the bad times. One of the reasons is that they invest in smaller companies, and only in the UK- the bottom 10% by size that are listed in London.

But the main reason they are risky is that, as the name suggests, they are "geared". Some of the money they use to be able to afford the portfolio comes not from ordinary shareholders but from bank finance or preference shareholders who simply demand a fixed return. As long as the trust can afford to pay that fixed return and pay off the loans and prefer shareholders, the holders of the ordinary shares will get to keep all the rest of the income and gains on all the assets - even the assets bought with the borrowed money.

At the moment the assets are worth £325m but there are loans and preference shares for £105m leaving assets attributable to ordinary shareholders of £220m.

So what happens if the investee companies do great and double in value? It's like if you bought a house with a mortgage: the house is now worth £650m but the loans are still only £105ish (OK, maybe £110m because of interest) so the net leftover for you and me is £540. Which is a lot more than double the £220 we have today. The returns have been " geared up".

But by contrast if the shares in the UK smallcap investee companies halve in value to only £162m, while our loans tick up with interest to £110m, you suddenly only have £52m left for the ordinary shareholders once the loans are settled. The ordinary shareholders assets go from £220m to 52m. So the UK smallcap market went down 50% in a crash, but investors lose more than 75%!

That is the risk of a geared investment. Significant changes in investor valuation for small underlying movements on the assets the manager picks.

Not everyone would use that strategy because it would scare some people witless. Of course, it can be a good way to make hay when the sun shines - and get more income than the assets you can really afford outright, would pay. But not surprising it has fallen to a discount while the markets are rocky...

The above is just a general comment on geared investment trusts really, without even looking at the specifics of the 2017 ZDP redemptions.

stringer_bell

I have picked a few to start off with, of course going to be dripping into these, weekly, monthly.. or however I see fit. I decided I will just go for growth

Lindsell Train Global Equity
HSBC FTSE 250 Tracker
European Assets Trust
Axa Framlington Smaller Companies

I'm debating which one of these to make my core holdings, and build around. I'm sure there is a few overlapping issues with these funds, but I still havent picked a few other sectors

Japanese Smaller Cos
North America Smaller Cos / North America Index

My S&S Is heavily weighted to biotech/healthcare

bowlhead99

So just to clarify the goal is no longer "income and slight growth" as per post #1, or "focusing mainly on growth" as per post #17, but now "just go for growth"! Bit of an about turn

Generally most people want a bit of everything in a balanced portfolio. You mention the S&S is heavily bio/health - is that going to stay that way or get overtaken by your new "core growth" philosophy and just be a bit part on the side?

Of the 4 you mentioned that you were going to make just one your core holding. The only logical candidate is the Lindsell Train one IMHO. Deciding that the core of your strategy be a single sector or single market region, like UK mid cap companies or European companies or generalist smaller companies, seems inherently flawed as a "core". They are examples of skews to different sectors.

I like the Lindsell Train guys, and hold that fund in one of my portfolios. Their update reports/ factsheets for their funds and investment trust are usually quite well written and they've had decent success. They generally seem to follow their own rules and not go too off piste. A relatively concentrated portfolio would not be particularly safe in a downturn but the international aspect seems much more suitable for an objective of picking up global growth opportunities over the long term than simply buying a UK mid 250 tracker.