Advice on fund

wmb194

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

It’s a junk bond fund and includes Thames Water... With junk bonds you need to look forward. You’re clearly a novice so if I were you I’d tread very carefully.

What did you mean when you wrote about, “discounting looking attractive”?

Linton

InvesterJones said:

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

What source are you using for evidence of this long history of being stable? To me it looks like the capital is not at all stable:

Define stable ? the trend line is going the right way , looks good to me I've seen much worse

For me stable would be non-volatile and avoiding capital loss. Many funds did lose capital in 22 as a rare event, but things like junk bonds also lost capital at many other times as you can see from the chart. If you're now not actually concerned with volatility or capital loss then equities should also be in the picture since the trend line is also positive.

Yes, of course lots of things are in the picture but this post wasn't about them, or my investment requirements And whether it fits, It was about understanding the characteristics of this particular investment 

Ah OK. So are you clearer now about the characteristics of this fund? It's made up of junk bonds, which are non-stable and do suffer capital loss, and tend to behave more like equities than bonds. As a result, people demand a higher return. This credit spread is currently quite narrow/tight, meaning there's not much compensation for taking on equities-like risk. 

If your requirement was fairly stable high income:
 -  capital value bouncing up and down within +/- 15% for almost all of 30 years with no long term falls
 - 242 underlying holdings
 - about 70% of holdings with duration < 5 years
looks pretty safe to me as anyone buying this fund for income would likely have no intention of selling and so have no concern about temporary mostly small variability in price. In any case a prudent income portfolio would require holdings in a wider range of asset types and should arguably be more geographically spread given the 50% or so dependence on the UK of this fund.

Summarising, in my view the fund looks reasonable for its purpose as part of a wider portfolio - I may even look at it for my income portfolio.  Whether it meets the OP's objectives is of course a very different matter.

Eyeful

1. If the OP was after dividend payments, I would have thought their first stop would have been to take a look at the S&P Dividend Aristocrats range of funds and ETF's rather going for this risky investment trust.

2. I wonder where he is getting his information from?
Has he even taken time to look at the AIC website? 
https://www.theaic.co.uk/

dont_use_vistaprint

Linton said:

InvesterJones said:

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

What source are you using for evidence of this long history of being stable? To me it looks like the capital is not at all stable:

Define stable ? the trend line is going the right way , looks good to me I've seen much worse

For me stable would be non-volatile and avoiding capital loss. Many funds did lose capital in 22 as a rare event, but things like junk bonds also lost capital at many other times as you can see from the chart. If you're now not actually concerned with volatility or capital loss then equities should also be in the picture since the trend line is also positive.

Yes, of course lots of things are in the picture but this post wasn't about them, or my investment requirements And whether it fits, It was about understanding the characteristics of this particular investment 

Ah OK. So are you clearer now about the characteristics of this fund? It's made up of junk bonds, which are non-stable and do suffer capital loss, and tend to behave more like equities than bonds. As a result, people demand a higher return. This credit spread is currently quite narrow/tight, meaning there's not much compensation for taking on equities-like risk. 

If your requirement was fairly stable high income:
 -  capital value bouncing up and down within +/- 15% for almost all of 30 years with no long term falls
 - 242 underlying holdings
 - about 70% of holdings with duration < 5 years
looks pretty safe to me as anyone buying this fund for income would likely have no intention of selling and so have no concern about temporary mostly small variability in price. In any case a prudent income portfolio would require holdings in a wider range of asset types and should arguably be more geographically spread given the 50% or so dependence on the UK of this fund.

Summarising, in my view the fund looks reasonable for its purpose as part of a wider portfolio - I may even look at it for my income portfolio.  Whether it meets the OP's objectives is of course a very different matter.

Everything I've read on her tell me it's right for me, it came highly recommended from someone I trust on these matters who's been investing successfully for 40 years, but it's always good to get other peoples views and perspectives, I mostly skim read over the expressive language from those with an agenda, but there's some really good advice on this thread as well.

 I'm definitely not averse  to risks &  although the risks in this case don't seem that  material for my purposes and the income. Opportunity fits nicely as interest rates are dropping.

Bostonerimus1

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

dont_use_vistaprint

Eyeful said:

1. If the OP was after dividend payments, I would have thought their first stop would have been to take a look at the S&P Dividend Aristocrats range of funds and ETF's rather going for this risky investment trust.

2. I wonder where he is getting his information from?
Has he even taken time to look at the AIC website? 
https://www.theaic.co.uk/

No, I've never heard of that website, but I think you probably knew that anyway before you wrote it 😀


I tend to go with advice from people I know personally who know far more about this stuff than me, sense check it on places like here, but also often just go with things that feel right. I do dial into a few WebEx for  quarterly earnings reports of companies I invest in directly, I listen to questions asked by people like Barclays and I read the news

dont_use_vistaprint

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

Bostonerimus1

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

There's an income version of VLS80 that distributes dividends and of course any fund can generate "income" - all you need to do is take some dividends or capital gains. But why do you want income/dividends now?

dont_use_vistaprint

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

There's an income version of VLS80 that distributes dividends and of course any fund can generate "income" - all you need to do is take some dividends or capital gains. But why do you want income/dividends now?

Are you suggesting this fun now is comparable to the distribution of VLS 80 ? or comparable to a capital growth fund where you just keep selling bits of capital ...... honestly

Bostonerimus1

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

There's an income version of VLS80 that distributes dividends and of course any fund can generate "income" - all you need to do is take some dividends or capital gains. But why do you want income/dividends now?

Are you suggesting this fun now is comparable to the distribution of VLS 80 ? or comparable to a capital growth fund where you just keep selling bits of capital ...... honestly

Nope, just pointing out that a total return approach from something like VLS is a legitimate way to generate income and asking why you want income now and from such a risky source as a junk bond fund.