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    • sorcerer
    • By sorcerer 9th Jan 18, 1:32 PM
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    sorcerer
    Woodford Equity Income
    • #1
    • 9th Jan 18, 1:32 PM
    Woodford Equity Income 9th Jan 18 at 1:32 PM
    So after holding Woodford Equity Income since the start I have decided to sell it and move on. Two reasons it poor dividend for this year and its poor performance.

    I am thinking of replacing it was Merchants Trust, and despite having to pay stamp duty on top, I think in the longer term it will hopefully be better. I will save about 22 a year in Platform fees, the dividend is nearly double of woodfords, and performance over the last year is about 14% ish, compared to woodfords 0% ish.

    With it being a trust, it can also hopefully grow the dividend each year, currently dividend growth is about 1.4% a year.

    What do you guys think?
Page 1
    • Prism
    • By Prism 9th Jan 18, 1:50 PM
    • 363 Posts
    • 280 Thanks
    Prism
    • #2
    • 9th Jan 18, 1:50 PM
    • #2
    • 9th Jan 18, 1:50 PM
    It has a decent dividend but I wouldn't want to be in this fund during a crash. Its basically 70% banks, industrials, miners and consumer cyclical. That stuff tends to fall hard. Its also leveraged at 13%.
    • sorcerer
    • By sorcerer 9th Jan 18, 1:55 PM
    • 844 Posts
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    sorcerer
    • #3
    • 9th Jan 18, 1:55 PM
    • #3
    • 9th Jan 18, 1:55 PM
    That is a far point, but I do hope to hold it for the next 21 years at least, so hopefully a price fall short term should not be too much of a problem.
    • Linton
    • By Linton 9th Jan 18, 1:59 PM
    • 9,394 Posts
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    Linton
    • #4
    • 9th Jan 18, 1:59 PM
    • #4
    • 9th Jan 18, 1:59 PM
    From the performance data I dont see any good reason to transfer. Over the past 12 months Merchants Trust has greatly outperformed Woodford Equity but in the previous 2.5 years Merchants Trust barely broke even whilst Woodford returned 30% . Selling low priced investments to buy high priced ones every year is a very good way to lose money - you should be doing it the other way round.

    Merchants pays rather higher dividends than Woodford, but if you wanted high dividends why did you buy Woodford in the first place? Note that performance figures include dividends. Dividends aren't an added extra.
    • bertpalmer
    • By bertpalmer 9th Jan 18, 1:59 PM
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    bertpalmer
    • #5
    • 9th Jan 18, 1:59 PM
    • #5
    • 9th Jan 18, 1:59 PM
    I ditched it a week ago. I'd only had it for a year so very short term but it's been a pretty good year and it was my worst performing fund.

    Decided to get some Fidelity Tech fund action instead.
    • ColdIron
    • By ColdIron 9th Jan 18, 2:12 PM
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    ColdIron
    • #6
    • 9th Jan 18, 2:12 PM
    • #6
    • 9th Jan 18, 2:12 PM
    If you require a growing dividend perhaps look at City Of London (CTY). Lower OCF and gearing and a 50 year plus record of increasing dividends. It trades at a small premium instead of the larger discount of MRCH but not enough to be concerned about. Do you really need the income? 21 years suggest not. Just a suggestion for research
    Last edited by ColdIron; 09-01-2018 at 2:30 PM.
    • Prism
    • By Prism 9th Jan 18, 2:22 PM
    • 363 Posts
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    Prism
    • #7
    • 9th Jan 18, 2:22 PM
    • #7
    • 9th Jan 18, 2:22 PM
    That is a far point, but I do hope to hold it for the next 21 years at least, so hopefully a price fall short term should not be too much of a problem.
    Originally posted by sorcerer
    Why are you planning on keeping the fund for 21 years when you have only been in Woodford for 3 and a half?
    • sorcerer
    • By sorcerer 9th Jan 18, 2:25 PM
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    sorcerer
    • #8
    • 9th Jan 18, 2:25 PM
    • #8
    • 9th Jan 18, 2:25 PM
    My hope is to live off the income in the portfolio, sooner rather than later, a portion of the 21 years will be me living off the income.. I also own CTY , and despite it's lower dividend I did think about adding to my position. But I didn't want to put the whole lot into it. But the yield (for merchants) is ohh so tempting :-)
    Last edited by sorcerer; 09-01-2018 at 2:31 PM.
    • sorcerer
    • By sorcerer 9th Jan 18, 2:29 PM
    • 844 Posts
    • 403 Thanks
    sorcerer
    • #9
    • 9th Jan 18, 2:29 PM
    • #9
    • 9th Jan 18, 2:29 PM
    Why are you planning on keeping the fund for 21 years when you have only been in Woodford for 3 and a half?
    Originally posted by Prism
    My original plan was to hold woodford for the same time, but in recent years, I have moved over more to investment trusts, and as such nearly 50% of my portfolio is in trusts. I like them because I get charged less for the platform and a lot of them have growing dividends year on year.

    Holding woodford over 21 years would cost me about 500 in fees, holding CTY or Merchants would cost me 0, unless things change off course.
    • Sue58
    • By Sue58 9th Jan 18, 2:33 PM
    • 107 Posts
    • 26 Thanks
    Sue58
    If you require a growing dividend perhaps look at City Of London (CTY). Lower OCF and gearing and a 50 year plus record of increasing dividends. It trades at a small premium instead of the larger discount of MRCH but not enough to be concerned about. Do you really need the income? 21 years suggest not. Just a suggestion for research
    Originally posted by ColdIron
    With IT's as well as looking at gearing and any yield for income (if required) is it more important to assess the NAV price as opposed to the share price with regards to results/profits?
    • ColdIron
    • By ColdIron 9th Jan 18, 2:35 PM
    • 4,258 Posts
    • 5,387 Thanks
    ColdIron
    My hope is to live off the income in the portfolio, sooner rather than later, a portion of the 21 years will be me living off the income.. I also own CTY , and despite it's lower dividend I did think about adding to my position. But I didn't want to put the whole lot into it. But the yield (for merchants) is ohh so tempting :-)
    Originally posted by sorcerer
    Whilst using equity income funds and reinvested dividends is a valid strategy for part of a total return portfolio, I'd be inclined to hold off hunting for yield until I actually needed it
    • sorcerer
    • By sorcerer 9th Jan 18, 2:37 PM
    • 844 Posts
    • 403 Thanks
    sorcerer
    From the performance data I dont see any good reason to transfer. Over the past 12 months Merchants Trust has greatly outperformed Woodford Equity but in the previous 2.5 years Merchants Trust barely broke even whilst Woodford returned 30% . Selling low priced investments to buy high priced ones every year is a very good way to lose money - you should be doing it the other way round.

    Merchants pays rather higher dividends than Woodford, but if you wanted high dividends why did you buy Woodford in the first place? Note that performance figures include dividends. Dividends aren't an added extra.
    Originally posted by Linton
    Performance figures are an interesting point, because OEIC and Investment Trusts tend not to have the same graphs. Making it harder to work out what is going on. I tend to find OEIC's include the dividend and Investment Trusts are showing just the price.

    So I have my own graphs built in Power BI, so I can compare like for like on a share price difference.
    • sorcerer
    • By sorcerer 9th Jan 18, 2:44 PM
    • 844 Posts
    • 403 Thanks
    sorcerer
    Whilst using equity income funds and reinvested dividends is a valid strategy for part of a total return portfolio, I'd be inclined to hold off hunting for yield until I actually needed it
    Originally posted by ColdIron
    Totally a fair point, but i have also got to worry about how my mind works. I know that when my investments start to drop I have the potential to panic sell. To try to avoid that I generate income, I use this income to buy more at a cheaper price and average down. If I don't have the extra cash I can't buy more. And my little mind goes into panic mode.

    Please bear in mind, that will only make up about 5% of the total investment portfolio, this includes global, property , American (north and south), Asia. And a a number of absolute return funds , also generating income.
    • Linton
    • By Linton 9th Jan 18, 2:47 PM
    • 9,394 Posts
    • 9,527 Thanks
    Linton
    Performance figures are an interesting point, because OEIC and Investment Trusts tend not to have the same graphs. Making it harder to work out what is going on. I tend to find OEIC's include the dividend and Investment Trusts are showing just the price.

    So I have my own graphs built in Power BI, so I can compare like for like on a share price difference.
    Originally posted by sorcerer
    Have a look at Trustnet/Tools/Charting. It lets you put any number of funds or shares on the same graph to compare performance over any time period. You can chose whether to include dividend reinvestment or not. Trustnet data is based on total return.
    • ColdIron
    • By ColdIron 9th Jan 18, 2:54 PM
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    ColdIron
    With IT's as well as looking at gearing and any yield for income (if required) is it more important to assess the NAV price as opposed to the share price with regards to results/profits?
    Originally posted by Sue58
    The premium or discount that an IT trades at and by how much is certainly a factor you should consider. The NAV will be what it will be whilst the share price is a reflection of investor sentiment of the holdings or the company that holds them. You should establish the reasons for the difference, sometimes it can be beneficial to you, sometimes not
    • sorcerer
    • By sorcerer 9th Jan 18, 3:01 PM
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    sorcerer
    I noticed Merchants has a nav of about -6%, i guess reflecting the lack of confidence their is in the UK at the moment, with Brexit hanging over us. -6% doesn't seem to bad, i have had worse, i currently hold one that's at -22%, and I keep buying more.
    • ColdIron
    • By ColdIron 9th Jan 18, 3:09 PM
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    ColdIron
    I noticed Merchants has a nav of about -6%, i guess reflecting the lack of confidence their is in the UK at the moment, with Brexit hanging over us.
    Originally posted by sorcerer
    I wouldn't say so, there are others in the same sector that trade at a premium. I haven't looked at Merchants for the whys and wherefores

    PS The NAV is the net asset value of the underlying holdings, the -6% you are referring to is the discount or the difference between the share price and the NAV
    • Sue58
    • By Sue58 9th Jan 18, 3:10 PM
    • 107 Posts
    • 26 Thanks
    Sue58
    The premium or discount that an IT trades at and by how much is certainly a factor you should consider. The NAV will be what it will be whilst the share price is a reflection of investor sentiment of the holdings or the company that holds them. You should establish the reasons for the difference, sometimes it can be beneficial to you, sometimes not
    Originally posted by ColdIron
    Thank you for your response on this. So is it the share price that determines the profit you make in an investment with an IT? As an example, I have a small holding (5K) in Worldwide Healthcare Trust and it has performed well but mostly the share price is higher than the NAV?
    • sorcerer
    • By sorcerer 9th Jan 18, 3:52 PM
    • 844 Posts
    • 403 Thanks
    sorcerer
    This has all been very interesting, it's always interesting to see what other people think, i have a few days to think about it, since it normally takes 2-3 days to sell an OEIC. But if I did go for Merchants i would like to get it pretty sharpish so I can get the next dividend.
    • ColdIron
    • By ColdIron 9th Jan 18, 3:53 PM
    • 4,258 Posts
    • 5,387 Thanks
    ColdIron
    Thank you for your response on this. So is it the share price that determines the profit you make in an investment with an IT? As an example, I have a small holding (5K) in Worldwide Healthcare Trust and it has performed well but mostly the share price is higher than the NAV?
    Originally posted by Sue58
    Simplistically, the share price determines the cost that you pay when you buy and the value you receive when you sell, the difference is your profit or loss irrespective of NAV (plus of course any dividends you may have received while you held them). Slightly less simplistically, all things being equal the share price will reflect changes in the underlying NAV, so if you bought at a 5% premium or discount and sold at the same premium or discount your profit or loss will be the same as the change in NAV which the share price reflects. However consider the scenario where a star fund manager retires or leaves after delivering stellar returns for many years. The shares you bought at a 10% premium could become worth a lot less if sentiment towards an new unknown manager moved that premium to a 10% discount. This could happen with no change at all to the NAV of the underlying holdings of the IT that held them
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