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  • FIRST POST
    • 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 2
    • sorcerer
    • By sorcerer 9th Jan 18, 4:02 PM
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    sorcerer
    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
    Originally posted by ColdIron
    And that's why buying property, infrasture etc can be better to buy under an investment trust (rather than an OEIC), since the Investment Trust is not forced to sell the investments when people want their money back.
    • bostonerimus
    • By bostonerimus 9th Jan 18, 5:05 PM
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    bostonerimus
    Sell low and buy high is a way to lock in losses. A sensible strategy of rebalancing and discipline over a period of years is a better approach.
    Misanthrope in search of similar for mutual loathing
    • jimjames
    • By jimjames 9th Jan 18, 5:30 PM
    • 12,653 Posts
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    jimjames
    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%.
    Originally posted by Prism
    When you said fund I thought you meant Woodford but OEICs can't leverage so assume you mean Merchants trust?
    Remember the saying: if it looks too good to be true it almost certainly is.
    • sorcerer
    • By sorcerer 9th Jan 18, 6:55 PM
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    sorcerer
    Sell low and buy high is a way to lock in losses. A sensible strategy of rebalancing and discipline over a period of years is a better approach.
    Originally posted by bostonerimus
    Actually I won't be selling it low, I bought it for £1 and selling it for £1.15 + three years of dividends. It's not great off course, but it's not a loss either. And hopefully I can find something that can perform better, and still pay me dividends. At the moment that's pretty much everything in the Equity Income category.

    I have always been told the time to get rid of investment that you don't like anymore for whatever reason is now. No point in waiting, maybe Neil will bring it back and it will the best performing fund in his sector maybe he won't. I don't really know, and neither does anybody else.
    • takesyourchances
    • By takesyourchances 9th Jan 18, 7:32 PM
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    takesyourchances
    I have held Woodford from opening too, for me, I am holding as part of my allocation and in my opinion it is far too short a time scale of investing to jump in and out of funds based on short term performance.

    Maybe think too, how you would feel if Woodford turned the fund performance around and in 5 years time it was performing well. What happens if your next fund dips after 2 years, do you sell it and move to another and so it goes on. Just some thoughts
    • talexuser
    • By talexuser 9th Jan 18, 8:00 PM
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    talexuser
    It's not great off course
    Originally posted by sorcerer
    If you sell today you will get about the same return over the 3 years if you would have bought the All Share index.
    • sorcerer
    • By sorcerer 9th Jan 18, 8:40 PM
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    • 403 Thanks
    sorcerer
    I have held Woodford from opening too, for me, I am holding as part of my allocation and in my opinion it is far too short a time scale of investing to jump in and out of funds based on short term performance.

    Maybe think too, how you would feel if Woodford turned the fund performance around and in 5 years time it was performing well. What happens if your next fund dips after 2 years, do you sell it and move to another and so it goes on. Just some thoughts
    Originally posted by takesyourchances
    I try not to look at the performance of funds I have sold, I see no point, because their is nothing I can do about it. But also whilst I agree with many things Woodford says, such as a outcome for the uk economy. I have issues with his stock picking ability, and risk management style. Some of the problems he had last year, could have been avoided. So what choice do I have when I lost confidence in the fund manager.

    I ask myself the question why do I hold a fund manager I no longer believe in?

    A good example is P2P he bought it at 1000p and more, I watched it, and always thought it was too expensive at the price he was paying, but he was too busy allocating cash as fast as he could. I bought it at 770p. Off course they are the many other examples, already discussed over last year.
    Last edited by sorcerer; 09-01-2018 at 8:40 PM. Reason: typo
    • fairleads
    • By fairleads 9th Jan 18, 9:14 PM
    • 588 Posts
    • 158 Thanks
    fairleads
    There is a bit more to evaluating the worth of an investment trust than meets the eye.
    The NAV of an IT is not calculated the same way as the NAV of an ordinary listed share.
    The NAV of an ordinary share is the value of the underlying assets of the company minus it’s liabilities, whereas the NAV of an IT is based upon the quoted prices of the underlying shareholdings minus the liabilities of the IT.
    So even buying an IT at a substantial discount to it’s NAV is no guarantee of future out performance or indeed protection because the underlying portfolio of shares – at the point of our investment - may all be significantly over priced and thus subject to drastic rerating by ‘the market’ in the event of a crash.
    Further, there is little value in investing in an IT just because it has increased its dividend for x years in a row if the current d/y is significantly lower than that of its contemporaries.
    • Prism
    • By Prism 9th Jan 18, 9:55 PM
    • 368 Posts
    • 286 Thanks
    Prism
    When you said fund I thought you meant Woodford but OEICs can't leverage so assume you mean Merchants trust?
    Originally posted by jimjames
    Yeah. Leaving Woodford is one thing but I'm not sure Merchants is better. If I had to buy one of the two today it would be Woodford. Not keen on banks and oil companies
    • bostonerimus
    • By bostonerimus 9th Jan 18, 10:13 PM
    • 1,945 Posts
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    bostonerimus
    Actually I won't be selling it low, I bought it for £1 and selling it for £1.15 + three years of dividends. It's not great off course, but it's not a loss either. And hopefully I can find something that can perform better, and still pay me dividends. At the moment that's pretty much everything in the Equity Income category.

    I have always been told the time to get rid of investment that you don't like anymore for whatever reason is now. No point in waiting, maybe Neil will bring it back and it will the best performing fund in his sector maybe he won't. I don't really know, and neither does anybody else.
    Originally posted by sorcerer
    Yes you've run foul of a bad year for an active fund investment and lost ground in a good market, but why have you lost faith in Neil, was the only reason to invest with him his past performance rather than his actual strategy. Let's hope your next choice is better although you seem to be choosing Merchant's Trust solely on short term performance which could take you from the "frying pan into the fire". Sorry if I'm being a bit hard, but you are doing lots of things that might give you very poor returns.
    Misanthrope in search of similar for mutual loathing
    • takesyourchances
    • By takesyourchances 9th Jan 18, 11:11 PM
    • 653 Posts
    • 418 Thanks
    takesyourchances
    I try not to look at the performance of funds I have sold, I see no point, because their is nothing I can do about it. But also whilst I agree with many things Woodford says, such as a outcome for the uk economy. I have issues with his stock picking ability, and risk management style. Some of the problems he had last year, could have been avoided. So what choice do I have when I lost confidence in the fund manager.

    I ask myself the question why do I hold a fund manager I no longer believe in?

    A good example is P2P he bought it at 1000p and more, I watched it, and always thought it was too expensive at the price he was paying, but he was too busy allocating cash as fast as he could. I bought it at 770p. Off course they are the many other examples, already discussed over last year.
    Originally posted by sorcerer
    Understand you will have your reasons and you don't believe in the fund manager any more. I'd like to see Woodfords fund in 5 plus years from now and how he has positioned it for ahead, personally as I said I am holding for my reasons above, but I do have a spread and will keep Woodford as part of it.

    If you don't mind me asking how much do you have invested in Woodfords?

    If your after steady yield and away from Woodfords, would infrastructure even be an alternative or even a spread of P2P could return higher than the income from Merchants Trust if it's income your focus is for this.

    I also hold City of London and have also been investing monthly into this. Interesting reading this as well from other replies
    • Thrugelmir
    • By Thrugelmir 9th Jan 18, 11:20 PM
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    Thrugelmir
    With it being a trust, it can also hopefully grow the dividend each year, currently dividend growth is about 1.4% a year.
    Originally posted by sorcerer
    Much depends on the future direction of exchange rates. What immediately springs to mind is that out of the top holdings HSBC and BP pay their dividends in $ , and Shell in €. Chasing yield for yield's sake isn't a strategy in these uncertain times.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • sorcerer
    • By sorcerer 10th Jan 18, 1:02 AM
    • 844 Posts
    • 403 Thanks
    sorcerer
    Understand you will have your reasons and you don't believe in the fund manager any more. I'd like to see Woodfords fund in 5 plus years from now and how he has positioned it for ahead, personally as I said I am holding for my reasons above, but I do have a spread and will keep Woodford as part of it.

    If you don't mind me asking how much do you have invested in Woodfords?

    If your after steady yield and away from Woodfords, would infrastructure even be an alternative or even a spread of P2P could return higher than the income from Merchants Trust if it's income your focus is for this.

    I also hold City of London and have also been investing monthly into this. Interesting reading this as well from other replies
    Originally posted by takesyourchances
    I have about £7500 in Woodford and £4000 in City of London, I also hold HICL and P2P Global Investments for alternative income.
    • economic
    • By economic 10th Jan 18, 1:05 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    Much depends on the future direction of exchange rates. What immediately springs to mind is that out of the top holdings HSBC and BP pay their dividends in $ , and Shell in €. Chasing yield for yield's sake isn't a strategy in these uncertain times.
    Originally posted by Thrugelmir
    Whenever have things been certain???
    • sorcerer
    • By sorcerer 10th Jan 18, 1:06 AM
    • 844 Posts
    • 403 Thanks
    sorcerer
    Much depends on the future direction of exchange rates. What immediately springs to mind is that out of the top holdings HSBC and BP pay their dividends in $ , and Shell in €. Chasing yield for yield's sake isn't a strategy in these uncertain times.
    Originally posted by Thrugelmir
    I agree, I remember when I first started out, I bought something that had a yield of 8%, only after a couple of years this dropped to 5%, and as a price dropped in value too. So I aim between 4-6% , but I average around 5% at the moment. I have some below 4% such as woodford, cty and Saints. But I bought all of these when they paid above 4%.
    • bostonerimus
    • By bostonerimus 10th Jan 18, 3:01 AM
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    bostonerimus
    I agree, I remember when I first started out, I bought something that had a yield of 8%, only after a couple of years this dropped to 5%, and as a price dropped in value too. So I aim between 4-6% , but I average around 5% at the moment. I have some below 4% such as woodford, cty and Saints. But I bought all of these when they paid above 4%.
    Originally posted by sorcerer
    Dividends are generally emphasized by people looking to generate retirement income, and even then its an arguable strategy. I would concentrate on capital growth and take any dividends as a nice bonus.
    Misanthrope in search of similar for mutual loathing
    • firestone
    • By firestone 10th Jan 18, 8:58 AM
    • 246 Posts
    • 106 Thanks
    firestone
    Dividends are generally emphasized by people looking to generate retirement income, and even then its an arguable strategy. I would concentrate on capital growth and take any dividends as a nice bonus.
    Originally posted by bostonerimus
    Capital growth and reinvesting dividends over the long term can be a nicer bonus
    • sorcerer
    • By sorcerer 10th Jan 18, 10:11 AM
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    • 403 Thanks
    sorcerer
    I try to do both my Pensions are focused entirely on Growth stocks, with the view to try grow the money as fast as possible. However my ISA is focused entirely on Income, with the view to live off this money until the Pensions can kick in 10-15 years time.


    I realise this is not the "Normal" thing that people do, but it works for me from a psychological point of view. This balance gives me a 50/50 break between high risk investments and low risk investments, and a I wear different hats, so to speak depending if I am investing for my ISA or Pensions.
    • coyrls
    • By coyrls 10th Jan 18, 12:00 PM
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    coyrls
    Why do you see growth as high risk and income as low risk? I don!!!8217;t think there is any correlation if you are measuring total return.
    • bostonerimus
    • By bostonerimus 10th Jan 18, 1:10 PM
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    bostonerimus
    Capital growth and reinvesting dividends over the long term can be a nicer bonus
    Originally posted by firestone
    Yes, I didn't mean to cash in the dividends......let them compound along with the capital gains.
    Misanthrope in search of similar for mutual loathing
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