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  • FIRST POST
    • capital0ne
    • By capital0ne 10th Jun 19, 5:22 PM
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    capital0ne
    ITs or Individual Co. Shares?
    • #1
    • 10th Jun 19, 5:22 PM
    ITs or Individual Co. Shares? 10th Jun 19 at 5:22 PM
    Would you buy FGT - Finsbury Growth & Income IT instead of holding individual shares? Namely Diageo, Unilever which I do hold and I like the others in FGT top 10?

    Ditto for Merchants IT - if you hold RDSB, GSK, HSBC, IMB, and BA. individually.

    Both of these ITs are at a low premium and have low charges.

    Thoughts please
Page 2
    • takesyourchances
    • By takesyourchances 13th Jun 19, 5:50 PM
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    takesyourchances
    Thanks, yes many people advocate you should look for Total Return, but I think there is a lot to be said for income and growth funds and ITs that produce regular growing dividends.

    I am retired and have an active income portfolio, as well as VLS funds in another portfolio. It will be interesting to see over time which produces the best returns, but in a major downturn whenever it comes, I think I will feel more comfortable having dividends still coming in than having to sell capital in the event of a prolonged bear market.
    Originally posted by Audaxer

    Yes I agree, I think too there is a lot to be said for income and growth funds and ITs that produce regular growing dividends. It is a solid foundation as a strategy I feel and until times the income is needed to be used, re-investing the income over and over helps really build it and dividends as you said should come in, in "some form" (maybe some will cut back) during a downturn.



    My IT's so far cover Global, UK, Europe, Asia, States, Property REIT's and Infrastructure. My eye is on adding a Biotech IT maybe next as the portfolio increases and a few other areas eventually.



    It looks possible in the next few years, fingers crossed for the dividend income to cover my basic living expenses which would be a good mental target to reach and keep on going type idea until I would want / need to draw on the dividend income.



    It is interesting that you are retired and this approach is working for you along with holding VLS funds.



    My IT's are in my S&S ISA, so all is tax free and gives the option of use before I would reach the age to draw on my SIPP, which in my case will be 57 years old (from 2028) so my S&S ISA would be my option if I wanted to work less before then or even retire fully before 57.



    I have a VLS 60 in my S&S ISA too, so that would be selling units eventually for income. If the dividend income was enough from the IT's I can let the VLS sit longer.



    My SIPP which would be 57 years or after is a sole VLS 80 at the moment which was started with a lump sum several years ago from an old Stakeholder pension I was paying into from my early 20's, so this has years ahead until there is the option to draw from it and could sit longer.


    This is my general strategy and wanting to give options before pension age also.
    Last edited by takesyourchances; 13-06-2019 at 5:53 PM.
    • Audaxer
    • By Audaxer 14th Jun 19, 8:24 AM
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    Audaxer
    It is interesting that you are retired and this approach is working for you along with holding VLS funds.
    Originally posted by takesyourchances
    I've not needed to take income yet. The VLS40 and VLS60 are ahead so far on a Total Return basis, but if both portfolios fell in an equity crash and I needed income, I still feel it would be safer taking dividends from the income portfolio rather than selling VLS capital.
    My IT's are in my S&S ISA, so all is tax free and gives the option of use before I would reach the age to draw on my SIPP, which in my case will be 57 years old (from 2028) so my S&S ISA would be my option if I wanted to work less before then or even retire fully before 57.
    You said in an earlier post you were nearing 40, so would that not mean you can't access your SIPP until 2036?
    • takesyourchances
    • By takesyourchances 14th Jun 19, 9:52 AM
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    takesyourchances
    I've not needed to take income yet. The VLS40 and VLS60 are ahead so far on a Total Return basis, but if both portfolios fell in an equity crash and I needed income, I still feel it would be safer taking dividends from the income portfolio rather than selling VLS capital.

    You said in an earlier post you were nearing 40, so would that not mean you can't access your SIPP until 2036?
    Originally posted by Audaxer

    I'd feel the same about taking dividends rather than selling vls capital during a downturn. I'd like to keep the vls going as long as possible if I can build the dividends high enough from ITs which hopefully will happen if I can maintain the investment levels I'm putting in.



    Yes I'll be 40 end of this year, I didn't word that the best, I meant I think the age increase for drawing on an SIPP increases from 55 years old to 57 years old from 2028, so in my case it would be 2036 at my age for SIPP access. I've the vls 80 in my SIPP as it could be 20 plus years from I'd touch it and it's been in maybe 5 years from I transferred my stakeholder lump sum in and add monthly.


    Good to exchange on this.
    • tin586
    • By tin586 15th Jun 19, 7:18 AM
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    tin586
    I hold a number of individual shares on the grounds that they are ‘hold forevers’ (eg Whitbread, Unilever, RB), but in the full knowledge that any company can implode.

    I also hold a number of ITs for diversification and to be able to access geographies/sectors that would otherwise be difficult to access directly - eg SMT, MYI, BNKR.

    But a constant nagging thought in my mind is whether I am paying fees for long term underperformance against a benchmark - the figures for BNKR and MYI are not so impressive and the latter’s charges are higher than I would like.

    So why not just put the money into a global ETF or a number of different ETFs and save on charges?

    Incidentally, I’ve never been interested in CTY because I see it as paying fees for a FTSE100 tracker, but I’ll gladly hear why I’ve got that totally wrong!
    • Apodemus
    • By Apodemus 15th Jun 19, 11:25 AM
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    Apodemus
    I’m not sure what your definition of fees includes, but I’ve got all my “hold forever”s in certificated form, so no ongoing platform charges.

    All companies, of course, have internal costs for creating the dividend stream, they are just more obvious in an Investment Trust than they are for a Unilever.
    • Audaxer
    • By Audaxer 15th Jun 19, 12:33 PM
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    Audaxer
    Incidentally, I’ve never been interested in CTY because I see it as paying fees for a FTSE100 tracker, but I’ll gladly hear why I’ve got that totally wrong!
    Originally posted by tin586
    CTY currently has a yield over 4% and has increased dividend payments every year for over 50 years. So if someone is looking for that sort of level of regular income increasing with inflation, that seems to me a better option than a FTSE100 tracker.
    • bowlhead99
    • By bowlhead99 15th Jun 19, 1:19 PM
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    bowlhead99
    Incidentally, I’ve never been interested in CTY because I see it as paying fees for a FTSE100 tracker, but I’ll gladly hear why I’ve got that totally wrong!
    Originally posted by tin586
    CTY currently has a yield over 4% and has increased dividend payments every year for over 50 years. So if someone is looking for that sort of level of regular income increasing with inflation, that seems to me a better option than a FTSE100 tracker.
    Originally posted by Audaxer
    Investment trusts (unlike FTSE100 trackers) don't have to distribute all their income, only a minimum portion, and can hold some back to pay dividends in leaner years. Some people might like that smoothing.

    The other feature is investment concentration. The FTSE100 index has 48% of your money in just the top 10 companies (e.g. about 11% in Shell and 7% in HSBC), whereas - although CTY still tends to hold big FTSE 100 companies - it takes them in smaller proportions (11% in those two combined instead of 18%). It takes judgements over what it should hold and how much. And perhaps allocating a greater proportion to the things that aren't the largest leviathans may eke out greater returns, at the same time as avoiding 'eggs in one basket' problem of the FTSE's high company or sectoral concentrations.

    Whether those features will provide you with enough comfort to prefer paying 0.4% OCF instead of more like 0.1% with a tracker to access CTY's investment allocation and dividend strategy, is in the eye of the beholder.
    • takesyourchances
    • By takesyourchances 15th Jun 19, 1:49 PM
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    takesyourchances
    Good to read the replies on CTY, in my IT portfolio I hold CTY as well, I have around £8500 at the moment in CTY so far and plan to bring it up to £10,000 in the next month or so as I balance out other IT holdings. I like the long rising dividend history and many of the points above.



    I actually sold out of Woodford's fund a while ago, thankfully at around plus 8% at the time and the proceeds went across to CTY.



    I may take out another UK IT at some point, no hurry at rhe moment as I want to balance out other IT's first and CTY can sit at 10k for a while as I add to others when I add the other £1500 and reinvest the income.
    • Audaxer
    • By Audaxer 15th Jun 19, 2:17 PM
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    Audaxer
    I actually sold out of Woodford's fund a while ago, thankfully at around plus 8% at the time and the proceeds went across to CTY.
    Originally posted by takesyourchances
    That's turned out to be a great decision. Just wondering, if the WEIF had been set-up as an IT with the same type of remit as CTY, would the Mr Woodford have been able to change the strategy and buy all these unlisted stocks? In other words, could the same fate as WEI Fund happen to a mainstream equity income IT like CTY or other similar ones with a long history, or are ITs safer than funds in that respect?
    • cogito
    • By cogito 15th Jun 19, 2:30 PM
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    cogito
    That's turned out to be a great decision. Just wondering, if the WEIF had been set-up as an IT with the same type of remit as CTY, would the Mr Woodford have been able to change the strategy and buy all these unlisted stocks? In other words, could the same fate as WEI Fund happen to a mainstream equity income IT like CTY or other similar ones with a long history, or are ITs safer than funds in that respect?
    Originally posted by Audaxer
    I keep a close watch on what my fund and IT managers are doing with my money which is why I too got out of Woodford when he strayed from his original path. It's not the most time consuming thing to do.
    • Reaper
    • By Reaper 15th Jun 19, 2:38 PM
    • 6,687 Posts
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    Reaper
    That's turned out to be a great decision. Just wondering, if the WEIF had been set-up as an IT with the same type of remit as CTY, would the Mr Woodford have been able to change the strategy and buy all these unlisted stocks? In other words, could the same fate as WEI Fund happen to a mainstream equity income IT like CTY or other similar ones with a long history, or are ITs safer than funds in that respect?
    Originally posted by Audaxer
    ITs are safer for stocks with poor liquidity (eg unlisted and property) because you should always be able to withdraw your money whenever you want.

    In theory if it had been an IT Woodford could have completely filled it with unlisted stocks. You can buy funds like that if you want. (eg BMO Private Equity Trust and many others)

    However it is up to the board of an IT to make sure the investments match the stated goal and if it was an Equity Income fund they would (or at least should) not have allowed that to happen.
    • atush
    • By atush 15th Jun 19, 3:52 PM
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    atush
    CTY currently has a yield over 4% and has increased dividend payments every year for over 50 years. So if someone is looking for that sort of level of regular income increasing with inflation, that seems to me a better option than a FTSE100 tracker.
    Originally posted by Audaxer
    And I am a very happy owner. 4% with a 50 yr track record of increases? I think its time to buy more.
    • takesyourchances
    • By takesyourchances 15th Jun 19, 5:32 PM
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    takesyourchances
    That's turned out to be a great decision. Just wondering, if the WEIF had been set-up as an IT with the same type of remit as CTY, would the Mr Woodford have been able to change the strategy and buy all these unlisted stocks? In other words, could the same fate as WEI Fund happen to a mainstream equity income IT like CTY or other similar ones with a long history, or are ITs safer than funds in that respect?
    Originally posted by Audaxer

    I think as others said, once Woodford went off the route the fund was promoted as at launch and the unquoted stock was going in and it went badly off course, I decided to get out while ahead as it had dropped a lot from I bought at opening. Thankfully I did as we know it went from bad to worse like recently.



    I see others said about the boards of IT's would hopefully not allow the change of direction from their policy and objectives like what Woodford done with his fund, others would know more than me on this. CTY was more what I was after for UK and I thought to merge the sale of Woodfords into it which I am glad I did and feel it is an investment holding for life.



    As Atush said "And I am a very happy owner. 4% with a 50 yr track record of increases? I think its time to buy more." - that is my thinking too and UK equity is well priced at the moment, I am happy to be buying more as part of my overall portfolio and collecting the dividends on the way.



    With reference to funds, as part of a tidy up as I went more IT based in recent years I merged other funds over into my other IT holdings to make things easier as I went more this direction.



    I only hold two funds now which I plan on keeping and that is BNY Mellon Global Income (previously Newton Global Income) and First State Global Infrastructure - I have towards £7000 in each of these funds at the moment. I like what each fund invests in as well. I would invest smaller amounts here and there from dividend income into these funds at times with no trading fees and then build up larger sums for other IT's that I can't add to on monthly regular investing.
    • Audaxer
    • By Audaxer 15th Jun 19, 9:18 PM
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    Audaxer
    I think as others said, once Woodford went off the route the fund was promoted as at launch and the unquoted stock was going in and it went badly off course, I decided to get out while ahead as it had dropped a lot from I bought at opening. Thankfully I did as we know it went from bad to worse like recently.



    I see others said about the boards of IT's would hopefully not allow the change of direction from their policy and objectives like what Woodford done with his fund, others would know more than me on this. CTY was more what I was after for UK and I thought to merge the sale of Woodfords into it which I am glad I did and feel it is an investment holding for life.



    As Atush said "And I am a very happy owner. 4% with a 50 yr track record of increases? I think its time to buy more." - that is my thinking too and UK equity is well priced at the moment, I am happy to be buying more as part of my overall portfolio and collecting the dividends on the way.



    With reference to funds, as part of a tidy up as I went more IT based in recent years I merged other funds over into my other IT holdings to make things easier as I went more this direction.



    I only hold two funds now which I plan on keeping and that is BNY Mellon Global Income (previously Newton Global Income) and First State Global Infrastructure - I have towards £7000 in each of these funds at the moment. I like what each fund invests in as well. I would invest smaller amounts here and there from dividend income into these funds at times with no trading fees and then build up larger sums for other IT's that I can't add to on monthly regular investing.
    Originally posted by takesyourchances
    The only thing that initially concerned me about investing in ITs, was the fact that they were not covered by the Financial Services Compensation Scheme. However I now don't see a problem with investing in the long-established mainstream ITs.
    • takesyourchances
    • By takesyourchances 16th Jun 19, 5:24 PM
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    takesyourchances
    The only thing that initially concerned me about investing in ITs, was the fact that they were not covered by the Financial Services Compensation Scheme. However I now don't see a problem with investing in the long-established mainstream ITs.
    Originally posted by Audaxer

    Yes that is true, I mostly have mainstream IT's. My newest running IT I think would be Tritax Big Box REIT and I am thinking of adding in another newer IT in The Renewables Infrastructure Group as another string of my infrastructure IT's as I like the infrastructure sector.



    How many IT's and funds do you hold outside your VLS?


    At present I have a spread of 14 IT's and 2 funds outside my VLS.
    • Audaxer
    • By Audaxer 16th Jun 19, 7:55 PM
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    Audaxer
    How many IT's and funds do you hold outside your VLS?


    At present I have a spread of 14 IT's and 2 funds outside my VLS.
    Originally posted by takesyourchances
    I have 12 funds and one IT(CTY) in my income portfolio. It is split between UK Equity Income, Global Equity Income, Asian Equity Income and strategic and corporate bonds. I also have a mixed asset fund (Artemis Monthly Distribution) which had a good performance history but has been a bit more disappointing than the other funds over the past couple of years. I probably should have an infrastructure and a property fund in there for more diversification.

    The yield on the portfolio for the first year was 3.9% on the original investment and should be a bit more this year. I am hoping that level of income increasing with inflation will be sustainable without having to sell capital but maybe I am being too optimistic?
    • Thrugelmir
    • By Thrugelmir 16th Jun 19, 8:32 PM
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    Thrugelmir
    CTY currently has a yield over 4% and has increased dividend payments every year for over 50 years. So if someone is looking for that sort of level of regular income increasing with inflation, that seems to me a better option than a FTSE100 tracker.
    Originally posted by Audaxer
    IT's hold distributable reserves accumulated from prior years. When Deepewater Horizon struck and BP cancelled it's dividend. Payments were maintained by drawing on these. No different to holding dividends received on individual holdings in a cash deposit account for a rainy day.
    “If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”
    ― Niall Ferguson
    • takesyourchances
    • By takesyourchances 17th Jun 19, 8:26 PM
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    takesyourchances
    I have 12 funds and one IT(CTY) in my income portfolio. It is split between UK Equity Income, Global Equity Income, Asian Equity Income and strategic and corporate bonds. I also have a mixed asset fund (Artemis Monthly Distribution) which had a good performance history but has been a bit more disappointing than the other funds over the past couple of years. I probably should have an infrastructure and a property fund in there for more diversification.

    The yield on the portfolio for the first year was 3.9% on the original investment and should be a bit more this year. I am hoping that level of income increasing with inflation will be sustainable without having to sell capital but maybe I am being too optimistic?
    Originally posted by Audaxer

    It would be worth looking into infrastructure and property as some more diversification with the assets being income producing assets as such, they could compliment your income portfolio, with some IT's yielding around 4% and just over 5% in others, it could be good for a lift in dividends.



    I added to my property IT's and infrastructure IT's this month and plan to again in August with plans for adding to other sections for July, mainly the global IT's I have,



    It seems that you are not being too optimistic at all with your approach with increasing the income.



    I plan on inputting my portfolio at some point into a spreadsheet, nothing too fancy, just to see sectors / regions and percentages mainly and I would like to chart the dividend income to see how it increases year on year easier. I check it on my account but it would be good to have it all together to track the progress.
    • Thrugelmir
    • By Thrugelmir 17th Jun 19, 9:27 PM
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    Thrugelmir
    The yield on the portfolio for the first year was 3.9% on the original investment and should be a bit more this year. I am hoping that level of income increasing with inflation will be sustainable without having to sell capital but maybe I am being too optimistic?
    Originally posted by Audaxer
    What % do you hold in bonds? As the remaining % of your portfolio , i.e. equities, is going to have to do all the heavy lifting in terms of protecting your income/capital against inflation.
    “If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”
    ― Niall Ferguson
    • Audaxer
    • By Audaxer 17th Jun 19, 10:17 PM
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    Audaxer
    What % do you hold in bonds? As the remaining % of your portfolio , i.e. equities, is going to have to do all the heavy lifting in terms of protecting your income/capital against inflation.
    Originally posted by Thrugelmir
    About 37% of the portfolio is in strategic bonds and global bonds. Maybe taking income of between 3 to 3.5% would be more sustainable. Perhaps an income portfolio should have more equity, and not be too concerned about capital fluctuations to achieve a higher level of sustainable growing dividends?
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