The Lemon Fool

Has anyone created a high yield investment trust portfolio with as few trusts as possible?

G3lc wrote:
Has anyone created a high yield investment trust portfolio with as few trusts as possible?

The bulk of my income-portfolio now consists of income-oriented Investment Trusts, but you're going to have to define what you mean by 'as few trusts as possible', because that's likely to be a subjective idea that's subject to a fairly broad outcome, depending on your personal views and the views of other IT-based income-investors...

As an example of what I mean by that, someone might think that 'as few trusts as possible' means just a single IT producing 100% of dividend income, whilst someone else might think that's not a diverse enough proposal for a long-term income-investment strategy, and might prefer at least 'some' level of increased diversity, either at sectoral and/or geographical level.

So do you mean 'one income-IT', or do you mean 'some level of income-IT diversity', but just enough and not too much?

I should also add that whilst the term 'High Yield' is often used around these parts, it can mean different things for different investments. When compared to some of the single-stock HYP options I see being discussed, often in the 7-8% yield range, that would normally be a yield-range that tends to be higher than many income-IT options available, and I tend to fish in the 4-6% yield range for most of the income-IT's that I'm happy to hold for the long term.

Related to that though, in my experience anyway, is that whilst single-share HYP yields might often seem 'temptingly higher' initially, the practical long-term process as far as my experience goes is that HYP portfolios often tend to drift into a position of holding an influential ward of 'yield casualties' over the years, where a quite wide spread of portfolio-holding yields tends to then drift the overall HYP portfolio yield towards that lower income-IT yield level anyway, which over the years has definitely helped to define my thoughts in terms of simply wanting to avoid all that 'HYP-related excitement', and stick with a much more sedate and better behaved portfolio of middle-of-the-road income-IT holdings instead...

Cheers,

Itsallaguess

G3lc wrote:Has anyone created a high yield investment trust portfolio with as few trusts as possible?

You'll have seen this comedy portfolio which might work for a while if you don't mind that some of those trusts have eaten one's capital in recent years.

I have nineteen in my portfolio, they've all worked income-wise but the capital not so much... I also have HYP shares and Fixed Interest.

How many do you have in mind?

V8

G3lc wrote:Has anyone created a high yield investment trust portfolio with as few trusts as possible?

I have, but you'll have to wait until 5 April the end of its first year until I reveal more on this.

Anyway, to give you a teaser trailer, I am calling it SHYIT (a Single High Yield Investment Trust).

G3lc wrote:Has anyone created a high yield investment trust portfolio with as few trusts as possible?

moorfield wrote: I have, but you'll have to wait until 5 April the end of its first year until I reveal more on this.

Anyway, to give you a teaser trailer, I am calling it SHYIT (a Single High Yield Investment Trust).

Not CTY by any chance? Just guessing!

moorfield wrote:

G3lc wrote:
Has anyone created a high yield investment trust portfolio with as few trusts as possible?

I have, but you'll have to wait until 5 April the end of its first year until I reveal more on this.

Anyway, to give you a teaser trailer, I am calling it SHYIT (a Single High Yield Investment Trust).

So what you seem to be saying is that you're proposing to have a Portfolio Holding Absolute Number of just one.

And when you've bought your first income-IT, then the portfolio is complete because the SHYIT has hit the PHAN...

Cheers,

Itsallaguess

Itsallaguess wrote:So what you seem to be saying is that you're proposing to have a Portfolio Holding Absolute Number of just one.

And when you've bought your first income-IT, then the portfolio is complete because the SHYIT has hit the PHAN...

It'll maybe be upgraded next year to number two.

Scott.

monabri wrote:

G3lc wrote:Has anyone created a high yield investment trust portfolio with as few trusts as possible?

moorfield wrote: I have, but you'll have to wait until 5 April the end of its first year until I reveal more on this.

Anyway, to give you a teaser trailer, I am calling it SHYIT (a Single High Yield Investment Trust).

Not CTY by any chance? Just guessing!

Oh no, we can do better than CTY.

I don't especially like high yield investment trusts. I would propose a moderate but growing yield instead. A combination of LWDB and JGGI should fit the bill. The proportion of each depending on how much exposure to UK or overseas stocks is required. I eat my own cooking on this.

moorfield wrote:

monabri wrote:


Not CTY by any chance? Just guessing!

Oh no, we can do better than CTY.

Not a very high bar.

BullDog wrote:
I don't especially like high yield investment trusts. I would propose a moderate but growing yield instead.

A combination of LWDB and JGGI should fit the bill. The proportion of each depending on how much exposure to UK or overseas stocks is required.

I eat my own cooking on this.

Agreed - I would expect a similar 'exciting' experience of owning what we might call Ultra High Yield Investment Trusts as we might experience with Ultra High Yield single-share HYP holdings, so anyone looking for less 'excitement' would be best doing as you suggest and fishing in the more moderate yield-pools, with a chance of seeing some steadier but hopefully growing income over the longer term.

I also own LWDB and JGGI, although they're part of a broader income-IT portfolio, and I'd personally struggle a little to justify holding a very small number of income-IT's as I will always look to take advantage of some of wider geographical diversity with my portfolio, and prefer to do that with a broader set of investments.

Cheers,

Itsallaguess

Thank you for your thoughts and suggestions, over the years I’ve tended to adopt a scatter gun approach, buy what seemed to make sense at the time, going forward I would like fewer trusts to concentrate on, my prime object is income now, and am well aware of what’s on offer from the Banks.
My holdings now are CTY, EDIN, MUT, TMPL, BERI, JEMI, CYN, MRCH, DIG, JEGI, BRWM,SHRS, BIPS, HICL,NCYF, HFEL, SOI, HDIV, SMIF, EAT, IBT, HINT, TRIG, FGT, LTI, JGGI, the most in CTY £60k and the least in TRIG 5K.
Going forward I think it would make sense to concentrate on say 5 or 6 Trusts paying a high dividend if possible.

I am fully prepared for all the criticism - too small, fund of fund, high cost etc, but I have about half in MATE, CMPI and FCIT.
Not really HIGH yield but yieldy nonetheless. And the remaining grab bag is definitely high yield.
The first two conveniently pay out (4 times) in different months and I bias my other picks to fill the gaps (further criticism here), though note I am not fanatical about it.

It is a work in progress and I am not at all wedded to the idea of minimum holdings but I thought it would be a valid and left field contribution.

W.

Wuffle wrote:I am fully prepared for all the criticism - too small, fund of fund, high cost etc, but I have about half in MATE, CMPI and FCIT.
Not really HIGH yield but yieldy nonetheless. And the remaining grab bag is definitely high yield.
The first two conveniently pay out (4 times) in different months and I bias my other picks to fill the gaps (further criticism here), though note I am not fanatical about it.

It is a work in progress and I am not at all wedded to the idea of minimum holdings but I thought it would be a valid and left field contribution.

W.

Given that monkeys throwing darts at a list of shares outperform active managers, I can't see any reason to criticise your approach! It will probably beat the monkeys

https://www.forbes.com/sites/rickferri/ ... 374b88630a

G3lc wrote:Thank you for your thoughts and suggestions, over the years I’ve tended to adopt a scatter gun approach, buy what seemed to make sense at the time, going forward I would like fewer trusts to concentrate on, my prime object is income now, and am well aware of what’s on offer from the Banks.
My holdings now are CTY, EDIN, MUT, TMPL, BERI, JEMI, CYN, MRCH, DIG, JEGI, BRWM,SHRS, BIPS, HICL,NCYF, HFEL, SOI, HDIV, SMIF, EAT, IBT, HINT, TRIG, FGT, LTI, JGGI, the most in CTY £60k and the least in TRIG 5K.
Going forward I think it would make sense to concentrate on say 5 or 6 Trusts paying a high dividend if possible.

I've appropriated ideas discussed over on HYP Practical and started with 15 selected from currently 10 different AIC sectors. 9 of these are "dividend heroes" ie. demonstrating that longed for but never quite found (over there) 5+ year history of increasing dividends. On top of this I'm using the TJH method to limit cost and income weights, and determine top up rankings. Which is why I am now calling my portfolio a HYP PHY.

Edit: My previous post re SHYIT is a paper experiment not a real portfolio, more on that next year.

moorfield wrote:I've appropriated the ideas discussed over on HYP Practical and started with 15 selected from currently 10 different AIC sectors. 9 of these are "dividend heroes" ie. demonstrating that longed for but never quite found (over there) 5+ year history of increasing dividend.

If the intent is to withdraw the portfolio income and operate it as an annuity supplement or annuity replacement with a stable but increasing income as a relative priority, an IT based solution is likely to work better in the sense of absence of income volatility than a direct share based one. That's at least in part down to the dividend reserve feature of ITs, something not present in purist forms of HYP.

G3lc wrote:Has anyone created a high yield investment trust portfolio with as few trusts as possible?

I run something similar, i.e. a (reasonably high yield)* investment trust portfolio focussed on income, though not as few trusts as you may be aspiring to! I used to hold more, but have trimmed them down!

They consist of: DIG, LWDB, MRCH, JGGI, MYI, SAIN, EAT, JEGI, BRSA, MCT, AAIF, JAGI, EGL, BERI, NCYF.

Plus in the REIT category: API, PHP, WHR.

And in the renewable energy space: BSIF, GRID, JLEN, NESF.

(I also hold a couple of global growth trusts and a defensive trust [BUT, ATST and RICA], but they wouldn't fit into your high yield classification).

* Would that be a RHYIT portfolio?

I too have started down this journey of turning my SIPP pot into a pension (annuity) income and have started with a 20% income allocation.

I went with equal parts of

FSV, MRC
EDIN, LWI, TMPL, MUT
ASL, HSL
ATST
HINT, MYI, SAIN

My yield filter was a little more modest at 2% and currently around 3.8% overall

I too run a joint HYP alongside an IT HYP. Our main IT holdings are DIG, TMPL, MYI, CTY, MUT, MRCH. Half holdings in AAIF, LWDB, UKW. Quarter holdings in 3IN, GSF and AERI. As the income is more than sufficient for our present needs, top up are going into LWDB and 3IN for their high annual dividend increases.
DIG, TMPL and MYI have been held since the early/mid 2000's although they have been bed and ISA'd in the meantime.
The dog is of course TMPL but it seems to be on the mend.

john

Alaric wrote:If the intent is to withdraw the portfolio income and operate it as an annuity supplement or annuity replacement with a stable but increasing income as a relative priority, an IT based solution is likely to work better in the sense of absence of income volatility than a direct share based one. That's at least in part down to the dividend reserve feature of ITs, something not present in purist forms of HYP.

This needs to be kept clearly in mind in my opinion. My plan is to use income from an IT portfolio as a way to mitigate the falls observed in HYP income during market catastrophes. Unsurprisingly perhaps, it looks like this comes at a price.

Only 2 of my investment purchases had an initial yield under 6% over the last 18 months or so - CTY on 5%, MYI on 4.6% - while a couple of share purchases were at least 7% (LGEN and PHP). CTY increased its payout by about 2.5% this year in the context of, at times, double digit inflation. MRCH (in my wife's portfolio) and MYI look worse. Hopefully increases will eventually filter through. My HYP purchases all increased their payout this year, most under inflation but still better than my IT holdings. IAAG's evidence-based work on these boards has been really helpful for me, hopefully a consideration of how the IT portfolio income streams responded to inflation will be part of the 2023 review as my sample size is tiny .

So perhaps ITs mitigate loss of income in a market crash but amplify it in times of a rapid increase in inflation, at least over the short term in both cases. In both situations the starting yield is lower. Worth a thought if you are wedded to one method over the other.

EEM