The Lemon Fool

SMIF 12th Interim:

1.86996p Final Dividend. Impressive, better than I thought it would be.

Yield almost 10% based on 7.37p dividends over the year.

Y

yieldhog wrote:SMIF 12th Interim:
1.86996p Final Dividend. Impressive, better than I thought it would be.
Yield almost 10% based on 7.37p dividends over the year.

Yes, and considering how much FI there is in the portfolio, their SP has held up surprisingly well.

To the downside, their basic divi has not increased since 2014 and the icing depends on a juicy final, also no revenue reserve and divi growth c2% pa, but with monthly income and a yield like this who's complaining...

V8

yieldhog wrote:SMIF 12th Interim:

1.86996p Final Dividend. Impressive, better than I thought it would be.

Yield almost 10% based on 7.37p dividends over the year.

Y

You are scburbs in disguise and I claim my £5.

Yes I copied and pasted the monthly income into my spreadsheet then checked the amount as it was different, so a nice bonus before Christmas.

Thanks for all of your replies.

A point made by V8 about the revenue reserve is a good one i.e. They don't have one.
This could certainly make the dividend a bit erratic. However, one of the things I like about SMIF is that it does not appear to leverage.

Over the last 10 years at least, the dividend has remained at or above 0.6p per month, which still gives you 8% or more yield. It's true though, that over the same time period and taking current price into account, you would be losing nearly 30 % in value but total return would still be quite respectable. I,m guessing, but I imagine total real return might also look positive.

The point is though, we may well be at a peak in interest rates and inflation which should stabilise most fixed income securities in terms of interest rate risks. The biggest risk might be a credit crunch that produces a higher rate of losses for some of the credits that make up the SMIF portfolio. On the plus side, SMIF should benefit from higher rates as it seeks to reinvest the proceeds of maturing bonds in what is a relatively short duration fund. It all depends on where the economy is heading and none of us can predict that.

As someone else mentioned on this thread, a capital loss is only realised when you sell and selling SMIF now I believe would be bailing out at what might be the bottom of the cycle. Much better to stay with an 8-10% yield for another ten years and hopefully also see some capital appreciation as well.

Y

yieldhog wrote:Thanks for all of your replies.

A point made by V8 about the revenue reserve is a good one i.e. They don't have one.
This could certainly make the dividend a bit erratic. However, one of the things I like about SMIF is that it does not appear to leverage.
Y

The Trust itself may not use leverage but the underlying assets probably do. The factsheet says that 34% of the trust is held in Asset Backed Securities. It also mentions exposure to derivatives as a key risk of the trust. I am currently researching potential fixed interest investments and SMIF failed my SNIFF test at the first hurdle - low credit quality bonds are one thing, but Asset Backed Securities is not something I want exposure to. Risk/reward on offer here is not for me.

All the best, Si

simoan wrote:

yieldhog wrote:Thanks for all of your replies.

A point made by V8 about the revenue reserve is a good one i.e. They don't have one.
This could certainly make the dividend a bit erratic. However, one of the things I like about SMIF is that it does not appear to leverage.
Y

The Trust itself may not use leverage but the underlying assets probably do. The factsheet says that 34% of the trust is held in Asset Backed Securities. It also mentions exposure to derivatives as a key risk of the trust. I am currently researching potential fixed interest investments and SMIF failed my SNIFF test at the first hurdle - low credit quality bonds are one thing, but Asset Backed Securities is not something I want exposure to. Risk/reward on offer here is not for me.

All the best, Si

Hi Si
Did your research offer up any suitable alternatives? I have enough SMIF but also have some funds that I'd like to allocate to this area. cheers

airbus330 wrote:

simoan wrote:The Trust itself may not use leverage but the underlying assets probably do. The factsheet says that 34% of the trust is held in Asset Backed Securities. It also mentions exposure to derivatives as a key risk of the trust. I am currently researching potential fixed interest investments and SMIF failed my SNIFF test at the first hurdle - low credit quality bonds are one thing, but Asset Backed Securities is not something I want exposure to. Risk/reward on offer here is not for me.

All the best, Si

Hi Si
Did your research offer up any suitable alternatives? I have enough SMIF but also have some funds that I'd like to allocate to this area. cheers

Unfortunately, not really. I bought some INVR and topped up another pref. Also transferred some cash into a short dated gilt (TG24). Bit boring, but I am not a natural fixed income investor it would seem.

All the best, Si

airbus330 wrote:

simoan wrote:The Trust itself may not use leverage but the underlying assets probably do. The factsheet says that 34% of the trust is held in Asset Backed Securities. It also mentions exposure to derivatives as a key risk of the trust. I am currently researching potential fixed interest investments and SMIF failed my SNIFF test at the first hurdle - low credit quality bonds are one thing, but Asset Backed Securities is not something I want exposure to. Risk/reward on offer here is not for me.

All the best, Si

Hi Si
Did your research offer up any suitable alternatives? I have enough SMIF but also have some funds that I'd like to allocate to this area. cheers

You might like to take a look at NCYF (New City High Yield Fund). It's in the same sector as SMIF. Yield currently: 9.39% paid quarterly.

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

I hold NCYF.

richfool wrote:

airbus330 wrote:Hi Si
Did your research offer up any suitable alternatives? I have enough SMIF but also have some funds that I'd like to allocate to this area. cheers

You might like to take a look at NCYF (New City High Yield Fund). It's in the same sector as SMIF. Yield currently: 9.39% paid quarterly.

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

I hold NCYF.

I hold NCYF and SMIF. Quite happy with them, but don't want to increase my holdings. Looking for something similar, with less yield but a bit more capital upside when interest rates start to fall.

Thanks to RF and Si for the replies.