Henderson Far East Income Share Discussion Threads

[aleman] 09/5/2024 08:52

After China's Q1 GDP beat forecasts with a healthy 5.3%, April imports add to a trend that suggests internal demand might be starting to recover:

[skinny] 05/5/2024 14:54

There you go Kiwi :-

[tim 3] 04/5/2024 08:59

Yes I used to write "real" options (not the bookie ones) some time ago.

There are so many options strategies you can use but I stopped because I found although it appears a good way of boosting income, when a stock really takes off you lose out and found over time this really cost you.

You are basically increasing income BUT putting a lid on potential gains.So if say a company was taken over or had much better results than expected you would lose out.

Owning a portfolio for a decent amount of time I find a lot of gains can come from a relatively small percentage of stocks that do really well writing call options can put a substantial cap on those gains.

[kiwi2007] 04/5/2024 00:31

I used to make a bit of money selling covered calls (mainly Guinness I seem to remember) in the late 80's. Days before the internet when things were written up on a big blackboard and little calls like mine were often just written off at the end of the day to clear the board apparently. It worked OK the few times I tried it.


Won't allow me to put a proper ink to trust-net !

trustnet.com/news/13412921/are-the-highest-yielding-equity-trusts-a-sound-investment

Best read the whole article but here's bits appertaining to HFEL

"- Others use derivatives to boost their income, selling away some of the potential gain to boost income,” he said. “Again, I’m not a fan, as this blunts the potential total return of the investment.”

“I think this explains Henderson Far East Income, which produces a yield far higher than most competing Asian income trusts yet its long-term total returns are by far the worst in its peer group (an average of 4.7% per annum over the past 10 years compared to 6.6% for abrdn Asian Income – the next worse – and 10.3% for Invesco Asia – the best),” Carthew said.

.......However, there is another factor at play here, both trusts have highish exposures to smaller companies, which have been lagging their larger peers.”

[carpingtris] 03/5/2024 12:36

Or to put it another way.. eh?

Looks like I need to spend time researching what 'call options' are etc.

[aleman] 03/5/2024 12:24

We have modified our options strategy to focus largely on writing call options with much less emphasis on writing put options. We feel this will reduce the risk profile of the strategy and has helped to increase income by using smaller positions over a wider number of underlying holdings.

The old strategy used to be to enhance income with writing call options - effectively foregoing some capital gain in a strong market in exchange for extra income up front. It works well in a flat market. Puts were not written much, if at all in, the "old days". I wonder if they got greedy, wrote loads of puts and that then exacerbated a falling market - either having to buy falling shares off others at over the market price or having to buy back the puts they had written in the market to close out the position.

Now they tell us there has been a more than doubling of call writing. So if the market rebounds sharply, as a few Asian countires might, partcularly China, then we will probably underform in those areas again.

This carry on with options writing to enhance income is ok so long as investors understand what they are buying into. It has been a large chunk of income for a long time to cover the dividend. Now it looks like its not even covering the dividend. I'd suggest it is not being explained well enough.

[carpingtris] 03/5/2024 12:18

Likely the sustained 'so far' dividend yield! Hope it continues.

[kiwi2007] 03/5/2024 11:22

I'm not sure what it's done to deserve to trade at a premium? When so many , perhaps better run, trusts are selling for quite large discounts?

I suppose I should gladly accept it though.

[fordtin] 02/5/2024 15:15

Nice to see it back to trading at a reasonable premium. Hopefully the next RNS will be for shares being issued above NAV.

[brucie5] 26/4/2024 11:31

JCGI is also doing well from a low base though China stocks seem largely friendless. That can be the moment to buy as it was here.

[aleman] 26/4/2024 11:17

Yep - like I said, a reversal of last results' policy. They sound to be making it up a bit as they go along. Last time:

Whilst a number of growth opportunities in markets where we have been
underweight in recent years such as India, Indonesia and Taiwan have
already performed well, there are still significant opportunities in
the years ahead. The nascent improvement in Indian and Indonesian macro-economics
has the potential for a long pathway of growth, the resilience of the
Indian rupee and Indonesian rupiah versus the US dollar this year is
a testament to improved sentiment. Indonesia has begun posting a current
account surplus, growth is strong and the country is set to reap the
benefits of significant infrastructure completion. India is seeing
the benefit of earlier reforms such as the Bankruptcy Code, which has
helped to de-risk the banking system speeding up recovery of bad debts.
In addition, corporates are deleveraging, real estate asset prices
are rising and the uptick in private sector capital expenditure alongside
higher government investment, bodes well for the outlook. Investments
in India have already appeared in our top contributors list for the
period despite the current low positioning. We have added to both markets
and observe more opportunities.

[carpingtris] 26/4/2024 10:35

Aleman - seems they are reducing India exposure anyway?

'We view the current Korean corporate reform as potentially very exciting and added exposure ahead of the official announcements. This was funded by reducing our positions in India where the market had performed well but where we see less upside for our stocks following strong moves. Additionally, Korean stocks are demonstrating higher dividend growth this year.'

[aleman] 26/4/2024 10:24

Just saying. I was not in favour of reducing cheap China to increase exposure to expensive India at an average P/E of over 20 anyway. Selling at the bottom to buy a frothy top at the end of a bull run seems like a good way to make temporary losses bigger and more permanent to me. Other opinions are available.

[hastings] 26/4/2024 10:10

I wouldn't call that a reversal of the more recent strategy. Seems more like a measured response to potential value situations.

[aleman] 26/4/2024 09:57

The report talks about selectively increasing China exposure again.

[scruff1] 26/4/2024 09:06

To what do you refer Aleman?

[njb67] 26/4/2024 09:01

What is your concern Aleman?

[aleman] 26/4/2024 08:18

Already threatening to reverse the recent policy change? What next week?

[uapatel] 25/4/2024 18:29

Henderson Far East Income — Repositioning to raise total returns

hxxps://www.edisongroup.com/research/repositioning-to-raise-total-returns/33520/

Appreciate this is usually paid for info by the relevant company, but thought it might be useful for some.

[aleman] 25/4/2024 15:52

As at close of business on 24 April 2024, the unaudited net asset value per share, calculated in accordance with the AIC formula (including current financial year revenue items and excluding shares held in treasury), was 230.3p. As the Company's shares are now ex-dividend, the dividend has been deducted from the net asset value.

As at close of business on 24 April 2024, the unaudited net asset value per share (excluding current financial year revenue items and shares held in treasury) was 227.2p.


Er, no it hasn't. The 3.1p difference is the same as yesterday. I think they've made a booboo and it will probably be deducted from tomorrow's published number for today. Maybe they should not have added the emboldened sentence until tomorrow and the NAV difference will alter then.

[aleman] 25/4/2024 12:26

Buy-backs are bad for investment trusts. They shrink the size of the invested pool, meaning costs rise as a proportion of revenues so some dividend growth is lost, offsetting the gain from fewer shares in circulation. We've already seen a few small trusts merged into larger ones this year because they have become unsustainably small. Buy-backs would just accelerate the trend. Do we really want poorer dividend performance and fewer trusts to choose from?

[kenmitch] 24/4/2024 17:03

Thanks for the good wishes Hastings. Not well but hopefully getting there.

Fair point about HFEL share price performance being enhanced by reduced discount. NAV is up around 10% from the low though, so definite hints of improvement.

There are STILL so many shares and Investment Trusts paying huge and often sustainable dividends, reflecting the undervaluation of a lot of UK shares. E.g just today Serica surprised by paying a 14p final (7% just for that 1 dividend) and the overall dividend is 11.5% and higher than last year.

Here’s a bit of info for those keen on seeing dividend cuts and more buybacks. Our portfolios have now reached the stage where all new investments can be paid for from the dividend income month after month.

AND it means the portfolios now fund themselves too.

And right now is still a good time to build a portfolio of shares and Trusts paying exceptionally high and sustainable dividends. It’s only when the dividends flow in like the current 10.4% HFEL yield, that we investors seem to realise what a bonus they are.

[2sporrans] 24/4/2024 14:13

kenmitch

you have to factor in that that 12% share price uplift was accompanied by a shift [mostly the past few weeks] from 4% discount to 2% premium; therefore just a 6% rise in NAV over those 6 months.
Some investors pay close attention to the NAV performance.

On the +ve side, you could argue that HFEL is yielding about twice what av. of peers payout; so maybe, as much as 3% EXTRA yield over 6 months, had one bought at last autumn lows. [HFEL yielded ~12% at its October nadir.]
Taking your 12% cap. gain and adding 6% for 2 divvis makes a TR of 18%, from the nadir.

It will be interesting to see how close to 6p the share price drops at tomorrow open; moreso if the premium fades over the next week or 3.
Perhaps it will......maybe it won't.