Acorn Income Fund Ld Share Discussion Threads

[chc15] 25/10/2018 10:08

This been battered bad , any reasons why..

[kimptonplace] 11/8/2018 16:42

Carterit and Asmodeus, just to say I entirely endorse what you say about income trusts, dividends and compound interest. Your investments are very similar to mine and for all the same reasons and I similarly prefer investment trusts save for the one exception being Terry Smiths Fundsmith referred to by mad foetus.

Whilst I agree that this is rather off the original subject it's interesting to note that Albert Einstein referred to compound interest as the most important mathematical discovery ever!

[carterit] 11/8/2018 13:00

Yes,he has done well mad foetus. However for me,its a unit as opposed to investment trust,and i prefer investment trusts. One thing i would add,is that its mainly invested in the USA,so has yet to confront a market downturn. He is without doubt exceptional,but just using one of my funds as an example.If you bought 2k shares in HFEL in 2007,they would have cost you about 4.5K (cost 2.25 each) and gave a yield of about 4%. If you held in the intervening period and reinvested the dividends into more of the same shares,with the power of compounding,you would now have approx 3.7K shares,without having to pay out any more money. They now yield 5.7%,and the total divi has risen year on year,even thru the financial crises,and are now 3.65. The share price doesn't seem particularly impressive at about 62% over 11 years,until you realise double the number which are now worth 13500 ie an increase of 200% with divis reinvested,and this is magnified the longer you hold them ,due to the power of compounding ( Compound interest is often called the eighth wonder of the world).

[mad foetus] 11/8/2018 11:21

For the purposes of this discussion I would recommend that you watch Terry Smiths presentation at the most recent Fundsmith AGM. Basically, his view is that placing "income" in a fund's name helps it to sell but guarantees underperformance, as companies that pay large dividends are admitting that they are unable to reinvest the money in a way that can grow their business beyond the rate of inflation. And if a business cannot do that, you shouldn't really invest in it. I am paraphrasing, it is worth watching. Fundsmith has gone from £1 to £4+ since launch in Nov 2010

[asmodeus] 11/8/2018 11:05

That's why I said that those able to do this are laughing. Because I need all my dividends for income, I have not been able to do this. However - in spite of this my capital has grown and with income vastly greater than banks, building socs., etc. P.S. I fear we're getting off topic now...

[carterit] 11/8/2018 09:11

...and of course the best bit with auto reinvestment of dividend income. The compounding effect......."dividend stocks, letting reinvested dividends continue to compound instead of relying solely on capital gains. As dividends continue to accumulate, both on the original shares as well as on the shares acquired from previously reinvested dividends, a snowball effect starts to occur, leading to quickly increasing streams of income.

However, dividend growth stocks add yet another level of compounding, as those investing in these stocks benefit from both reinvested dividends and dividend growth. As dividends can be reinvested to purchase new shares, both the original shares and the newly purchased ones all benefit from the higher dividend, leading to a form of "double compounding.",and most of my funds have increased there payouts year on year for a number of years. For example total dividends today for MYI,HFEL,AAIF are now between 100-150% higher than in 2006,and have increased yoy ever since.

[carterit] 11/8/2018 00:12

Same as asmodeus. I'm currently 62 and intend auto reinvesting for another 2-4 yrs before taking the income. I run mine and my wifes portfolio,and aim to receive a roughly equal divi each month,so have split the funds so that some pay out in months 1,4,7,10,some in 2,5,8,11, and some in 3,6,9,12. We each receive a 4 figure dividend each month,which is auto reinvested. I have invested in growth funds in the past but feel that they have to be watched closer becuase the last 2 crises of 2000 and 2008 showed that there values halved each time and they ended back where they started (as did many markets). With dividen payers i feel you can take your eye off them a bit more. I also found that many of them fell less than market avg of 50%+ eg MYI,AAIF,HFEL all fell approx 30%,and others which fell more eg NCYF,HHI were paying a yield of about 10% at one stage,so that lessens the pain a bit,as you pick up many more shares than you would otherwise. I have seen and expect my portfolio to double approx every 7-8 yrs based on 5% share growth and 5% yld,and am expecting that by the time we take the dividends as income,that income will more than cover our needs,and hopefully means that we won't need to break into the shares at all,and thus have something to leave our children and grandchildren (well thats the plan anyway)

[stmartin] 10/8/2018 17:04

asmodeeus

Thank you for your explanation which has clarified things for me.

[asmodeus] 10/8/2018 16:28

If you rely on your share portfolio for income, as I do, dividends are a priority, if only for peace of mind. I was once persuaded to ignore dividend-payers and go just for capital growth. The market collapsed, and so I had to start selling at losses to pay the bills - not an experience I ever wanted to repeat. And of course those who don't need the income and can reinvest the divs. as well as having capital growth are laughing, as they say.

[stmartin] 10/8/2018 11:15

carterit

Perhaps you can answer a question that has always puzzled me. Why is the level of dividend , for some people, a reason to buy ? I've always looked at total return and sold if I have needed money at a certain time ( not on a regular basis ). It always bothered me that EAT would pay its high dividend out of capital if necessary, although the reason I sold it was significant decline in performance ( same as why I sold AIF last week )

Is there a tax advantage, is it simply less hassle to receive cash regularly without puzzling about timing your purchase or something else ?

[asmodeus] 10/8/2018 11:04

Caterit - I have a portfolio remarkably similar to yours, (i.e. dividend-payers), and my philosophy is to believe (and hope) that even if cap. values fall, dividends will still be payable - if reduced - and I can still pay the bills. In the past I have been prudent (panicked) and sold, only to miss the bottom and be filled with regrets on the recovery.

[caradog] 10/8/2018 09:13

Carterit - like you, I have sold out of most growth-focused ITs and retained the dividend payers. I haven’t yet reinvested and am about 60% cash at present. The geopolitical nightmare seems likely to continue for a while yet, and to get worse before it gets better.
I don’t see any market as a safe haven from Trumpism, including Europe, e.g. Erdogan locks up preacher, Pence insists on sanctions, Lira falls, Turkish companies default on loans, European banks suffer, etc etc. Brexit, Iran, China, Russia add to the volatile mix.

[carterit] 09/8/2018 22:51

Yep,was in that one until earlier this year but div is half that of SDV/AIF,also EAT in european smaller companies,so didn't meet my criteria,and as i've probably looking at taking the dividends rather than re-investing in another 2/3 years,i've been gradually repositioning to the higher dividend payers. As well as the 2 mentioned ones,i have BBOX,FCRE,MXF in property type funds,AAIF,HFEL,MYI in asian/global income/growth BRCI ,BRWM in commodities,EDIN,MRCH,HHI in uk based funds,HGT,FPEO for private equity,EGL,HICL in UK/EU/Global infrastruture,IPE,NCYF in financials BSIF,TRIG in renewables/environment

[stmartin] 09/8/2018 20:46

If you particularly like this sector, maybe you should look at Aberdeen Smaller Companies Income IT which is on a 13% discount and has soundly beaten AIF on performance on all periods up to 5 years - didn't look up dividend.

[carterit] 09/8/2018 19:27

....and if previous falls over the last 4 years are anything to go by,they can reach 15-24% or so,of which we have had half a dozen during this period.I wouldn't have a problem adding at current prices or lower,obviously while keeping an eye on the NAV (buts that why we buy managed funds),and thats why i buy investment rather than unit trusts (so i can buy at a discount in unfavourable times). I remember buying several property funds in early / mid 2009,and getting back into a couple of commodity funds from the end of 2015 onwards.

[carterit] 09/8/2018 19:01

Same here ,long term holder since 2011. Provided NAV remains stable and dividends are above 4% (currently about 4.7% on expected payouts this year),then i am happy to hold. Have approx 20 funds in various sectors/countries,averaging approx 5% dividends,which are still currently auto re-invested. Been investing long enough now to know that markets don't always go up,and invested in enough sectors,countries so that while some sectors/countries may go down,others may go up. Its also times like these when i'm also happier to buy. Would sooner buy a fund at a 10% discount (especially one paying a decent dividend),than one at a premium.Not added more yet,but will do if it continues to drop further.

[chc15] 09/8/2018 18:13

I'm a long term holder, so to buy on big dips is my simple strategy. The nav is still good.

[whilstev] 09/8/2018 16:39

The only worry is if the value of the underlying assets were to fall. At the moment a net asset value of 460 means you are buying those assets at a 10% discount.

[stmartin] 09/8/2018 14:38

CHC15

Are you not at all concerned to know why the continued sharp decline? 5% in two days is a hell of a lot and that follows from last week when , AFAIR, the price was 463 and it is now 413/420.

[whilstev] 09/8/2018 14:31

Have added buy price 413.7 so even better.

[chc15] 09/8/2018 14:11

Down more, will continue to top up here

[whilstev] 09/8/2018 12:21

Discount now over 10% with a dividend of 4.5% and rising this is now a bargain. Thankyou Mr Baron. It wouldn't surprise me if he now changes his mind and recommends buying again!!!

[stmartin] 08/8/2018 13:13

"good dividend and long term record"

I suppose it depends what you mean by long-term record. It declined badly after McClure's death in 2014 and I was thinking of selling then, but it came back somewhat after a year or so.

I tend to compare it to the UK Smlr Cos trusts and since I have owned Henderson Smlr for the same period, have always judged them against each other : the last 12 months have given + 19.4% for HSL and + 0.4% for AIF and since I am currently somewhat concerned about a generalised slump, I decided that that, plus the poor performance was a good reason to sell AIF last week.

[chc15] 08/8/2018 09:52

I've topped up my holding today. Watching SDV too, barron sold them too.

[on one] 08/8/2018 09:19

Large discount now opening up, good dividend and long term record. Also nav has started to rise so I've bought in as a long term hold, see how it pans out.