Believe ~18% is invested in China. |
Divi being maintained through thick and thin (so far) = big tick
~12% YTD - not to be sniffed at.
Things are looking up :) |
Why do we think this trust is rated at a premium? Performance, as we have all debated and acknowledged has been awful and the dividend level looks less secure than in the past. The improved outlook for China seems to me to be the driver, yet it has little direct relevance to HFEIL |
Decent recovery here back to a premium over nav |
Worth a look at an alternative -AASC is also giving a divi of 2.25% plus at 96p pays out in one year 100p but also gives the holder the right to convert into ord. AAS shares at 293p. The AAS share price is only 3% below that level currently, at 284p, and trades about 14% below its NAV of 332p. |
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: |
There you go Kiwi :- |
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. |
 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.” |
Or to put it another way.. eh?
Looks like I need to spend time researching what 'call options' are etc. |
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. |
Likely the sustained 'so far' dividend yield! Hope it continues. |
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. |
Nice to see it back to trading at a reasonable premium. Hopefully the next RNS will be for shares being issued above NAV. |
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. |
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. |
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.' |
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. |
I wouldn't call that a reversal of the more recent strategy. Seems more like a measured response to potential value situations. |
The report talks about selectively increasing China exposure again. |
To what do you refer Aleman? |
What is your concern Aleman? |
Already threatening to reverse the recent policy change? What next week? |
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