Merchants Share Discussion Threads

[jeffian] 09/10/2020 23:57

zac0_4,
Yes, I'm sure that's right, it's just a hard habit to break. In my own case, I had to confront the issue in 2008 when my main dividend-payer stopped paying out and I had to sell something to live.

As for "It's unclear why so many who apparently seek growth own income trusts", in my case it's a question of age and circumstance - I don't need to get better off and I do need income. My thought process was that as long as the underlying capital kept pace with inflation, I would take the income, but I understand that is not entirely rational if I can withdraw the same amount from the increased capital pool. Of course, the question comes back into focus when you are still withdrawing £x per annum, the market is falling, and your capital pool is shrinking!

Someone above mentioned having 30 IT's. I'm in the fortunate (by pure luck) position of having a very large proportion of my portfolio converted to cash as a result of unforeseen takeovers prior to March 2020 and as I can't research sufficient individual shares to spread the load, had identified 20 IT's to do the job for me. It's a mixture of income and growth funds and MRCH is in there.

[zac0_4] 09/10/2020 22:56

aurelius5 - I suppose the answer to your question is in my case diversification of income streams. I'm sure, as you say, the music might stop with growth funds but until it does they currently far outperform income focussed investments. Here's an example: had you invested £10,000 here 10 years ago your capital would today be worth £9,735. However, you'd have enjoyed dividend payments of £6,438. Had you invested £10,000 in the Fundsmith Equity fund 10 years ago, and at the end of each year sold units to the equivalent value of the MRCH annual dividend, you'd have paid yourself the same income, £6,348 but your capital is now worth £34,813!! Growth or income? What matters is total return. I hold here but for how much longer I'm not sure.

[zac0_4] 09/10/2020 22:34

jeffian - I too am an old codger! (I think) Yes, there is a psychological barrier to overcome when selling shares or units to provide income. I've overcome that with my holding in Fundsmith, which by far is my largest holding. I'm invested directly with the Fundsmith team. I've set up an automatic withdrawal process. They sell units and provide me with a quarterly payment, taken from my capital, just like a dividend. So far it's worked a treat. I've taken income to date equivalent to 5.8% of my investment, and my investment is still showing capital growth of 27%. Happy with that to date. Good Luck.

[aurelius5] 09/10/2020 19:03

It's unclear why so many who apparently seek growth own income trusts. Bear in mind that most long term capital growth comes from reinvested dividends. An income trust will pay you through thick and thin,but one day the music stops with growth funds. See where SMT is in three years. Horses for courses.

[tim 3] 09/10/2020 18:24

Yes me too and it's also so much easier to get you head round spending your income not your capital but am in both camps these days after so many years of ridiculous under performance of income investments particularly individual shares.The AZN vs GSK comparison is a good example GSK pays a good dividend but has gone virtually nowhere in the last 3 years where as AZN pays a much smaller dividend but has doubled in the same time.I know although in the same sector but each has different profiles but it's by no means an isolated example.

[jeffian] 09/10/2020 18:05

I've been interested by the discussion here on the merits of chasing income vs. capital growth. I've always been an income-seeker which stood me in very good stead from around 1998-2008 when I bought unfashionable 'value' shares when the market was all dot.com (where are they now?). However, I have been persuaded by the arguments of Terry Smith et al and have come round to the view that 'money is money' and it doesn't much matter whether you call it 'capital' or 'income'. Having said that, I can't shake the habit entirely and have bought a few of these at this level. I think it's psychological; I'm an old codger now and was brought up on a lifetime mantra of 'grow capital / spend income' and it's a hard habit to shake.

[chc15] 09/10/2020 11:52

That's done well, didn't have it on my radar. I have around 30 investment trusts, way too many, hard to track them all. Best ones being SMT, III and MWY.

[zac0_4] 08/10/2020 16:12

This maybe of interest to some. If not, please ignore. I hold 4 investment trusts. HHI, HFEL, MRCH and SSON (Smithson Inv Trust). The first 3 for income and the latter for capital growth. Smithson is coming up to it's 2nd anniversary following it's launch in Oct 2018. To date it's delivered 52% growth. Might be of interest to some who are looking for further diversification.

[chc15] 08/10/2020 13:07

Yes good day, real test is over next few weeks though.

[tim 3] 08/10/2020 10:35

Not a bad reaction all things considered.

If it holds here could easily see £4 with a little help from Mr market.

Not today obviously !

[panshanger1] 08/10/2020 08:08

6.8 pence ex dividend Interesting to see how this behaves now

[tim 3] 07/10/2020 13:55

Also nav is now close to zero from 4% discount last week.

Real test will be tomorrow.

[tim 3] 07/10/2020 13:43

Don't forget its ex divi tomorrow.

[gateside] 07/10/2020 13:31

What's changed the sentiment here?All I can think in that from the results investors feel the dividend is safe

[chc15] 07/10/2020 10:16

I'm well diversified, but here, me and Zac are in the same boat, been tricked into going for income. But in the words of Jack Bogle from Vanguard and Terry at fundsmith: 'never go for income'.

[zac0_4] 07/10/2020 10:00

SS - I've simply answered the question you asked, that is, "what has outperformed during the crisis?" If you don't like the answer then don't ask the question! I'm far from a gambler. The funds I listed I've been invested in for a number of years. Will they continue to grow? I've no idea. But for me they're as good a place as any to invest. I hope we finally see some growth in UK listed dividend paying stocks as, to date, all my holdings have performed poorly.

[chc15] 07/10/2020 09:03

I hope you're right, but I think there will be growth, and funds like Fundsmith will continue to do well. Even a global tracker will be decent in the years ahead, best to diversify anyway.

[superiorshares] 07/10/2020 07:37

Zac_04

You are the Horse Gambler that looks at the past and tell his fellow Punter . " I put my money on that horse at 33/1" 3 days after the race has finished .

Can you pick out the Growth funds for the next 5 years ?
There isn`t going to be any .

On MRCH . was doing a Trawl . I thought why on earth would a high yield invest Trust use the FTSE ALL share as its benchmark . Beyond me that .

High yielders are going to come back big time , because there will be little or no growth over the next 2o years .

I am just going to wait and see what is left that can actually pay a sustainable dividend . Price will be a lot lower than today though .

[gateside] 07/10/2020 07:36

But MRCH is a FTSE investment trust. It would be good to compare it to companies in the UK, as that's what it invests in.The big omission is that MRCH does not hold any gold. POLY is in the FTSE100 and pays a good dividend too. Performance has been excellent. MRCH missed out there.Too much focus on Tobacco here, an industry in decline.

[tim 3] 06/10/2020 23:13

With savings delivering less than 2% has to be worth looking at.

[gateside] 06/10/2020 22:57

Gold, Renewable energy, Miners, Pharmaceuticals, to name but a few, have all outperformed in this crisis!

[zac0_4] 06/10/2020 21:04

SS - "Can you name stocks that have outperformed in the crisis?" - how about the following global equity / sector index funds (all with 12m performance figures - L&G Global Health & Pharma +15%, L&G International Index +8%, L&G Global Tech +39%, Rathbone Global Opps +29%, Fundsmith Equity +14% or Blue Whale Growth +24%. Hopefully, this answers your question.

[zac0_4] 06/10/2020 20:59

SS - "why does a high yielding investment trust have the FTSE All share index as its benchmark?" - I've no idea. But that's what MRCH list as the benchmark on their website!

[superiorshares] 06/10/2020 18:47

And Zac-04

Can you name the stocks please that have outperformed in the crisis ????

You will get there eventually ???????