Merchants Share Discussion Threads

[tim 3] 22/6/2020 09:22

I also used to believe that nothing ever changes in the market however this fed buying is an extremely powerful force if they are pumping huge amounts into the market and buying stocks and continue to do you are basically changing the fundamental way it works after all buying is what drives prices up!

I still think there will be crashes but they could be very different from what we are used to maybe very fast affairs with huge falls followed by quicker recoveries?

I agree MD that is highly likely.

[mister md] 22/6/2020 07:56

within a year (or two max) we will see FTSE 7000 again and 500p + MRCH shareprice. Thats a 25% increase from here (excluding the dividend). You can call me a plonker in a year (or two) if I'm wrong ;)

[zac0_4] 21/6/2020 23:18

I think it's time for bed . . . I've done it again . . . 31.12.09 to date! I blame old age and red wine! Goodnight all!!

[zac0_4] 21/6/2020 22:35

Apologies for typo . . . should read 'since inception (2009)' In fact in 10.5 years (31.12.19 to date) the fund has delivered a return of 364%

[zac0_4] 21/6/2020 20:04

CT2000 - you are correct in theory. However, your example assumes the fund never delivers growth. Also, you are comparing the dividend paying holding with either the S&P or FTSE index. Compare it to the fund I have used ie Fundsmith. Total returns for 5 years 148% v 8%, 3 years 48% v -5% & 1 year 11% v -15%. Annualised growth from the fund since inception (2019) has been 18.2% It's important to examine returns from our investments from time to time to ensure we are actually getting value for investing our cash. Good luck.

[tim 3] 21/6/2020 19:09

I take your point chart trader, a lot is about timing and I learnt a long time ago buying crashes is usually far more profitable than selling them in the long term.Am not bearish on mrch I own them but maybe not as bullish as I was.I also was around for the crash of 1987 let alone the tech crash @ feeling old lol

[mister md] 21/6/2020 18:54

time in the market vs timing the market and all that ...

[zac0_4] 21/6/2020 17:31

Hi MM - Yes, the UK index is clearly underweight in its exposure to technology compared to other global indices. I fear this may continue to be a drag on share price performance for years to come. That, and Brexit still looming over us!

Fingers crossed with regards to continuing dividend payments, although I don't think it's a given that we won't see a decrease. Latest estimates are for between 30 and 50% of UK dividend income to disappear this year. I guess the key is that companies who've cut, or suspended, payments this year re-introduce them over the next 18 months or so. However, I suspect some will use the opportunity to re-introduce at lower yield levels!

[mister md] 21/6/2020 15:55

not many have been as consistent in paying (increasing) dividends as this one over the years though - eventually the shareprice should recover too with their solid (if unexciting) holdings. Though agreed, in hindsight, the USA and its Technology stocks was the place to be over the past decade or so ...

[tim 3] 21/6/2020 15:17

Of course past performance does not mean the same will happen in the future but in the current environment and for the foreseeable future I just can not see the UK outperforming the US.If there is a double bottom or crash then fine I will likely commit the rest of my investment funds to the market but again unless something major changes with limited exposure to the uk.

[tim 3] 21/6/2020 14:54

Thanks zac.

I think its sometimes seems a better idea to withdraw income rather than capital but as you say in the long run its total return that really counts.

Chart trader

If you look at that period when the S&P halved so did the FTSE AND mrch dropped even more probably due to gearing, after that the S&P outperformed the FTSE and MRCH considerably.

[zac0_4] 21/6/2020 14:40

ct2000 - I'm not sure of the point you're trying to make. Total return is all that matters! If you're enjoying a 7% dividend per annum at the expense of a 10% capital decline, for example, then what's the point?

I've compared the 5 year total return from Merchants dividend paying trust to Fundsmith Equity fund and the difference is startling. Merchants has delivered a total return of about 8% over the last 5 years against 148% from the Fundsmith fund over the corresponding period.

You tell me which is best!!

[zac0_4] 21/6/2020 12:15

Tim. My largest holding is in the Fundsmith Equity Acc fund. I invest directly with Fundsmith and they off a facility to set up regular withdrawals, just like dividend payments. So I don't have to get over the psychological barrier of physically selling part of a holding!

I built up a position in the fund from April 2018 through to August 2019. I haven't invested any more capital since. In August 2019 I set up a regular payment programme equivalent to 4.5% of the value of the capital and to date have received payments of 3.75% of the 2019 August value.

Despite withdrawing 3.75% from the fund over the last 10months my overall capital has grown by 24%.

I really am questioning myself over remaining in dividend paying shares and trusts!

Good luck with your investments.

[zac0_4] 21/6/2020 12:02

My 3rd type of holdings are Investment Funds (OEICs). Here's my Top 3 over the last 6 months: L&G Global Tech Acc Fund +20%, Rathbone Global Opps Acc Fund +15% & LF Blue Whale Growth Acc Fund +14%. My botton 3, whilst also showing a loss, have managed to preserve capital far better than Merchants with total returns ranging from -9% to -3%.

I only invest in the accumulation version of the funds and manually withdraw on a quarterly basis as and when required.

I think long term I will be migrating more of my capital to funds. They seem less volatile and, if you pick the right ones(!!) can deliver good total returns.

The only fund that I'm aware of that can automate a regular withdrawal, just like a dividend payment, is Fundsmith Equity Acc fund.

[zac0_4] 21/6/2020 11:49

Tim. I have a lot of thoughts on this topic so will probably share in 2 or 3 separate posts. On the basis that the best time to look for long term winning investments is when the battlefield is strewn with corpses I've analysed my holdings' performance over the last 6 months.

My individual dividend paying shares are all considerably down with a number of dividend cuts to contend with as well.

My UK dividend paying investment trusts are also well in the red. HHI total return since Jan 1st is -18%, whilst Merchants has delivered -27%. This now means it has to deliver a total return from here of 37% just to break even from its Jan 1st start point . . . . !!!

[tim 3] 21/6/2020 10:06

Zac

Have also got serious questions about the UK market.

After spending a fair amount of time looking at the charts and how markets behave over many years particularly the last decade or so a familiar pattern emerged, the uk, FTSE in particular often follows the US down sometimes dropping even further but does not grow anywhere near as much in the good times.

Away from the charts the FTSE's reliance on "old world" type companies like oil and tobacco and other very mature industry companies does make me question whether this will ever change.Although I still like the pharma's.

I previously have been a big believer in the UK particularly because of the security I thought it offered and big dividend yields but events over recent history have give cause to question this.

Even though the US is not cheap and there is certainly risk, I am not fully invested by a long way at present, I think if it does crash then the UK will still be hit hard but the recovery is likely to be quicker in the US.I also think if we don't crash then it will continue to outperform the UK.

For this reason I have used the recent drops to reposition my portfolio with more exposure to the US than the UK using S&P etf's although am keeping an eye on investment trusts too.

I still hold MRCH, its track record on dividends particularly if you need the income is hard to fault although you could argue this has come at the cost of growth.

A lot depends on your financial objectives but for me total return is looking a better option than going for high yields.

IMO.

[zac0_4] 20/6/2020 16:16

This is probably my worst performing investment, other than RDSB, since the turn of the year. Total return of -27%. I can't make my mind up as to whether it's down to the simple fact that it's so heavily tied to the UK stock market, which has underperformed for probably a decade, or that chasing dividends is counter-productive in that companies don't reinvest enough of their profits to develop and strengthen their businesses. Something's wrong!

[zac0_4] 14/6/2020 17:57

I was hoping Investment Trusts might be able to weather the storm. However, the more I read, certainly around UK dividend income, the more I have to agree that we're likely to see dividend cuts across UK investment trusts in 2021.

[poikka] 14/6/2020 09:19

For income planning, I'm allowing for most of my ITs' divis to reduce by 30% next year. I wouldn't expect a greater reduction.

[che7win] 08/6/2020 14:01

NAV continues to rise nicely