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Should I sell these two?
Keith Cobby
Posted: 15 December 2017 17:11:30(UTC)
#23

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We hold HFEL for income and Pacific Horizon for growth.
2 users thanked Keith Cobby for this post.
Mr Helpful on 15/12/2017(UTC), Mickey on 15/12/2017(UTC)
laang lee
Posted: 16 December 2017 20:07:47(UTC)
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Coming in a bit late on this question, but do not see any answer given. I want to contribute to the general line, even though I cannot answer either.
What has gone wrong with Aberdeen Asian inc.? I thought OP held IP Asian Equity inc. until re-reading. I think What has gone wrong with IP Income and Growth ? may have been answered in the financial press.
I remember the high hopes for Newton Asian Income, ( Tim D ) and then other co's joined the bandwagon.
It looks like Asian Income will come big in the future. HL promoted Income and Growth for years, "Look how your fund will grow if you reinvest the Income". But not promoted so much nowadays.
Like several here, I hold HFEL, and bought it when it was New Star - ( and they have a brilliant future behind them.)
I take the dividends, perhaps one day I may calculate whether or not I'd have been better off reinvesting - best not to. I've had about £165 per £1000pa for past couple of years. No big deal - But. This year have seen some growth, at last - can I sell before the crash.?
When BG was mentioned (can't see but was it colin overton #14? )
I thought to graph compare my Henderson against Newton, Aberdeen, Jupiter and BG. etc. #18.
BG Pacific came out tops by a mile.over 5 yrs. Beat BG EM. But over one year they (Still top) were similar. My Henderson did well enough for me to have no regrets about holding - but I could have done better. For King Lodos,- I checked Vanguard Asia, and a couple of other brand trackers, but nothing to write home about.
Does big boy have the answer.?
When I go to Asia, I see massive, rapid change/development. Also, some shareholders get a much bigger share of the profits than others.
I don't have the info. to hand, but doubt if there's much difference in a UK portfolio and an
Asian one over the past 10 years. (Perhaps I should not have said that - there are millions of Asians a lot-lot richer than 10 years ago.) Aberdeen + IP - Aberdeen v IP ?
I do like to see a reply from OPs where they say what they've done, following a question like this. Maybe, no change, because next year both funds could bloom, but neither are doing particularly well at the moment.



1 user thanked laang lee for this post.
Tim D on 17/12/2017(UTC)
laang lee
Posted: 16 December 2017 20:27:21(UTC)
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Ooops ... #18 should read #19.
King Lodos
Posted: 16 December 2017 22:43:54(UTC)
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laang lee;54305 wrote:
For King Lodos,- I checked Vanguard Asia, and a couple of other brand trackers, but nothing to write home about.


This is something that could save you a lot of money and energy if you get your head round it early on..

This is a chart for Aberdeen Asia Pacific (picked at random):

https://i.imgur.com/yQImrxm.png

- Red is how the fund's done;
- Orange is how the sector's done (all the funds in the space averaged together);
- Green is how the benchmark's done (this is what you get with an index tracker).

Say there are 300 funds investing in Asia Pacific .. We hear about the best 10; the worst 10 probably close.

The question is can you pick the best 10 funds over the next 5 years? And generally people can't .. Statistically, the worst rated funds are most likely to outperform.

So if you keep buying funds based on what they've done in the past, your performance is probably going to be somewhere between the red and orange line (or worse) .. If you buy the index, you get the green line .. It will always look unimpressive, because it's the average – and we don't hear about the average .. We hear about yesterday's winners
10 users thanked King Lodos for this post.
Micawber on 16/12/2017(UTC), laang lee on 17/12/2017(UTC), Sara G on 17/12/2017(UTC), Jim Thompson on 17/12/2017(UTC), Jeff Liddiard on 17/12/2017(UTC), cliff aner on 17/12/2017(UTC), Tim D on 17/12/2017(UTC), Rickenbacker Al on 18/12/2017(UTC), Alex Peard on 21/12/2017(UTC), Guest on 22/12/2017(UTC)
Tim D
Posted: 17 December 2017 15:09:01(UTC)
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laang lee;54305 wrote:
HL promoted Income and Growth for years, "Look how your fund will grow if you reinvest the Income". But not promoted so much nowadays.


I have a theory this is because income strategies (ie buying yieldy stuff) are to some extent value strategies (the dividend-to-price-ratio is a weak value factor but a value factor nonetheless). And value has underperformed for years now.
King Lodos
Posted: 17 December 2017 15:24:19(UTC)
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They are – but they were doing quite well till about 2015.

Probably the main reason value strategies underperform is that they tend to put you in cyclical stocks (like banks and natural resources) – which usually do better later on in the business cycle (when rates are rising, and growth increases demand for materials).

Dividend strategies are value-like, but have tended to put you in sectors like Healthcare – which got a bit expensive .. And when these stocks get bid up too high, earnings yields risk not covering dividends, and dividend yields risk falling below the requirements for the sector .. That's just my take on it – and I think it explains some of the problems Woodford's having

Andrew Smith 259
Posted: 17 December 2017 16:16:39(UTC)
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King Lodos;54276 wrote:
Keith Cobby;54266 wrote:
Hasn't Lindsell Train's outperformance been due to the very large holding in the management company.


I don't know .. looking through past reports, the holding in LT has generally been lower – sometimes only 8 or 9%.

It's also held treasuries, preferred shares, and shifted in and out of its own funds – doing a great job of sailing through the financial crisis .. I'd like to get the reports from 2007-2009 to see what they did there.

I've roughly backtested most of its core portfolio – and (minus Nintendo) it's done around 9% annualised since the 90s, vs 5% from the US index .. Very well run portfolio – not sure whether the premium and performance fee make it a good investment yet, as apart from its holding in LT, you can recreate the other 60% of the portfolio extremely cheaply



That’s an interesting thought. You’re only looking at about 12 stocks with very little turnover. The only stock I might not be tempted to buy is Pearson. But it’s interesting how they are still sticking with Pearson.
Big boy
Posted: 17 December 2017 16:45:08(UTC)
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We seem to have many very clever people on this site and we go round in circles. No one I know can forecast the future so all Managers start from a level playing field. I would buy the largest discount ( providing most of the investments are quoted daily) You can only buy a big discount within the Investment Trust sector as you will never buy a Unit Trust at a discount....always pay a premium. The simple and most advanced answer to the question is switch to SST and WPC. Don't worry that the Manager has pink eyes or 3.567% is invested in nappy manufacturing in China as you will not add any value. Buying at big discounts is very uncomfortable at first but very satisfying when others start to join you having realised that the sector etc has been undervalued. You get a double whammy as discounts narrow and a higher income is provided.

Forget about investing in the top 6 Global Companies. ITs can give you exposure to the small and exciting Cos of the future.
5 users thanked Big boy for this post.
Mickey on 17/12/2017(UTC), Tim D on 17/12/2017(UTC), Luca Brasi on 17/12/2017(UTC), Chris Howland on 18/12/2017(UTC), IanL on 18/12/2017(UTC)
King Lodos
Posted: 17 December 2017 17:51:26(UTC)
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Andrew Smith 259;54326 wrote:
King Lodos;54276 wrote:
Keith Cobby;54266 wrote:
Hasn't Lindsell Train's outperformance been due to the very large holding in the management company.


I don't know .. looking through past reports, the holding in LT has generally been lower – sometimes only 8 or 9%.

It's also held treasuries, preferred shares, and shifted in and out of its own funds – doing a great job of sailing through the financial crisis .. I'd like to get the reports from 2007-2009 to see what they did there.

I've roughly backtested most of its core portfolio – and (minus Nintendo) it's done around 9% annualised since the 90s, vs 5% from the US index .. Very well run portfolio – not sure whether the premium and performance fee make it a good investment yet, as apart from its holding in LT, you can recreate the other 60% of the portfolio extremely cheaply



That’s an interesting thought. You’re only looking at about 12 stocks with very little turnover. The only stock I might not be tempted to buy is Pearson. But it’s interesting how they are still sticking with Pearson.


And a performance fee which means you'd be buying on a 12% premium and paying a 3-4% fee.

I found their report documenting 2008-09
http://www.lindselltrain.com/~/media/Files/L/Lindsell-Train/Attachments/Reports/interim-report-2009.pdf

Protected by holding very defensive stocks and a few government bonds they were selling to buy equities cheap.

Paying that fee that makes no sense .. What they do well though is discipline and sticking to a plan – it's interesting to read how they were thinking through the crisis .. Nick Train mentions (I can't recall in this report or another) that in 2008/09, no one knew what stock markets would do – he compared it (as I often like to) to Japan falling 80% over 20 years .. That was a prospect at the time, and they were selling the best performing assets (LT bonds) and buying very select stocks
1 user thanked King Lodos for this post.
Tim D on 17/12/2017(UTC)
King Lodos
Posted: 17 December 2017 18:09:19(UTC)
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Big boy;54330 wrote:
We seem to have many very clever people on this site and we go round in circles. No one I know can forecast the future so all Managers start from a level playing field. I would buy the largest discount ( providing most of the investments are quoted daily) You can only buy a big discount within the Investment Trust sector as you will never buy a Unit Trust at a discount....always pay a premium. The simple and most advanced answer to the question is switch to SST and WPC. Don't worry that the Manager has pink eyes or 3.567% is invested in nappy manufacturing in China as you will not add any value. Buying at big discounts is very uncomfortable at first but very satisfying when others start to join you having realised that the sector etc has been undervalued. You get a double whammy as discounts narrow and a higher income is provided.

Forget about investing in the top 6 Global Companies. ITs can give you exposure to the small and exciting Cos of the future.


Your strategy is one way to buy a discount .. But it's not the only way – and I wouldn't say you're buying on very big discounts.

If stocks are 50% overvalued, then buying a trust on a 20% discount isn't much of a bargain .. Jim Rogers made a career buying things on much more distressed valuations – e.g. you can pick up Russian stocks nearly 1/10th of the value they were going for 10-15 years ago .. That would be like buying on a 90% discount.

Alan Selwood
Posted: 17 December 2017 21:25:22(UTC)
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Big discounts imply either that the market is undervaluing the assets hugely, or that the risk of total loss is uncomfortably large.

In this sort of situation, you can gamble your house and your shirt if you wish, but remember that although winning in this situation would be an incredibly good outcome, getting it wrong means wipe-out. I like the James Bond quote 'Always have a Plan B'.

So if you really want to try for massive gains from what is hated by others, temper it with assets held elsewhere that will allow you to invest another day if your gamble flops.

Ask yourself : How much risk do I NEED to take to get an adequate outcome for me?
2 users thanked Alan Selwood for this post.
antigricer on 18/12/2017(UTC), Guest on 22/12/2017(UTC)
King Lodos
Posted: 17 December 2017 21:56:42(UTC)
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I think if you assume markets have generally got it right, then the edge in low valuations is time-scale – being that fund managers are judged over very short periods.

By the same measure, it may be that things aren't discounted enough sometimes .. I recall an endowment manager who'd done very well buying things on distressed valuations – but I think the financial crisis might have hit and left them holding a lot of things that became worthless .. Possible Icarus analogy.

Good piece on Lindsell Train's site, about the 12.6% annual returns from Unilever over 20 years, and how only 1.3pa was explained by the rise in valuation .. When I look at popular stocks – HL right now: 3x bitcoin shares, mining, banks, dividend payers – I think quality companies may be the overlooked bargains in this market (despite them predicting somewhat lower returns)

http://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/investment-insights/2017/Confounding%20Compounding%20-%20February%202017.pdf
1 user thanked King Lodos for this post.
Guest on 22/12/2017(UTC)
laang lee
Posted: 21 December 2017 04:41:16(UTC)
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Should I sell Aberdeen Asian Income and Perpetual UK Income & Growth.?
Difficult question "Should I sell ?"
There was the other :- Should I sell B/R Gold&General, ITV & Saga.
And : On Transactions, there was (paraphrase) - Saga looks cheap at this price - any comments?
I guess interested parties have read Mark Barnetts interview on Citywire.

I come back to this topic because, as several people have HFEL, many of them for the interest. I have HFEL, and commented. " I got £165 per £1000pa for the past 2 years"
What I should have said, was that I got £165, per £1000 over the past two years. Sept-Sept.
Some will have noticed my mistake. Some not noticed I claimed 16.5% interest.

About £80 last year, and predicting Dec, guess £90 this year, roughly. That is still good interest.

On my Friends Life ( Was Sun Life, Axa, Friends Life, now Aviva.) Sun Life UK Distribution.
I got £33 per £1000. *A wide range of shares,property, bonds and fixed interest.*
I don't know how to see whether this type of fund has fared better in a downturn, but this seems to be the accepted principle, along with (say) Ruffer or RIT etc. Rather than all equity.
It seems to go up and down with the FTSE 100 however. Whatever.

You makes your choices and takes your picks, but for those with large sums invested, or to invest your choices can make a big difference.
I confess to a bit of a fright a few days ago when SMT, Alliance Tech, Polar Tech, Monks, and others took a bit of a dive. But Edinburgh Worldwide has gone up, and even FEET has gone into the black for (my) first time.

Comparing 2017 with the previous 2 or 3 years, this has been one where investors (should) have made money. Think of all the examples. How many times do Blue Prisms come along.? or IT performance like Independent.?
But it is next year we need to think about now, always *interesting times*.

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