Compound Income
  • Blog
  • Scores
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact



A month of Positives.

2/12/2019

0 Comments

 
November turned out well for investors with a few potentially positive developments and consequently positive returns from equity markets around the world. Firstly there seemed to be some positive developments towards a scaling back of the US / China Trade War, although this was subsequently delayed. 

Meanwhile in poor neglected UK there were some hopes of a BREXIT deal being done which then led onto the announcement of a General Election. Now while this introduces another layer of uncertainty into an already cloudy outlook, at least there were some positive looking polls for the Tories. This has led some to believe that they might be able to get a working majority and thereby "Get BREXIT done" as their campaign slogan says. 

The upshot of this for the under owned UK market & the more domestic focused sectors found in the Mid Cap and Small Cap sectors, was that they enjoyed stronger gains than the rest of the market and the larger more internationally exposed blue chips as the pound also rallied a little on election / BREXIT resolution hopes. In terms of the UK Market timing signals that I calculate, given the positive returns across the board all the main indices are still above their moving averages signalling that one should remain invested. 

Given the news flow and the moves seen in the Mid and Smaller Cap parts of the market these are more bullishly placed than the broader indices. This also helped the Compound Income Scores Portfolio (CISP) to a strong month - see the highlighted links for more details.
In summary the CISP returned 6.5% in the month versus the 2.2% from the FTSE All Share. For the year to date this leaves it with a total return of 21.4% versus 15.3% for the index.  

On doing the screening for potential sales and replacements this month proved to be less positive. As the few names that were potential sales looked a bit marginal and I'm inclined to give them the benefit of the doubt for now given the forthcoming General Election and the likely winding down thereafter for Christmas. In addition I struggled to find many attractive looking alternatives that were not already highly rated. So I'll look to do more of a refresh in the New Year. 

Talking of which that's probably it from me on here for this year, unless I get any good ideas or have any thoughts I wish to express post the election outcome. But barring that may I take this early opportunity to send Seasons Greetings and I hope that the markets are positive for you too in the next month and next year too for that matter, 
Picture
0 Comments

A bit more Chat on IT's & a 5.4% yield from Residential Property.

22/11/2019

0 Comments

 
Further to the last post about the possible benefits of Investment Trusts I see or rather heard the FT Money Show Podcast is talking about this too this week. The episode covers Family Trust where wealthy families like the Rothchilds hold a large stake so you can invest along side them. Coincidentally it also covers the Dividend Heroes and also the benefits of the IT structure and independent boards etc.

Along the way it also touches on investing for income and see the closed end structure as an ideal way to do this via alternative assets like property and infrastructure or Green energy etc. They did mention though that many of these (like the Green energy funds) stand on big premiums. If that sounds of interest you can listen to it here. 

With premiums and discounts in mind I did  notice some results from an interesting looking Property REIT yesterday, called Residential Secure income (RESI) which in common with many other REIT's is standing on a discount, around 15% in this case and offering a decent yield of around 5.4% with the price at 92p and the NAV having moved up to about 108p from launch. Unusually it invests, as its name suggests, in Residential Property let to Housing Associations, part rent part buy owners and in the main Retired folk. They are just about fully invested after coming to the market just over two years ago and are now paying their target dividend of 5p which they hope to grow in real terms over time and achieve an 8% total return. So while overall it may not be that exciting and could I guess go to a bigger discount it does seem like a reasonably attractive way of becoming a social landlord without all the hassle. 

While housing is quite a battle ground in the election presumably this type of operation could face some political or regulatory threat or opportunities depending on the shape of the next government. So maybe dull and not without it's risks but seems an interesting play on residential property and the housing shortage at the affordable end at a discount with a decent and potentially index linked yield, unless I'm missing something.
Picture
0 Comments

Woodford Income Fund debacle highlights Benefits of IT's for the long run?

20/11/2019

0 Comments

 
Picture
IT's v Open Ended Funds Managed by the same Manger. Source: Money Observer
I saw some good article in Money Observer recently which highlight the benefits of Investment Trusts or IT's over their open ended cousins. The table above highlights this, although worth noting that the 10 year period covered was obviously positive which will have helped those IT's with gearing. You can read the full article from which this table is extracted here if that is of interest. 

You may be sceptical about this and I know that many are keen on either Indexing to avoid the risk of picking and paying for an active fund manager who then goes onto under perform. I'm sure that many hit by the Woodford fall out will be feeling that way. Indeed even the IT structure of his Patient Capital Trust didn't save investors from his poor strategy, highlighting the need to understand the risks that managers are running when selecting a fund to invest in.

Talking of risks, others I know prefer to go it alone and go their own way, often with very focused or concentrated  portfolios, which is fine when things go well but could be painful when things don't. Indeed I have done that successfully myself in the past (although I'm more diversified these days) but I have been doing it in recent years with the Compound Income Scores Portfolio.  This  has out performed well over 4 and half years or so that it has been going (see here for details) but that has not been without some volatility along the way, although the rewards have been more than adequate to compensate for that. If you're interested in trying that yourself you can read how you can gain access to the Scores here if you'd like to use them to help you run your own income portfolio.

Aside from that the other way to go, apart from Index Trackers, would I suggest  be a portfolio of quality IT's to give you a diversified and less volatile ride (than a concentrated portfolio) with a decent chance of income growth on top from a selection of the well know Investment Trust Dividend Heroes as they are known as they have grown their dividends for decades. Again see the image below from Money Observer for details of these and you can read the full article here if that is of any interest. Again you would need to investigate the strategy pursued by the manager and the markets they invest in to make sure you are comfortable with the risks they are taking. 

Whatever you are doing or if you decide to go your own way or invest in Heroes, however you decide to invest in the future, watch how you go in these interesting times.

Picture
Dividend Heroes - click image to enlarge Source:Money Observer
0 Comments

October Update

4/11/2019

0 Comments

 
Picture
The month passed without too many alarms but with a few surprises and political shenanigans along the way. This included an unexpected deal which seemed at one point to have a chance of going through, before being scuppered by the remain favouring majority in the houses of parliament. 

Market & Portfolio Returns Comments.
For UK equities this meant a pick up for the more domestically sensitive sectors and indices like the Mid 250 and Small Cap which delivered positive returns in the month. While the broader more international larger indices the FTSE All Share, FTSE 350 & FTSE 100 all saw  negative returns as the effects of a relief rally in Sterling hit sentiment on some of the larger stocks and sectors. For the Compound Income Scores Portfolio, with its bias toward Mid & Smaller stocks, this meant a better month relative to the broader market as it clawed back some of the under performance from last month. The small positive return left it up by 14% YTD which is 1.2% ahead of the FTSE All Share. If it is of any interest you can see the full performance history since inception in April 2015 here and detail about the Scores which help with the stock selection here. 

Market Timing Indicators & Outlook Comments.
Despite this the Market Timing indicators that I produce for the UK markets remained in positive territory to varying degrees with the 250 being the most bullish & the Small Cap Index the least with FTSE 100 in between. Given this and despite a small tick up in the US unemployment rate, no sell signal has been generated again this month. So despite all the political worries domestically over BREXIT and the forthcoming election and the on going trade dispute and global economic slowdown one should probably remain invested. 

Worth bearing in mind though that the US Manufacturing ISM index remained below 50 this month (recession territory) and the US yield curve went negative a few months back (an advance warning of recession). Thus far though, despite the economic slowdown, a robust employment and wages background seems to have been sufficient to keep things ticking over kept consumers spending. Corporate spending however seems to have turned quite cautious with investment spending tailing off quite dramatically and not just in the UK due to BREXIT, while share buy backs and dividend have continued to support markets. 

This has however left UK equities looking pretty unloved and good value compared to both their history and other asset classes. This also suggests it is probably worth remaining invested as if a few things turn out better than expected then there could be quite a decent rise in sterling based assets including equities. If not then at least the lower valuations than elsewhere mean they might offer more downside protection than some other markets.

Summary & Conclusion.
So we survived the often tricky October without too much harm despite all the scares along the way. Timing indicators and valuations suggest that in the UK at least one should remain invested for now. While in the UK we also have the General Election and associated BREXIT bullshit to look forward to. We are also entering a seasonally stronger period with the potential for some resolution of the political log jam, if any party can come out of the election with a working majority, big if I know. I must admit for about 5 minutes there I thought that might have been possible if the Tories had done some kind of leave pact with the BREXIT party, but Nigel Farage seems to have ruled that out now. This seems to make a split of the leave vote more likely while remain favouring parties seem to still be talking about some kind of rebel alliance and many are already talking about tactical voting (sigh).
To me it looks like a hung parliament or or perhaps some kind of remain coalition might be the end result but who knows?!

​
0 Comments

Reasons to be cheerful, don't be too bearish?

11/10/2019

0 Comments

 
This may be a triumph of hope over expectation but just a couple of positive straws in the wind as US / China talks resume raising hopes yet again of a possible toning down or maybe even an end to the escalation of their trade war. This would tie in with my theory about Trump's Machiavellian plan to game the US economy for his electoral benefit. 

Meanwhile in the UK their was an unexpected turn of events as the BBC reports - "Brexit Secretary Stephen Barclay is to meet the EU's chief negotiator later - after Prime Minister Boris Johnson and his Irish counterpart agreed they could "see a pathway to a possible deal".

Notable movers this morning are the House Builders and Banks as markets maybe react to the possibility or an unexpected deal to leave the EU and therefore less drastic times for the domestic economy. Even the soggy old Pound is up a bit. Or maybe it just reflects some bear closing ahead of the weekend in case there are some positive developments?

Nevertheless it is worth remembering that the UK market is pretty unloved and beaten down in terms of its valuation, so any positive surprises could lead to a sharp bounce, I suspect, if indeed there is a "pathway to a possible deal" which could be a Stairway to Heaven for Brexit supporters. Or will it be another Long & Winding Road to an extension, a Highway to Hell of another referendum or a Labour Government , a Road to Nowhere or the Hotel California - take your pick. Personally I still suspect we'll be forced into another extension and probably a second referendum down the line so that the MP's & the EU can get the "right" result as they see it this time. 

Sorry for the tired old music analogy, but couldn't resist on a day when incredibly HMV said it was going to open a massive new store spanning 25,000 sq ft across one floor - almost the size of 12 tennis courts - HMV Vault in Birmingham promises to become a "Nirvana for music and film fans". This comes apparently ahead of the 2nd National Album day tomorrow - encouraging fans not to skip but to discover albums. Strange days and before I Ramble On I'll just finish up by saying bizarrely I've "revisited" an album - Abbey Road - 50th Anniversary which has been in the news and apparently topped the charts, having missed it first time around. But ironically I've done that via Spotify - so good luck to HMV's & indeed Thomas Cooks Travel agents new owners as I think they are probably rowing against the tide. 


0 Comments
<<Previous

    RSS Feed

    Google+

    Archives

    November 2019
    October 2019
    August 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014

    Categories

    All
    32Red
    Aberdeen Am
    Admin
    A G Barr
    Alliance Pharma
    Alternative Telecoms
    AMEC
    Amino Technologies
    Amlin
    Anglo Pacific
    Asset Allocation
    Auto Trader Group
    BA Systems
    BATS
    Behavioural Finance
    Bellway
    Berendsen
    BHP Billiton
    Bloomsbury Publishing
    Bodycote
    Books
    Bovis Homes
    BREXIT
    Britvic
    Catlin-group
    Central Asia Metals
    Centrica
    Character Group
    Churchill China
    Cineworld
    Clarkson
    Commercial Property
    Compound
    Computacenter
    Connect Group
    Croda
    Currencies
    Demographics
    Diageo
    Diploma
    Directors Dealings
    Dividends
    Easyjet
    Economics
    Emerging Markets
    Emis
    Empiric Student Property
    Etfs
    Fairpoint
    Ferguson
    Ferrexpo
    Finsbury Foods
    Food Retailers
    Forterra
    Games Workshop
    Gateley
    Go Compare
    Goid
    Greene King
    GSK
    Hargreaves Services
    Hays
    Headlam
    Hedge Funds
    Hill & Smith
    House Builders
    Howden
    HSBC
    IG Group
    Imperial Tobacco
    Indivor
    Inflation
    Insurance
    Intermediate Capital
    Interserve
    Investment Trusts
    It
    ITV
    James Halstead
    Jarvis Investment Management
    JLT
    Jupiter Fund Management
    KCOM
    Kingfisher
    Legal & General
    Lloyds Bank
    Maintel
    Man Group
    Market Timing Indicator
    Market Valuation
    Marston's
    Matchtec
    Media
    Merlin Entertainment
    Micro Focus
    Mining
    Mitie
    Miton Group
    Moenysupermarket
    Mondi
    Moneysupermaket.com
    Music
    National Grid
    N.Brown
    News
    Next
    Nichols
    Norcros
    Oil
    Page Group
    Paypoint
    Pennon
    Persimmon
    Personal Finance
    Pharmaceuticals
    Phoenix Group
    Photo Me
    Photo-Me
    Plus500
    Podcasts
    Polar Capital
    Politics
    Portfolio
    Portmeirion
    Provident Financial
    PZC
    Qinetiq
    Ramsdens Holdings
    Rank Group
    Reckitt Benckiser
    Renewable Energy
    Renishaw
    Research Papers
    Restaurant Group
    Retailers
    RIO
    RM Group
    Rolls Royce
    RPC
    RPS
    Safestore
    Sainsburys
    Savills
    Schroders
    Scores
    SCS Group
    Sell Discipline
    Shareholder Yield
    Share Picks
    Short Interest
    Somero
    Spectris
    Sprue Aegis
    SSE
    Stock Spirits
    S & U Plc
    TalkTalk
    Taptica
    Tax
    Technology
    Telecoms
    Tobacco
    Trading Ideas
    TSB
    TUI
    UK Market Update
    Unilever
    Utilitywise
    Value
    Victrex
    Vodafone
    VP.
    Water Utilities
    WH Smiths
    William Hill
    Wynstay
    XL Media
    XP Power
    Yield
    Zytronic

Powered by Create your own unique website with customizable templates.
  • Blog
  • Scores
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact