Suggest a fund for income

Suggest a fund for income

Author
Discussion

Jaguar steve

Original Poster:

9,232 posts

211 months

Monday 18th December 2017
quotequote all
Spent way too long looking now and getting nowhere. There's so many funds and platforms to choose from I'm actually starting to loose the will to live...

I've got a cautious to medium attitude to risk, want a long term solution when I can park some cash and take a regular income from it without staying awake all night every time the market has a wobble. I definitely need a tracker or manged fund as there's no way I can pick individual investments myself.

Although keeping capital up with inflation would be a bonus I'm prioritizing income over growth and ideally it'll be invested as an ISA to keep tax simple as neither of us has used our allowances this FY and I CBA with faffing about with accounts and tax returns anymore.

Overall big picture is at the moment I'm split roughly 40% in Premium Bonds, 40% in two Santander 123 accounts and 20% in two cash ISAs. I'm considering drip feeding chunks at a time ending up with between half to two thirds in a income fund and splitting the remainder between Premium Bonds mainly to keep Mrs JS sweet, trying a few £k on P2P lending with Assetz to see how that goes and keeping one Santander 123 for unexpected spends and somewhere to feed income to.

Critique, suggestions or comments? Apart from the essential cars, hookers and coke that is.

Cheers Chaps thumbup

xeny

4,311 posts

79 months

Monday 18th December 2017
quotequote all
Something like Vanguard's high dividend yield ETF:

https://www.vanguardinvestor.co.uk/investments/van...

or a more traditional option like City of London Investment Trust?

Vanguard run their own ISA platform so really easy to implement, but it's not that hard to open an ISA and buy a couple of investment trusts.

FredClogs

14,041 posts

162 months

Monday 18th December 2017
quotequote all
Artemis do a couple of good income.funds, one higher yielding.

If you think about it though a FTSE tracker will yield ~3.4%, I'm not sure that many "income" funds yield significantly higher and of course make higher charges and more concentration means more risk. Also, its my opinion, that investing for income in the hope that its some kind of hedge against a market crash is folly, the higher yielding stocks are some of the most over valued in the market and will not be immune to a correction.

Badda

2,673 posts

83 months

Monday 18th December 2017
quotequote all
FredClogs said:
Artemis do a couple of good income.funds, one higher yielding.

If you think about it though a FTSE tracker will yield ~3.4%, I'm not sure that many "income" funds yield significantly higher and of course make higher charges and more concentration means more risk. Also, its my opinion, that investing for income in the hope that its some kind of hedge against a market crash is folly, the higher yielding stocks are some of the most over valued in the market and will not be immune to a correction.
If you look at Artemis high income for example though, it's more bond focused than stocks.

FredClogs

14,041 posts

162 months

Monday 18th December 2017
quotequote all
Yep, fair point

WindyCommon

3,382 posts

240 months

Monday 18th December 2017
quotequote all
FredClogs said:
the higher yielding stocks are some of the most over valued in the market and will not be immune to a correction.
I agree. Even without a correction I expect many of the bond proxy stocks to underperform the broad market from here. Their prices have been pushed too high by yield hungry investors.


If you want a single-fund, perhaps take a look at the modern multi-strategy risk targeted income funds run by the likes of Invesco Perpetual and Aviva Investors. They have access to wide range of income sources and are run with a hawk-eyed focus on diversification and volatility.

https://www.invescoperpetual.co.uk/uk/products/inv...
https://www.avivainvestors.com/en-gb/adviser/inves...


Edited by WindyCommon on Monday 18th December 11:19

TcA1968

59 posts

77 months

Monday 18th December 2017
quotequote all
xeny said:
or a more traditional option like City of London Investment Trust?
I'd second this suggestion. City of London has increased its dividend every year for 50 years. Hard to argue with from a steady income perspective. Check out the AIC website's dividend heroes:

https://www.theaic.co.uk/aic/news/press-releases/a...

You can also use their "find and compare" tool to filter on specific sectors, to find other UK Equity Income trusts or look at different sectors.



FredClogs

14,041 posts

162 months

Tuesday 19th December 2017
quotequote all
1.65% is not a fortune but its certainly not cheap.

Go on the HL website and check out their wealth 150 list, probably the best research tools out there are TH hl website, morning star website, best invest website and monevator for passive investing.... That one above looks a bit shonky to me.

Jaguar steve

Original Poster:

9,232 posts

211 months

Wednesday 20th December 2017
quotequote all
Thanks for all the replies Chaps. Much appreciated.

Still finding all the terms and facts and figures and options way too much of a headfull and even if I was confident with my choice of fund I'm nervous about attempting to do stuff online like transferring cash and opening and monitoring accounts so have a bit reluctantly decided to dump the lot in a IFAs lap in the new year for them to sort.

I know that's gonna cost but at least I'll get some sleep... smile

bad company

18,642 posts

267 months

Wednesday 20th December 2017
quotequote all
You could go for the Hargreaves Lansdown High Income Fund:-

http://www.hl.co.uk/funds/fund-discounts,-prices--...

It’s like a ‘fund of funds’ so the risk is spread. `I’ve held them for some time and have done very well.

xeny

4,311 posts

79 months

Wednesday 20th December 2017
quotequote all
It's not altogether impossible that will cost you more than any conceivable ineptitude on your part achieves, especially if you're talking about an amount that will fit in an individual premium bond allowance.

You've had a range of suggestions in this discussion.

I'd suggest writing them out in a table, look at the "expected" income, the fee structure, and look on google finance, morningstar or similar to see how volatile they are over time (i.e. can you sleep at night). Anything that has a decent return will fall in value during a panic like 2008, that's the nature of the beast - if you can't accept that, investing is probably a bad choice for you.

Remember that overall return is higher where risk is higher, and assess overall return by adding the fee to the expected or historic customer return. If you're going to take risk, it makes more sense that you're much more highly rewarded for it than the company running the investment - it's your money on the line after all.

You're looking at maybe 4 hours work, and if you count the overall return on that work, they may be the best rewarded 4 hours work of your life.

BanzaiMan

157 posts

148 months

Thursday 21st December 2017
quotequote all
Jaguar steve said:
I've got a cautious to medium attitude to risk,
What tools did you use to assess your ATR?

Badda

2,673 posts

83 months

Thursday 21st December 2017
quotequote all
bad company said:
It’s like a ‘fund of funds’ so the risk is spread. `I’ve held them for some time and have done very well.
It's only been going 20 months?

At the most, you'll have made 12% plus a 2.5% divi - does this sound familiar?

By my reckoning that's significantly worse than a FTSE all share tracker would have achieved.

xeny

4,311 posts

79 months

Thursday 21st December 2017
quotequote all
Looking at http://www.hl.co.uk/funds/fund-discounts,-prices--...

says 10.31% over the past year, with ~4% dividends.

hyphen

26,262 posts

91 months

Thursday 21st December 2017
quotequote all
Is Woodford coming good yet?

Shnozz

27,495 posts

272 months

Thursday 21st December 2017
quotequote all
hyphen said:
Is Woodford coming good yet?
In a word, no.

Badda

2,673 posts

83 months

Thursday 21st December 2017
quotequote all
xeny said:
Looking at http://www.hl.co.uk/funds/fund-discounts,-prices--...

says 10.31% over the past year, with ~4% dividends.
You've made the mistake of looking at it as a total return rather than on price alone. Also the 1.29% charge is taken from those divis...plus the portfolio charge (if I'm not mistaken).

All is not as it seems...so interested to hear bad company's experience as he seems very happy.

xeny

4,311 posts

79 months

Thursday 21st December 2017
quotequote all
I don't think so - if I look at http://www.hl.co.uk/funds/fund-discounts,-prices--... and specify 1 year as the graph time span it eyeballs at just over 10%, so I think the quoted total return excludes dividends.

Yes, I agree that in a sane world "total return" for a fund would be reported as change in total of price + dividends, but that doesn't appear to be the case here.

In my very limited experience dividends are by convention quoted after fees (which in this case I think are stupidly high), although I admit I don't see a specific statement either way.

Badda

2,673 posts

83 months

Thursday 21st December 2017
quotequote all
xeny said:
I don't think so - if I look at http://www.hl.co.uk/funds/fund-discounts,-prices--... and specify 1 year as the graph time span it eyeballs at just over 10%, so I think the quoted total return excludes dividends.

Yes, I agree that in a sane world "total return" for a fund would be reported as change in total of price + dividends, but that doesn't appear to be the case here.

In my very limited experience dividends are by convention quoted after fees (which in this case I think are stupidly high), although I admit I don't see a specific statement either way.
Now go and select 'price' rather than 'total return.

Fees are taken from divi.

xeny

4,311 posts

79 months

Thursday 21st December 2017
quotequote all
Apologies, I sit corrected - that's even worse performance than I thought :-(