Member Info for zac0_4

Robleo - " . . . lgen/aviv/mng/lloy/psn/dlg etc. all dropping also funds are not making any progress . . ."

Whilst, I agree, some funds are not setting the world on fire they're not costing you in loss of capital. LGEN has reduced the value of your capital by 13% over the last 12 months. L&G Int Ind has made you +3% and Fundsmith +5% over the same period. I've picked those 2 as I think you hold both. That means the L&G tracker fund has outperformed LGEN by 16% and Fundsmith's outperformance is 18%.

Not losing, or costing, you money is very important. LGEN has to deliver 15% growth from here just to get back to where it was 12 months ago.

Equally it has to grow 16% and 17% to match where the funds are today. The funds maybe boring and slow but they're doing a better job at protecting your (and my) wealth!

" . . . If you were lucky enough to buy 9 months ago you are up 10% on your capital with a 10% div . . . "

Maybe. But if you were unlucky enough to buy 12 months ago you are down 20% on your capital with a 6.8% div . . .

" . . . Heads or tails :-) . . . " Exactly! What to do?

I first bought into this around May 2017. Built up positions over time in both my ISA and SIPP at a cost of £30k and £22k respectively. Sold my entire SIPP holding a couple of weeks ago at £2.43 (seems a genius move now!!) suffering a £6.5k capital loss. However, dividends covered that loss almost to the penny.

I've decided to continue to hold in my ISA. Currently sitting on a £9.5k capital loss, £2.5k nett loss when dividends are factored into the equation.

For me, though, that's only half the story. A simple Global Tracker Fund (L&G International Index) has produced a return of +53% over the last 5 years, HFEL a loss of -7% (with divs reinvested). I'm afraid I've been seduced by the dividends here at a substantial cost to my actual (and potential) capital.

And I thought diversification via trusts / funds carried less risk than individual shares! A few honest comments from the fund managers wouldn't go amiss either!!

" . . . They're all ripe for a pullback . . . "

Yet another sweeping statement. On what basis? A fair number of those you list are still below what they were trading at 2 years ago! Perhaps you could clarify.

I don't think the yield will be putting investors off, more like the 6 year continuous decline in the share price!

I) don't be seduced by dividend yields alone - look at overall total returns

ii) be very careful of, so called, 'advice' given on any bulletin boards!!

Good luck

The stated dividend policy is not in question. On that basis why would simply confirming the policy result in a rerating of the share price?

Bald_eagle . . . "couldn't one use a similar argument against dividends?...reduces the value of the balance sheet. Hence the loss of capital we have experienced with LGEN possibly . . ."

Exactly. To me that's why the current sp is -14% down on 5 years ago but your total return during that period is +23%!

For me the only thing that increases a share price is an increase in profits or potential future profits. As per my example removing £1bn from the value (from the balance sheet) of the business and reducing the number of shares in circulation to the same value simple maintains the status quo.

. . . "There are risks, of course, but they are in line with most investments . . ."

Yes, much bigger risks investing in a single UK business in one sector as oppossed to a global equity tracker fund investing in 2,200+ companies across multiple sectors and geographies.

With more risk you hope for better results. In this case the reality doesn't match hope!!

I held these in both my ISA and SIPP. Sold my SIPP holding just prior to recent ex-div date at 243.36p - seems like a shrewd move now! Just wanted to reduce my exposure to dividend (+5% yield) holdings so I've decided to ditch all in my SIPP and just hold in my ISA. My SIPP sale cost me 30.4% in lost capital, however the dividends received the holding period delivered exactly the value as the lost capital. So, break even.

My ISA holding is currently 29.8% down in capital terms with dividends received to date of 23.2% of the value of capital invested. So, over 6% down.

It's safe to say this hasn't been one of my better investments! I've no idea where this will go from here and hear nothing to reassure me from the fund managers!!

I'm definately no fan of buy backs. In my experience it has no effect on the share price. Let's say a company has £1bn to spend on buying backs its own shares. That £1bn sits as cash on their balance sheet so is priced in the share price. It is removed from the balance sheet so the value of the business is reduced but is offset by a reduction in shares in circulation. The sp remains as-is. Yes, with less shares, it increases EPS and reduces cost of overall dividend payments. But for me, as a shareholder, I'm no better off.

Anon3 - . . . "my point is more that the performance is, while not good, not particularly woeful either . . . " I agree

. . . "A company that's rising consistently is going to become harder and harder to find in the next 18m-2 yrs, imo, so if you find one, let me know please . . ."

Well, I know I'm beginning to sound like a broken record, but L&G International Index Trust has risen each year for the last 5 years (maybe more, I don't have the data). I'm expecting a continued growth in the global economy, albeit small, over the forthcoming couple of years. Remember, it's not all about simply level of growth it's about not losing money. Take the last 12 months, the trust has delivered growth of almost 5%, whilst LGEN has lost 7%. That's a 12% outperformance and it make a big difference!

I'm not really interested in other companies who are performing even worse than LGEN! I'm interseted in my holding here.

At the current share price this year's dividend of c.19.64p per share will have cost me 22.5p per share in lost capital. Better than last year I suppose, were a 18.71p dividend cost me 47.5p per share is reduced capital.

Robleo - for those who are interested they can copy and paste below for access to fund info

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-international-index-trust-c-accumulation

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-global-technology-index-trust-c-accumulation

Robleo - you may well be right. The period you've picked ie Jan22 to date has been a poor period for funds as well as dividend paying shares. My largest holding, Fundsmith Equity, has declined by 5.2% during that period. However, my holding here, in LGEN, has declined by over 12%. You tell me which is best.

Protect.scot - yes, a cracking result from BHP

Can anyone name a dividend paying holding (5%+ div pa) that has outperformed a simple global tracker fund over the last 5 years? Say L&G International Index Trust Acc.

My 7 dividend paying positions all fail the above test. I've sold out most of my dividend payers in my Sipp and currently I'll continue to hold in my ISA. However, despite holding them for years, the data simply doesn't add up. I'd be better off selling down units annually in the above mentioned fund to use as income.

Maybe I'm just a poor picker of shares / trusts!!

Yet another dividend paying company with a very mediocre performance. Annualised total returns of less than 3.0% over the last 5 years.

RogueRiver - thanks for the link