TwoSporrans
19 Aug 2015
Re: Prospective returns Thanks for revealing this website Fabius.The December 2014 assessment of HFEL was interesting to read.Maybe JB wishes he hadn't concluded with:"the positive outlook for the region in general, and a good exposure to China which I suggest is one of the most undervalued markets at present, all suggest optimism."Then again, whatever the problems/faults with Chinese companies operating in a State Capitalist environment, it's wrong to treat all of them the same; there are huge contrasts.The current weighting in Chinese equities of 21% [+~7% in Hong Kong] is a cause for concern; however the particular companies HFEL is invested in don't look too bad as medium/long term prospects. JB comment, back last December:"Chinese banks which are on a price/earnings ratio (PER) of around five to six times and yield over 7%. Such valuations would suggest a lot of bad news is in the price."Methinks it's unlikely that these banks will fold under a tide of Non Performing Loans [a lot of smaller lenders may though]; they will be underwritten by the state in worst case scenarios. More likely the state will simply pay off rafts of the NPL's while continuing to build equity states in these banks.Whatever, devil's in the detail.I'll read more of what JB has to say when time permits.CheersTS
Greyinvestor
19 Aug 2015
Re: Prospective returns Thanks for that, I've added it to my reading list.....
Fabius1
19 Aug 2015
Re: Prospective returns Just noticed the link is to the home page so you need to click on the dealing page link.
Fabius1
19 Aug 2015
Re: Prospective returns GreyThis may be of interest, assuming you are not already familiar.[link]
Greyinvestor
18 Aug 2015
Prospective returns You may be interested in this;[link] the record, I have been adding HFEL and JEMI, but I've been adding MYI faster. I hold some SEDY.My reasoning is that emerging market valuations have been falling fast, and I like low valuations.You may have the impression that I don't like UK stocks. This is wrong. I just don't believe that they are good buys right now. I have substantial holdings in KIT, EDIN, and MRCH. Some in TMPL and MUT. Also large holdings in BEZ, LRE, HSTN. I Have medium holdings in HSBA, APAX & CNKS. I have smaller holdings in CLIG, PFL, TTG, ALY, NVA. So I am very much yield and value driven.I don't like some big divi payers, they may not be able to keep it up. That includes RDSA, BP, VOD, GSK, in my view.HFEL is, however, my largest holding. This doesn't mean that I completely approve; they are overweight China and paying out too high a divi. HFEL has not grown at all in five years.I continue to search for a good new UK equity. But as of now I haven't found one. I was forced to sell out of CGL and BRIT by takeovers.So my search goes on, until the market falls......
Fabius1
18 Aug 2015
Re: Chinese devaluation impact? TSThat's a rather interesting little synopsis. Wouldn't know where to begin myself other than to say I have a largish wodge of cash under the mattress.F1
TwoSporrans
17 Aug 2015
Re: Chinese devaluation impact? BadnewsIt's good to have a contrasting view; one that doesn't reflect a keen buyer's optimism.I've sold out of nearly all the UK-European equities and corporate bonds I held; mostly over the past 2 years.However, in parallel I've built up in UK direct property funds as I have thought, since 2013 that they offered a better risk/reward trade-off.In fact this asset class now makes up ~70% of all my investments, including pension.2014 returns ~13%, 2015 on track for ~9%; negligible volatility; almost linear progression.I'm happy with this and still think the asset class has better risk/reward than equities/bonds going forward at least 6 months, probably more as the rental up-cycle has only just begun outside London.More luck than smart? Whatever...the stratagem has worked OK.Only mentioning this to put my HFEL take into some perspective.Like Greyinvestor, I'm buying into HFEL as the price falls.Asian Income equities now comprise ~20% of my asset weighting; HFEL alone ~15%.Just bought another slice for 290p.Thinking of this as an undated, sort of inflation-indexed bond, the 6.75% dividend payout looks very attractive.Accepted, that Merchants yield of over 5% looks very tasty and like CTY which I sold out of has an impeccable, decades long record of unbroken dividend rise/hold.Still, the HFEL record has been sound over many years.I don't think the divi. was even trimmed during the 1997-8 Asian debt crisis!!Admittedly, in it's Touche Remnant form, pre 1992 Henderson buyout, this was a very Australasian centric fund and arguably lower risk than the Pan Asian one of today.Consider:If the HFEL dividend does get pared back, how far might this go?A 20% cut would be very harsh by any precedent.Still leaves a 5.4% yield.HFEL rode and recovered from that 97/98 crisis very strongly, as did Asian economies and equities generally.Can one say the same for the UK, Europe or even of the USA since 2007-8?The debt:GDP situation in UK/Europe remains dire in the face of the feeble economic growth generated by the greatest monetary stimulus in their history.Companies selling into 'Western markets' are, in the main, faced with stagnant revenue growth and low productivity gains. That leaves only cost cutting as a widely tenable means of keeping earnings growing.So, I'm not confident there is much upside left in their equities or even that the dividend payouts are fully sustainable.Many of the best FTse100 companies are those that sell into global markets competitively.Good, hard-gut companies to be sure.Then again the same can be said of the top Asian-Australasian companies.Accepted, there is additional currency risk in investing in HFEL; it may be greater than the price risk in local currencies over certain timeframes.Also, there is a greater 'political' risk; at least that's the general perception.......Whatever, HFEL is at 3 year lows and close to 5 year lows, in spite of the dividend having risen a lot in the interim; think it's almost 20% up the past 3 years.The share price is down about 25% from its 2014 peak.This seems to discount a fair bit of woes going forward.Of course, the price may fall a lot further, especially if we have a global bear market.In that event, many American/European holdings in Asian assets will almost invariably be liquidated whatever their long term virtues.Yet, long term holders will likely have the last laugh as the Asian rebound will very probably be emphatic and the 'Western' one relatively insipid.Meanwhile HFEL should continue to shell out a generous flow of cash.That's my hope anyway.CheersTS
badnews
17 Aug 2015
Re: Chinese devaluation impact? Grey Investor,You put too much emphasis on the value of the pound and I feel a little too much on this fund.The UK market is actually good value on a risk-adjusted basis. The Merchants Trust (MRCH) gives you exposure to solid UK companies (mostly FTSE 100) for over a 5% yield. This trust has increased dividends each year for decades - yes decades!!I have some in HFEL, but it is not good value. It only gives me an extra 1 percentage point of yield for much higher risk and volatility.You are eloquent Mr Grey, but I can not agree that the UK market is not good value. it' gives a lot of bang for the risk buck at the current time.BN
devonplay
13 Aug 2015
Re: Chinese devaluation impact? I picked up some more JEMI this week.I'm glad to say my position with HMRC is sorted, so maybe a little buying spree in August as I planned.I remain fully invested, but on my 20 year horizon that feels OK.One or two thinks looked tempting this week, but EM remains for the brave!As far as HFEL. i'm going to wait and see what early September brings as the 'pro's" head back to their desk. DL
Greyinvestor
13 Aug 2015
Re: Chinese devaluation impact? I have added, at this and higher prices. In retrospect I wish I'd waited longer; todays NAV is down again, which surprises me, it should be up. But I'm doing OK because my SIPP is 86% cash. I should have sat on my hands a bit longer.In my view, S E Asia is moving into value territory. I'm less sure about other emerging markets.I'm still a frustrated investor, I would far rather be buying UK stuff at good prices. However, I recognise that the pound is very high; higher than it should be, I think. So using it to buy overseas stuff should be a good idea.
devonplay
13 Aug 2015
Re: Chinese devaluation impact? And would you add at this price Grey?DL
Greyinvestor
13 Aug 2015
Re: Chinese devaluation impact? I've been buying since 1998, and to the best of my knowledge the income has only ever gone up. I believe that there is a small revenue reserve to cover shortfalls. The income must be slightly at risk,but the yuan has, I believe, gone down less than it previously went up. The yield on my first ever purchase is now running at 25%, which gives you an idea of how S E Asia has developed since its last debt crisis in 1997/8.The fund has been around for a good while but has got a lot bigger in recent years. The fund manager changed about five years ago, but Henderson tends to be a stable environment and is getting steadily stronger in the Far East. Henderson itself goes back into the annals of history.
PJ Foster
13 Aug 2015
Re: Chinese devaluation impact? Has HFEL ever reduced it's dividend before? How long has the trust been running?Cheers,
Greyinvestor
13 Aug 2015
Re: Chinese devaluation impact? I do think that HFEL has been increasing the dividend at too fast a rate, and note that the shares have not increased in value for five years. I am, however, still adding to my holding. I'm a long haul investor, income driven, and I believe that strong sterling enables me to buy into weak emerging economies at a reasonable price. I do not believe that the UK and US markets represent good value at the moment. I'm prepared for a bumpy ride, but my view is that the capital will ultimately follow the income. One other point; it seems to me that we are going through a deflationary period, despite the best efforts of central bankers to destroy our currencies. In such a period, income is king.
WarrenGemini
12 Aug 2015
Re: Chinese devaluation impact? The dividend cover was 1.06 in FY 2014 so still some room there but it also depends on what proportion of the dividend comes from China/HK companies, whether the market turmoil causes companies to significantly reduce dividends and the final level of the currency reduction effect so it might cause HFEL to reconsider dividend levels.
