Category Archives: ISA

Posts mainly about my ISA

June 2019 Portfolio Performance

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Really quick update today as don’t have a huge amount of time, but wanted to get the Numbers recorded from Sharepad.

Overall a successful month with ISA +2.5%, SIPP +2.3%, However, poor compared to the TR from the benchmark Vanguard Lifestrategy which was at 3.34% – But overall I cannot be disapointed with the result as it’s still a decent return on a single month basis.

I do see this morning #HUR has had a setback on the Well program, so The shareprice has taken a beating – an opportunity to buy more perhaps for the SIPP to be investigated over next month.

Portfolio performance April 2019

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So it’s time for the monthly recap against the market for both SIPP and ISA portfolios as recorded by Sharepad:

  • SIPP – overall performance +1.3%
  • ISA – overall performance + 1.8%

Overall performance in same benchmark fund (Vanguard Lifestrategy 80%) is +2.87% so again behind the benchmark annoyingly. As said in last months update I do have ~ 5 shares ex-dividend with payments due in May, so I do expect this to recover.

Yearly performance so far is SIPP 4%, ISA 8.7% – based on sharepad again. When compared at benchmark of 9.58%, I have someway to go, but again dividends are not paid yet… I’m reasonably happy with 4% at this stage of the year, and ecstatic about 8.7%… let us hope the performance continues throughout 2019!

Over the month, highest performance from non-benchmark fund was as below:

  • SIPP – PCOMKT – Merian UK Smaller Companies +6.03%
  • SIPP – BT.A -> BT Group Plc + 2.64%
  • ISA – ATST – Alliance Trust Plc +4.13%
  • ISA – AV – Aviva Plc – +3.15%

Detractors:

  • SIPP – DLG – Direct Line Group -7.45%
  • ISA – LLOY – Lloyds Bank -0.525% (tiny loss and dividend due).

Overall only 2 holdings in ISA lost money in April – great. Mears Group Plc also had another month of losses, so averaging down that purchase has made sense. DLG is targeted to top-up in the SIPP next month.

The SIPP portfolio has only really had > 0.5% losses from SSE, MER and DLG for the month, overall the funds have gained as a whole. As the shares in question are all actually in my top-ups already for last month as per my last post, it’s not unexpected. The losses are actually covered in DLG’s cases, by the dividend that is due in May, so I am not intending to drop this position.

I have also sold out of an under-performing fund this month in the SIPP – and converting to cash for later use. This will leave a ~2% cash holding in SIPP that will be increasing until I find a good trade to use on.

SKG & FCIF – update

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After the announcement of a wind-up nearly at time of post of last post…

I ended up selling my position that morning, as money in bank is better than waiting for a drip feed of returns (which I see as the likely FCIF outcome) – and buying SKG as a replacement from my “targets list”. Smurfitt Kappa are a paper/card producer with huge market reach across the globe, and my current “valuation” metric has them trading below their true value (which should be 15% above current market by my calculations (as a lower-end estimate)). Given that and a 3% dividend, it met my up to >20% growth in a year metric. It also has the owners heavily invested in the business’s future stake (which I love to see in a company), and is trading at a healthy PE. The Venezuala situation did hit this years bottom line, but I don’t see it being repeated.

As this is going ex-dividend shortly, I expect to expand on this position in 2019 as the price drops – it looks like a long-term holding potential for me – I may not sell this position for 10 years if I’m right, given how cheap it seems right now.

I’m also intending on buying the same share in the SIPP over time, as I do see it being a core-industrials holding, and the current move to home-delivery is really helping SKG.

One small point, this does place me reasonably underweight reference Bond/Loans in the portfolio, so I do need to replace this percentage over the coming year. I may top up CGT, which has been a good exposure to this market which actually has made me money in last year (circa 8% in 13 months, as I purchased on a dip!).

FCIF – Funding circle investment fund

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This is more a note to myself on not investing what you don’t understand fully. Last year I made one of the embarrassing mistakes that end up defining your investment strategy in future years. Back in 2008, I had similar “big bets” on Oil plays like Aminex, which I also didn’t understand, but the money lost was tiny! From then on I didn’t really lost most years, however, last year, I did make a mistake.

Last year, when I was re balancing my ISA, I put £1000 over to FCIF, as at the time it had a decent Dividend. But this was early in my understanding of both valuations (NAV) and ETF’s – ie, the fact an ETF can trade both above and below the asset valuation.

At the time, I just had focused on the price, which had been a steady ~ 100-102p since inception, and hadn’t paid heed to the NAV graph (which wasn’t exactly rising). The fact the NAV was below the actual price the shares was trading should have been a “danger” sign, and should have prevented me buying at a 5-10% premium.

Last year I paid over the odds effectively for this investment, and it’s made my future buying more informed. For the value of the knowledge priceless, but it did cause a £200 drag to the overall ISA last year, which would have actually resulted in my other investments outperforming the benchmark (ie, Lifestrategy) in 2018.

Is FCIF a good investment now? Well, it’s relatively under the NAV now – and personally I do top-up the investment when I have nothing better to top-up in the ISA monthly (as having assets in the market in a liquid stuck like FCIF is a good play to allow a faster trade compared to an OIEC settlement), but I know for sure right now that won’t be the case this month (I have 3 better candidates for this months monthly “regular” investments). However personally I would rate this as a ~7.5% divi rise in a year, and maybe 2% on shareprice over 2019 (but it does have a future potential 10% rise on the discount). As you can get a ROCE of up to 15-20% elsewhere right now, I’d personally avoid buying outright given I don’t expect the recovery this financial year. Am I going to sell this? Well no, as having a investment like this in the portfolio does help to remind me of the failure. And I may want to top up when I see the NAV monthly gain numbers start to recover a little.

Portfolio Performance – March 2019

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Overall “monthly” figures (from my sharepad tracker), taken on Sunday 31/3/19 as markets closed

  • SIPP : +2.2%
  • ISA : +1.7%

Given during the month the Vanguard Lifestrategy 60% we have as benchmark is +2.29%, so I am behind this “rolling” month by a small amount on both portfolios (I’d also add these figures include dividends!)

Lets see how we do next month – Given this is first time I’ve been tracking my portfolio this way, I should add my largest benefits/detractors :

  • SIPP – Largest growth : BP +4.78% – + a dividend payment making this higher.
  • SIPP – Largest detractor : WPCT -5.15% – overall portfolio is -0.4% on this now
  • ISA – Largest growth: BGJSB +4.09%
  • ISA – Largest detractor : LLOY -1.13% **

Given majority of shares in both portfolios have actually had gains, and we’re due Dividends on quite a few having already gone or are going to be going ex-divi over April, I expect growth over next 2 months to actually exceed the benchmark.

With the top up strategy discussed yesterday, I expect reinvestment to continue in the detractors going forward.

** Aviva was actually largest detractor, but we expect this from a new position in portfolio, and I haven’t lost as much as a long-term holder of a share – majority of losses are in stamp-duty and the trade fee – as is normal when entering a position.

Lets hope for a better result next month!

Aviva trade

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This post aims to explain the reasoning behind my recent Aviva Purchase (my first large purchase/rebalance in 2019) compared with other shares on the “Targets” list. I already had Legal and General and Aviva in the targets list and had been monitoring both for a few months with a view as to which to choose.

To start however I needed to identify other potential targets for an insurer were any insurer with Life exposure which gave a list of insurers from FTSE 350 – doing a FTSE sector search recorded similar to the below:

Sharepad example of full market search of all companys in the Life insurance sector.
Example of Sharepad.co.uk/Sharescope “Life Insurers ftse350 with some minor fields added to show PE, price to NAV, Yield and cover”

From here it’s reasonably clear, the yield from Aviva is higher than the rest, with the 2nd highest Dividend cover, and lowest PE earnings of the insurers in this sector, also using this I can dig in and the PE is at a several year low. The “analyst” price expectation was nearer 500p per share, however analysts are frequently wrong. Next stage was to analyse director dealings, I see that a couple of the board were also buying shares at a higher price than the shares currently are trading at in the recent history.

There was a recent CEO change this month with Maurice Tulloch taking over – this doesn’t concern me as an internal candidate who will know the business and it’s weaknesses, where an external candidate may not move to remediate any problems as fast. Given Aviva returned under 25% compared with the overall market at 65% in recent years, this change may actually improve the return on investment going forward (or that is my hope). This is understandably a risky change, but he is invested in the business himself, as is the previous chairman.

So in not strictly analysis of performance, the other piece I was personally familiar with was that Aviva seemed to be advertising a lot more heavily in past few months in the UK. Where I had not seen legal and general advertisements, I could recall many from Aviva across print, transport, and other media which again gave confidence this was correct call.

The combination of these factors gave me a degree of confidence the market has this priced incorrectly at present. As the true “true” value of this share should be higher – which along with the 7% dividend will likely give me my desired > 10% annual return from this share pick. I’m sneakily hoping this will be a 15% return in 12 months however.

I aim to hold this for several years given the compounding potentially possible here. I also don’t see this as a Brexit risk share given majority of revenue is from the UK. I may add to this holding if this was to drop further, as I can’t see any financial reason for this to be trading at a PE of 7.1.

The next class of share I need to add to the ISA is Oil – as banking, insurance sectors now covered. I’ve been leaving technology picks to the funds I hold for moment despite actually working in a technology field, and it is arguable Oil is a technology stock in any case due to the fast adoption of technology in the Oil field.

ISA Update – March 2019

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I am to cover all my investments in current portfolio in a future post, but my aims on my ISA are quite different to my SIPP. The aim here is to keep 50% of shares in regular funds or ETF – with the remaining 50% split between personal single share investments and shares I have analysed myself – a higher risk profile is acceptable within the latter 50% pool. At start of March 2019 there were 11 investments in the ~ £14,000 total at that time, so less diversified than the SIPP and with less overall concentration. The theory is as I start to outperform passive investments and “good” active investments, I should move to managing more of my own money.

At end of tax year, ie last week I added a non-scheduled £2000 to my ISA. As I usually add £250 a month, this allowed me to take a position in another “investment”, bringing the total number of investments in this ISA to 12 from the previous 11.

How I invest is an entire future blog post, but I have a table of “Investable Universe Targets” I have identified previously on my dashboard on the http://www.sharepad.co.uk website, which gave me at the time a choice of several investments to pick to invest this funding. I decided to pick an Insurer, as my ISA at present only has an individual Bank share, not any insurer – and is overall quite weak on individual shares as it is 80% funds at present.

My primary reasoning on a life insurer was the relatively recent news on life expectancy for Annuities reducing, ie, people living less long, giving the Insurers the ability to return cash to investors. Despite this being “old” news, and this being case, I spotted a few insurers had actually been trading at quite low prices to their expected and historic PE despite this “bonanza” of upcoming returns. This along with the knowledge that the money from annuities will be returned over several years would hopefully set the insurers up for buy-backs and improved dividends going forward. As this has potential to increase both share price and dividend over next 5 years, it was a risk I was willing to take.

I decided to not invest the full amount available as I know the market will have some degree of Brexit turmoil, which should allow me to spend the remaining money on topping up under performing investments post Brexit (of which this could be one). As many great investors know turmoil is a great time to be in the markets sometimes – it’s worth holding some extra funds in cash for this. I usually use Capital Gearing Trust for this “cash equivalent” pot, and don’t hold in Cash at all, but given I already have > 10% of the ISA in CGT to allow for “future” quick trade plays, I will not increase this given the trading fees, and fact I’m pretty certain I’ll want the cash reserve in next 2 months to rebalance the portfolio.

So onto my first tracked large (ie, outside the £250 a month) trade of 2019 on Friday 22/04/19 – where I purchased 300 shares of Aviva for a total of £1256.31. This has since lost around 2% since purchase, but I’m still reasonably happy with the value. A blog tomorrow post will discuss more of the reasoning for the decision.

End of month totals (this was recorded as a timed post early this week – sorry, as I am out Friday so values are likely “out”):

  • ISA Portfolio current value Total: £15995.60
  • Current investments Value: £15,221.27
  • Current cash Value: £772.43