Tag Archives: portfolio

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.

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.

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

SIPP Portfolio March 2019

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Future blogs will improve the style of this data “dump”, but attached below is the current full portfolio for March, along with cost/values in GBP. I have not included percentages, but my aim is for “fund” to eventually make up 50% of the below, with 50% being self selected shares. We are currently far higher percentage wise on “funds” however at current market values. 25% of the fund should remain as a passive investment with Vanguard Lifestrategy 60 as the bedrock, and “target” to beat for the rest of the SIPP.

Every month £1000 is added to the portfolio, with it being split in last month into the shares marked in italics below with £100 going to each option – which shares get added to do change monthly to rebalance – typically the “less” profitable shares get the topups. I am using interactive investors “regular” trade option to pound cost average down the trades, so trading fees are £1, and stamp duty where effective is 50p. This compares identically to a real time trade of £10 of £1000.

Share/FundOriginal CostCurrent P&L
Vanguard LifeStrategy 60% ACC5249.95311.58
BP3545.53416.60
Capital Gearing Trust2228.251.95
Direct Line952.47-5.42
Fidelity China Special Situations39621.36
Funding Circle SME Income299.14-47.09
Fundsmith Equity T Acc574.9939.80
Milton European Opportunities B ACC900.0116.10
Lindsell Train Japanese Equity B Sterling Hedged2002.55
Mears Group98.07-3.39
Merian UK Smaller Companies Fund R ACC60020.11
Scottish Mortgage Investment Trust Plc985.88-40.91
Smithson Investment Trust Plc365.8613.24
SSE Plc1299.7720.72
Threadneedle European High Yield Bond 3G550-11.19
Woodford Patient Capital Trust Plc
1147.86-42.52
Baillie Gifford Japanese Smaller Co B ACC899.75-14.15
BT843.847.07

Total Profit over last 12 months: ~707.91 GBP (above was from real-time data so may be slightly out!). Not bad for what was a bad year overall for the markets and given ~ 10k of the funding was drip fed over the year it is no wonder that the returns are lower than the top 3 investments, which were bulk purchased at the start.

The return to beat is the Vanguard LifeStrategy piece is the 60% – which returned ~5.9% the previous year as a whole. Given the total portfolio was funded initially mostly on this – as a whole the portfolio has under performed this. However, this excludes for most part any Dividend in past 12 months, making the BP Figures in particular very out. BP comfortably outperformed LifeStrategy, and generated double the return from a smaller investment overall when this is taken into account. As this was my largest “pick” of all the shares outside of the Fund list, this firms up my strategy of picking under priced shares, and holding, and reinvesting Dividends.

The “new” share added this month to the Portfolio is Mears group, following what the market saw as disappointing results. I however found this to be a company that has a high potential for recovery in future, with a potential upside of 30-40% + dividend over next 2 years. I will do a seperate post on the indicators that lead to this conclusion. But I will be adding to this holding over next few months unless the market does recover by 30-40%. This was in my Targets list previously from a search, so I know the fundamentals looked reasonable for this option.

Next month I plan do not plan to add any new share, and likely will not change the distribution in the short term, unless market conditions change. I appreciate I will need to keep re-adding funds back to Vanguard in a few months, as this is dropping below my 25% target for this holding. Changes from last month include re-adding Woodford Patient Capital to monthly top ups following the Woodford Equity reshuffle at a premium (they paid 95p). Given this currently is a 15% discount to NAV, thats month I’m (hopefully) locking in for later. Also have put BT back to the “purchase” list, as both have had recent falls in value – similar reasons.

Overall there are likely too many funds/shares in the portfolio right now, however, it is being 20% weighted with new funds to Japan ahead of Brexit, as I suspect Japan will benefit greatly if the UK economy takes a nosedive. Lindsell Train Japan is also mainly because of their 10% Nintendo holding – I sense this will be a winner, and I can’t easily “drip” feed into the Japanese markets without using a fund. As a gamer don’t bet against Mario, Nintendo and Zelda, as I see Mario and Zelda as a moat that other gaming firms dream of holding.

As a whole the portfolio is also considerably underweight ref: Asian equities, and I need to find a fund for Asia/Australian assets as soon as reasonably possible.

After I have filled that gap – I suspect the next decision are on other “shares” to rebalance to 50% directly held shares. At moment that percentage is ~40% so I have a way to go on that. I also will be too highly weighted to WPCT soon, so will need to switch to another option – however I still feel that I should invest when the fund is trading below my “value” figure.

I’m still unsure about SSE as a longer term holding – but thats a blog for another day.