As well as my big cap portfolio I’m playing with, I might start a second one. The objective will be to see about generating income. A mix of relatively high yield unit trust / OEICs and of investment trusts, say 5 of each. The idea will be very much a buy and hold routine. It will have a review it once a year in case any disasters need to be weeded out.
As it will be targeting income I won’t be too concerned about capital growth. (I will assume any growth in one investment will probably be balanced out by losses in another.) Any actual ‘overall growth’ in the portfolio will be through reinvesting any income not withdrawn at yield or dividend payment time. This should be an interesting experiment. Dividends are usually paid out twice a year, so this will not be a portfolio to be ‘rushed’. As a target a 4% income seems a reasonable objective to aim at. This will be a learning experience, I’m not going to worry as to what it actually turns out to be. So long as I can gain some knowledge and experience doing this I’ll be happy.
As for my main virtual portfolio, then I think I will go for the idea at the start of each month of culling out the worst performer if it really has behaved badly. I don’t want to get into the bad habit of too much churning and replacing things just for the sake of it, that will only rack up unnecessary charges. However cutting losses is so important in ensuring an overall gain. Remember that if an investment falls by say 50%, it will need a 100% gain to get it back to where it was.
The portfolio is currently getting into profit. This is mainly through a nice set of results by JD Sports. Rio Tinto is still looking a bit weak, so if anything’s going to go at the start of next month it is still favourite for the chopping block. It would be nice if it did burst back into life.