Category Archives: finance

January 2018 investment trust review.

January investment, a good start.

My new ‘capital growth’ investment trust portfolio has started the new year in a positive fashion. Of the ten trusts only one, TR Property, is currently in negative territory. All the others have moved positive more than sufficiently to cover trading costs et. cetera, which is rather nice.

The area showing the greatest growth is currently the Far East. My Baillie Gifford Shin Nippon and Templeton Emerging Markets ITs showing gains of 5.1% and 4.3% respectively. However my stand-out performer is the (high risk) Vietnam Enterprise, up a fraction over 10%. Quite how long this rate of growth can continue… we’ll just have to see. TrustNet gives this fund a FE Risk Score of 219 (cash score:0, FTSE 100 index score:100) so a fair bit of volatility must be expected.

Overall, for this investment trust growth portfolio we’re looking at a gain of 3% so far this year.

My income portfolio is also up since the turn of the year, by 0.6%. Not massive, but competing with the FTSE 350 index. I’m more than happy with this considering this is a long term income-targeting selection of investments.

As for how things may for these investment trusts for the rest of this year, I guess I’ll have to start drinking a lot more tea so I can get practicing my tasseography. (I must confess to being particularly attached to gunpowder tea; a light slightly smokey-tasting green tea.) This skill will probably be as useful as reading all the current thoughts and comments being put out by many (highly paid!) brokers and financial advisor experts. Or perhaps buy shares in companies that do 3D printing, hoping they will be able corner the market in producing a better quality crystal ball for the financial wizz-kids to gaze into. Their abilities make Professor Trelawney’s look positively amazing.

New Investments

New year, new investments

First, looking back at the investment trust income portfolio.For the year 2017 it grew 12.9% in value, added to that must be dividends of around 4.5% of original amount invested. This compares to a FTSE 350 Total Returns index gain of around 12% for the same period.  (Investments in Brunner IT, City of London, F&C Capital and Income, JPM Claverhouse, Merchants, Murray Income, Schroder Income & Growth, Scottish American, Temple Bar, and Value & Income.)

So no changes to the portfolio, steady as it goes.

As for the large cap ‘BullBearings’ portfolio, ummm… a mix of finding myself too distracted with other things and the BullBearings stock market simulator website closing has killed this one off. Since it was set up on the site last March it has grown by over 10% but with no more BullBearings let’s clear the decks and start again. Ten investment trusts, each with equal weighting, bought right at the start of January. The idea is to hold these for the year, however a (flexible) stop-loss of around 12.5% (danger zone, may sell) to 15% (cut and run time) is on the cards. Investment trusts are usually not the most volatile of shares, so this should not result in too much churning. If this works then great. If it doesn’t work well, then a case of ‘learn from the experience’.

Allianz Technology (Technology)
Baillie Gifford Shin Nippon (Japan)
Blackrock Throgmorton (UK)
Edinburgh World Wide (Global)
JP Morgan American (America)
Schroder Asia Total Return (Asia ex-Japan)
Templeton Emerging Markets (Emerging markets)
TR European Growth (Europe)
TR Property (Global Property)
Vietnam Enterprise Investments (Vietnam)

This selection covers most of the obvious areas, though perhaps an odd one out being Vietnam Enterprise investment trust. With wage costs in China now approaching the level of many western countries, labour-intensive industries are moving their production facilities across to relatively low cost Vietnam. So this one has been added to give a little extra spice to the selection.

June July performance

End of July (what happened to June?!) so let’s see what’s what.

Big cap portfolio.

There have been a few more ‘downs’ than ‘ups’ than I’m really happy with in my big cap portfolio, but then that’s the nature of the stock market. As for general performance, fallers include GlaxoSmithKline and Tate & Lyle, but the main nasty has been JD Sports which through June and into early July fell by nearly 25%. However if you look at JD’s performance over the last three years it’s been a pretty solid non-stop climb. Add to that a sudden upsurge in April, then a bit of a correction was not unexpected. This fall has brought the share price back to where it was about 6 months ago and is also now showing signs of perking up again, so I’m not too worried.

On the performance plus side Rio Tinto and Electrocomponents are up nicely. Rio has moved up 20% from a local low in May, while Electrocomponents continues its general climb which started back in early October 2015. Back then we’re talking of a share price of around 170p, now around the 620p mark.
So despite JD Sports upset, the portfolio is still outperforming the FTSE100 index and is showing an annual rate of growth equivalent of a little over 8%.

Income portfolio.

As for my investment trust based income portfolio, that’s been flat-lining for the last couple of months. Despite this it ‘s still up 12% since its inception in December last year. However in dividends (it is, after all an income portfolio) it has returned an equivalent annual yield of 3.9%. Add that to its capital growth and I’m more than happy with it.

So it’s all very much let things continue on as they are, no plans to sell anything yet. The first real review time for that won’t be till September for the big cap portfolio (its 6 month point). Even then any re-balancing may not occur till its first birthday. Likewise not till December (1 year) for the income one.

May Monies

Coming to the end of May and my big cap portfolio is coming along okay.

It’s up a little over 2.5% for the proverbial Mad Month of May. However as nice as that sounds it has underperformed compared to the FTSE 100 (up around 4%). The main problem here for this portfolio was a sudden fall by Tate & Lyle. Despite announcing a healthy increase in pre-tax profits there was only a small increase in sales.This sales performance appears to have disappointed the market so it has punished Tate with an 8% fall over the last few days.It could well be time to say goodbye to them, also possibly to Ashtead which since a peak in April seems to be starting a downward trend.

Looking at the others, Burberry seems to have recovered from its nasty fall in April with the rest generally coming along nicely.

As for replacing Tate and / or Ashtead, then the investment company 3i (III) and the digital payment company Paysafe (PAYS) are on the short-list. Much depends on what happens when the market opens tomorrow.

My income portfolio (up 2.6%) has slightly outperformed my big cap portfolio in capital growth while also providing dividends at an equivalent annual rate of over 3.3%. No plans here to make any changes to this. It is targeting long term income rather than capital growth with a holdings review probably not till December.

End of April finance

End of month finance review time.

What’s happened on the finance and investment side of things? Redrow has done rather nicely but star performer has been JD sports, up neatly 15% over the last month. On the downside, Burberry recently announced a reduction in sales and so suffered a sudden fall in price but looks to be recovering a little. Rio Tinto seems to be on a bit of a downer, but it’s GlaxoSmithKline that’s going to be sold out of the portfolio. So on Tuesday (Monday being a bank holiday) Glaxo will go and be replaced with Persimmon (PSN).
Overall the portfolio is up over 2% and is nicely outperforming the FTSE 100 index. It is generally targeting capital growth, any dividends will be seen as a bonus.


As for setting up an income virtual portfolio I’m doing something a little non-standard. I’ve sorted out 10 high income type investment trusts (Brunner (BUT), City of London (CTY), F&C Capital and Income (FCI), JPMorgan Claverhouse(JCH), Merchants (MRCH), Murray Income (MUT), Schroder Income Growth (SCF), Scottish American (SCAM), Temple Bar (TMPL), Value & Income (VIN)), and have, in my simulation, bought £1,000 of each of them.

The slightly non-standard thing is that having decided on what to buy (based on long term dividend stability / growth) I back-dated the purchase to the start of last December. This does immediately give me an idea of how the income side is performing in respect to dividend generation. The start of December is also an important date regarding some pension stuff I have, so having this income portfolio running parallel to my pension stuff will be useful to me. This straight away lets me see that it’s currently paying out dividends at an equivalent interest rate of 3.5% a year, but if I add this to overall capital growth then since December it’s showing a 10% gain. This compares to an 8% gain in the FTSE100 Total Return Index over the same period.

I’m happy enough with things at the moment. It is a learning experience and will be useful later in life when I’m no longer having a wage as an income but am relying on other investment sources.

Time to think about generating income.

Income please.

As well as my big cap portfolio I’m playing with, I might start a second one looking 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, reviewing 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 and 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. As this will be a learning experience I’m not too worried as to what it actually turns out to be, so long as I can gain some knowledge and experience doing it.

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%, then a 100% gain will be needed to get it back to where it was.
The portfolio is currently just getting into profit mainly through a nice set of results from 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.

financial ups and downs

Time to kick this blog back into life, so let’s try by occasionally talking about some financial ups and downs type stuff.

As part of my Master Plan to become stinking rich and rule the World – or perhaps at least become financially stable – I thought I’d experiment a bit with some virtual stock-market trading. So (using the financial web site). I have, as of 6th March, ‘virtually bought’ 10 of the leading UK stocks. And as this virtual portfolio moves up and down (I hope far more of the ‘ups’ than ‘downs’) I’ll report back here.

The current virtual portfolio is split across Ashtead (AHT), Burberry (BRBY), Carnival (CCL), CRH (CRH), Electrocomponents (ECM), GlaxoSmithKline (GSK), JD sports (JD.), Redrow (RDW), Rio Tinto (RIO) and Tate & Lyle (TATE).

Various financial targets, looking at things over say 6 months or a year. First, and perhaps the most obvious – not to make a loss! Moving up in scale, to beat a high interest bank account. To outperform the FTSE 100 index (surprisingly few ‘professional advisers’ can actually achieve this over the long term). To learn a bit about the financial world of how to sensibly save money.  Also, and perhaps most importantly, to have a bit of fun.

So now we are almost a month in, time for some first thoughts.

These are all big-cap companies varying in market capitalisation size from Carnival at around £680 million up to Glaxo at £1200 million. With these sort of sizes I would not be expecting too many sudden large jumps in value. Six (AHT, BRBY, CRH, ECM,GSK, RIO) are showing small losses, that leaves CCL, JD., RDW and TATE into profit. However despite the majority in loss, overall things are into positive territory through JD Sports increasing by around 8%.

Even as I am writing this there is something I might try. If I have a reason to sell something then it will obviously get sold. However, on a monthly basis, assuming there was the usual mix of ups and downs, then look to see which was the worst performing and if it has fallen by more than 5% then sell it. I must think about this over the weekend (this is being written on a Saturday). Assuming I decide to go with this, then Rio Tinto (down nearly 6% and below its 50 day moving average) will go and probably replaced by Smiths Group (SMIT).

Oh decisions, decisions!

Money and Things.

Money and things finance related.

An unexpected thing happened recently. Without warning or giving reason my credit card company lowered my credit limit by about 80%. I’ve not been near my limit in ages, so in that respect it was not a problem. Where it was a problem was that suddenly, and without warning, I’d lost an important source of instantly available emergency money. That ‘comfort blanket’ where you know that if something happened and you needed money *right now*, not in a few days, not tomorrow, but instantly (and if it is that sort of situation, then it probably is instantly), that supply had gone. Oh crap.

I suppose the proverbial silver lining to it was that got me looking at my whole money position, and especially to my pension situation. I’m sure most people are aware of all the fuss there has been in the press over the last few years over pension deficits and how a large proportion of the population are going to have very limited income when they retire. At the moment the basic state pension is just under £100 a week, or a bit below £5,500 a year. Not a lot to live off!

I do have a bit of money put to one side for my old age, but this did highlight that I do need to increase this, however I don’t have a great deal of free income coming in to add to this fund, so I must make it grow by itself.

So off to see a pension / financial advisor and see what he had to say. To cut a long story short, the final outcome was that we would put the money into a SIPP (Self Invested Personal Pension) and within that SIPP he would look after half and I would control the other half.
So I have put my half into a range of Investment Trust. Investment trusts are companies who invest their money in other companies! This is not as silly as it sounds. Let’s say you think that the countries of S. E. Asia or perhaps of Eastern Europe show growth potential. You could go off to their individual stock markets and buy into specific companies based in S. E. Asia or Eastern Europe (not always very easy to do), or you could find a U.K. based company listed on the London stock exchange which does just that, invest in these places, and then buy the shares of that U.K. based company (quite easy). So that’s what I’ve done; a selection of investment trust funds that look to S. E. Asia, to Europe, and to mining companies.

My advisor has gone in to European based Unit Trusts. Unit trusts perform a similar function to investment trusts, are often run by the same people, are far more popular, but are set up in quite a different manner. (Do an internet search yourself on something like ‘difference between investment and unit trusts’ if you want to know more about them.)

I’m quite happy with the idea that at times the stock market will go up, but it will also have it’s down periods. We had a down period with the recent banking crisis though the stock market has done a considerable recovery since then. There have been other fall periods in the past, there will be other fall periods in the future (tough, that’s the way things go). However what I’m looking for is say, if I average out the ups and downs over a period of 10 years, to grow by an equivalent of at least 10% a year. That is my minimum personal target. In good years this will not be too difficult to do, however the bad years will pull this figure down. So in reality I must look to at least 20% ‘good year’ growth to balance the bad years out.

What I’m also expecting is that my advisor should out-perform me. Professional advice does not come cheap, they have the financial training, knowledge of the market and access to far more financial information than me. So if I do out-perform him I may feel clever at having out done the professional, but also disappointed in that I will not have got value for money for the fees that I have paid.

Only time will tell.