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 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.