Tag Archives: income

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.

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.