Tag Archives: investment trusts

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.

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.

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.