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Introducing the LemonFools Personal Finance Calculators

SIPP for 2060+

Including Financial Independence and Retiring Early (FIRE)
ADrunkenMarcus
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SIPP for 2060+

#5405

Postby ADrunkenMarcus » November 15th, 2016, 9:02 pm

On TMF, I'd started a thread documenting a completely unbalanced, non-diversified, unconstrained, and potentially idiotic SIPP portfolio. Although it's older, this particular portfolio has been unitised back to 5 April 2014. From that day until 30 September 2016, the accumulation unit value rise from 1 to 1.7514.

The holdings (expressed as proportions of portfolio unit value) have evolved as follows:

Note the blanks are intentional - Standard Chartered was added late 2014; Patisserie Holdings, Rotork and Spirax-Sarco Engineering were added in 2015; Plus500 was sold in 2015. *Asterisks* signify where holdings have been sold down or added to.

Code: Select all

                                   05/04/14      05/04/15   05/04/16
Aberseen Asian Smaller Companies      30.2%      *15.0%*      13.3%
Patisserie Holdings                                          6.3%
DP Poland                              9.9%      20.5%      29.7%
Murray International                  14.6%      11.7%      15.3%
Plus500                                          21.1%   
Rotork                                                      3.0%
Spirax-Sarco Engineering                                     6.2%
Standard Chartered                                 3.7%      1.9%
Standard Life UK Smaller Companies     35.1%      *19.8%*     17.3%
Temple Bar                              9.7%      7.7%      6.6%
Cash                                    0.6%      0.4%      0.5%
                        


As time goes on, I'll try and post more meaningful reviews.

Best wishes


Mark.

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Re: SIPP for 2060+

#7331

Postby DeBriefed » November 21st, 2016, 11:44 am

Thank you! Looking forward to seeing more.

ADrunkenMarcus
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Re: SIPP for 2060+

#7739

Postby ADrunkenMarcus » November 22nd, 2016, 1:35 pm

In April 2017, I'll post an annual update including all transactions and the total return data for the year and cumulative. Hopefully it will be of some interest. :)

Best wishes

Mark.

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Re: SIPP for 2060+

#7767

Postby DeBriefed » November 22nd, 2016, 2:15 pm

Definitely.

One thing I'm grappling with as I get closer to FI is that I'm going to have to get much better at tracking my investment performance. At the moment I have no systematic way to tell how much of any given increase in NW is savings, how much is dividends, how much is increase in equity values, how much is interest. Some of this I can garner from tax returns, but I'm going to need to do better (and hopefully ramping work down will coincide with having more time and energy to invest in the exercise!)

So as well as the portfolio itself I'm always interested to see how people track how they are doing.

DeB

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Re: SIPP for 2060+

#7775

Postby swill453 » November 22nd, 2016, 2:22 pm

DeBriefed wrote:One thing I'm grappling with as I get closer to FI is that I'm going to have to get much better at tracking my investment performance. At the moment I have no systematic way to tell how much of any given increase in NW is savings, how much is dividends, how much is increase in equity values, how much is interest. Some of this I can garner from tax returns, but I'm going to need to do better (and hopefully ramping work down will coincide with having more time and energy to invest in the exercise!)

So as well as the portfolio itself I'm always interested to see how people track how they are doing.

I don't worry too much about where the increase comes from, since I really only care about total return.

So I have everything individually itemised in a spreadsheet on a monthly basis, but the important figure (for me) is the total net worth, and I compare it against the FTSE All Share Total Return index.

(It is of course useful to see the detail, like how much of a cash "float" I've got etc.)

Scott.

ADrunkenMarcus
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Re: SIPP for 2060+

#7848

Postby ADrunkenMarcus » November 22nd, 2016, 5:37 pm

I am decades away from retirement, so I am in a different position to many.

Using a slightly adapted version of pinchthepennies' unitisation spreadsheet here: http://lemonfoolfinancialsoftware.weebl ... folio.html , I am tracking my SIPP as Accumulation units only.

I also have a dividend growth portfolio where I record both Accumulation and Income units. For that, I am interested in total return but also strong dividend growth and so I try to focus on those two elements: my view is that companies which can achieve reliable, above inflation dividend growth will also deliver superior total returns.

Best wishes


Mark.

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Re: SIPP for 2060+

#8123

Postby DeBriefed » November 23rd, 2016, 12:22 pm

Yes I have wondered about unitisation: is it very time consuming?

I do agree that in the end Net Worth is what matters and where it comes from is less critical. The reason I want to track is mainly to check whether it's actually sensible for me to be investing in individual shares at all, or whether I should chuck everything in a handful of trackers and be done with it. I'm pretty sure financially the latter would be better. I only got into individual shares because I didn't want too much exposure to financials before the financial crash (yet they seemed to make up a huge amount of the FTSE), and then after that I bought some housebuilders because I didn't yet own a place and wanted to get some exposure to the housing sector in case prices continued to rocket. Now I don't have any particularly strong preferences along those lines and my picks have been more driven by sectoral views (e.g. that commodities were oversold) that have turned out to be .... erm... shall we say underwhelming in their accuracy (so far at least!)? :oops:

However, I do feel that when I am retired I would like to be able to make these kinds of judgements, and will have more time to research them properly, so there is something to be said for "getting my eye in" as long as I don't lose my shirt in the process. Therefore I'm pretty interested to know just how much better/worse my individual stock picks have done compared with my index trackers - but I do think I will probably need to unitise to do that in any kind of sensible way.

ADrunkenMarcus
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Re: SIPP for 2060+

#8277

Postby ADrunkenMarcus » November 23rd, 2016, 5:41 pm

Yes I have wondered about unitisation: is it very time consuming?


It’s really not too bad at all once you have it up and running. For my SIPP, I only go into my spreadsheet every April to add the value as of each tax year end (and whenever I make a contribution – maybe once every two years); for my dividend growth portfolio, I only update it each month at the same time (c. 10th of the month) the accumulated dividends from the previous month are paid out by my broker. It takes less than five minutes each time: an hour a year; ten hours a decade; twenty hours for twenty years; forty hours for forty years…worth it for working out if all the time you’re spending choosing individual securities was worth it.

The reason I want to track is mainly to check whether it's actually sensible for me to be investing in individual shares at all, or whether I should chuck everything in a handful of trackers and be done with it. I'm pretty sure financially the latter would be better.


There’s no shame in that, and it’s probably best for most people to go ‘passive’. However, I do believe that if you have a concentrated portfolio of very high quality businesses held for the long term and low running costs then there is a reasonable chance of beating the market. There’s a lot of rubbish in the FTSE 100! You could combine a low cost tracker (all world, all caps…or even smaller/mid cap focused) with a selection of top quality blue chips.

For each shareholding I own, I track performance benchmarked against the FTSE 100, 250 and All Share. I record on a ‘per share’ basis, avoiding issues with slicing holdings or whatever: the cost base per share; the dividends received per share each year to date; the share price now; the total return (share price gain plus dividends received and the proportion of the total return from dividends); the CAGR total return; and the benchmark total return for the same period. I also work out the CAGR in dividends per share:

Best wishes


Mark.

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Re: SIPP for 2060+

#8389

Postby tjh290633 » November 23rd, 2016, 11:26 pm

DeBriefed wrote:Yes I have wondered about unitisation: is it very time consuming?

I do agree that in the end Net Worth is what matters and where it comes from is less critical. The reason I want to track is mainly to check whether it's actually sensible for me to be investing in individual shares at all, or whether I should chuck everything in a handful of trackers and be done with it. I'm pretty sure financially the latter would be better. I only got into individual shares because I didn't want too much exposure to financials before the financial crash (yet they seemed to make up a huge amount of the FTSE), and then after that I bought some housebuilders because I didn't yet own a place and wanted to get some exposure to the housing sector in case prices continued to rocket. Now I don't have any particularly strong preferences along those lines and my picks have been more driven by sectoral views (e.g. that commodities were oversold) that have turned out to be .... erm... shall we say underwhelming in their accuracy (so far at least!)? :oops:

However, I do feel that when I am retired I would like to be able to make these kinds of judgements, and will have more time to research them properly, so there is something to be said for "getting my eye in" as long as I don't lose my shirt in the process. Therefore I'm pretty interested to know just how much better/worse my individual stock picks have done compared with my index trackers - but I do think I will probably need to unitise to do that in any kind of sensible way.


If you want to compare individual shares and trackers, unitisation doesn't really help. My method is to have a cash flow for the overall portfolio and for each holding, which includes purchases as negative elements and dividend payments, sales and current value as positive elements. You can then use the XIRR function to work out the rate of return for that individual holding, or you can amalgamate them to get the XIRR for that part of your portfolio.

If you really want to compare them then you need a common start date, as the results will vary with start date. I have a few residual holdings of OEICs which are a useful yardstick to my own performance.

Hence the IRR for my overall HYP is 10.4% since April 1987, the IRR for the shares held past and present vary vetween -81.5% and +129%, the IRRs for the OEICs are 11.9% for JPM Natural Resources (Held since it was Ebor Commodity in 1970), 9.1% for M&G Dividend, held since 1975 and 8.0% for Threadneedle UK Equity Income held since it was Eagle Star High Income in 1993.

Obviously the respective IRRs vary from time to time, as the market goes up and down. This table shows how my portfolio has performed to the present day from the end of each year since 1998:

Code: Select all

Since        Acc Unit   IRR   
31-Dec-98        5.89    8.05%
30-Dec-99        6.85    7.59%
31-Dec-00        6.68    8.25%
31-Dec-01        6.43    9.12%
31-Dec-02        5.23   11.44%
31-Dec-03        6.38   10.66%
31-Dec-04        7.59    9.99%
30-Dec-05        9.69    8.50%
31-Dec-06       12.25    6.84%
31-Dec-07       12.41    7.49%
31-Dec-08        7.41   15.78%
31-Dec-09       10.24   12.86%
31-Dec-10       12.32   11.65%
31-Dec-11       13.45   12.15%
31-Dec-12       15.80   10.85%
31-Dec-13       19.56    6.70%
31-Dec-14       20.34    8.15%
31-Dec-15       21.42   11.37%

You can see how the IRR varies as the "accumulation unit" value fluctuates.

TJH

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Re: SIPP for 2060+

#8514

Postby DeBriefed » November 24th, 2016, 11:26 am

Thanks both - I am going to have to give this some more thought!

ADrunkenMarcus
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Re: SIPP for 2060+

#8538

Postby ADrunkenMarcus » November 24th, 2016, 12:32 pm

No worries DeBriefed.

If you wanted a version of my spreadsheet template which I use to track the performance of my individual shareholdings, I'd be happy to send it through. The unitisation versions others have created here are highly recommended and, I've found, easy to use.

I am always impressed by Terry's record keeping and strong, long term performance.

Best wishes


Mark.

ADrunkenMarcus
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Re: SIPP for 2060+

#27618

Postby ADrunkenMarcus » January 30th, 2017, 8:35 pm

With the assistance of others* I managed to unitise the SIPP portfolio back to inception in December 2001. It's much easier given that there have been no withdrawals and it only had three investment trust holdings up until 2007.

I played with some more figures for December 2001 to January 2017.

My SIPP: 7.9% CAGR;
FTSE All Share: 6.2% CAGR (TR);
FTSE 100: 5.7% CAGR (TR);
Retail Price Inflation: 2.7% CAGR (since Q4 2001).

So the SIPP's 'real return' was 5.2% CAGR above inflation; 2.2% above the FTSE 100; and 1.7% above the FTSE All Share. I assume it may have lagged the FTSE 250 somewhat, but that's a guess.

Even with relatively low inflation, this lopped off more than a third off the returns. And a closet tracker fund with too many holdings costing 1.5% a year would have eaten up almost one-fifth of them, too. It's not difficult to see how inflation plus fund fees on a poorly performing collective could have swallowed over half the returns.


As I wrote there: 'While my 7.9% CAGR (net of fees) beats the FTSE All Share's 6.2% CAGR on a total return basis, performance appears to have been improving as time went on. In the earlier years, the transition from a child SIPP to a 'normal' one resulted in a fees increase at a time when the portfolio was quite small. For a period, these detracted quite significantly. Now, however, with a flat fee and a larger portfolio the fees as a proportion of the portfolio value are diminishing steadily.'

My more detailed records start in April 2014 and that will continue to be my focus as that's when the 'portfolio' largely took its current form. Review to come in April!

Best wishes


Mark.

* See viewtopic.php?f=15&t=2874

ADrunkenMarcus
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Re: SIPP for 2060+

#45629

Postby ADrunkenMarcus » April 12th, 2017, 8:52 pm

Time for a review of the 2016-17 tax year!

It's a unitised portfolio but no contributions were made anyway. And no trades were made!

The total return of the portfolio's accumulation units was 42.8 percent, which compares to the 23.6 percent return of the All Share; 16.9 percent of the FTSE 250; 25 percent of the FTSE 100; and 16.4 percent of the FTSE All World ($).

Since April 2014, it has returned 69.7 percent compared to 23.1 percent for the All Share; 25.5 percent for the 250; 22.4 percent for the 100; and 18 percent for the All World. The CAGR is 19.3 percent.

As to composition, each holding as a proportion of the total portfolio changed as follows:

Aberseen Asian Smaller Companies 13.3 percent to 12.2 percent
Patisserie Holdings 6.3 percent to 3.8 percent
DP Poland 29.7 percent to 37.1 percent
Murray International 15.3 percent to 14.6 percent
Rotork 3 percent to 3.1 percent
Spirax-Sarco Engineering 6.2 percent to 6 percent
Standard Chartered 1.9 percent to 2.3 percent
Standard Life UK Smaller Companies 17.3 percent to 14.2 percent
Temple Bar 6.6 percent to 5.7 percent
Cash 0.5 percent to 1 percent

I expect cash to continue to build up as dividends are received. Similarly, at the current rate DP Poland will account for an even larger proportion of the portfolio and will be trimmed at some stage. Many will already think it madness to have 37.1 percent in this company. I would like to top up Rotork and even Spirax-Sarco Engineering (on better prices), bringing up Rotork to a more chunky holding.

Best wishes


Mark.

ADrunkenMarcus
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Re: SIPP for 2060+

#49795

Postby ADrunkenMarcus » April 29th, 2017, 12:05 pm

Hmmm...I had a notification of a reply to this thread but there's nothing here?

Best wishes

Mark.

swill453
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Re: SIPP for 2060+

#49796

Postby swill453 » April 29th, 2017, 12:07 pm

A lot of topics were spammed last night, now cleaned up.

Scott.

ADrunkenMarcus
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Re: SIPP for 2060+

#49797

Postby ADrunkenMarcus » April 29th, 2017, 12:10 pm

Cheers Scott.

ADrunkenMarcus
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Re: SIPP for 2060+

#130683

Postby ADrunkenMarcus » April 8th, 2018, 10:43 am

Hmmm...review for the 2017-18 tax year.

TRADES
Standard Chartered was sold and the proceeds into Kainos Group in May 2017; Rotork was topped up in August 2017; and DP Poland was topped up (very modestly) in February 2018.

CURRENT HOLDINGS

The following table shows the proportion of the portfolio in each security:



TOTAL RETURN - INDEX

On a total return basis, the portfolio was down 6.6% which followed on from a very good return the year before. Since 5 April 2014, it remains ahead of all my chosen indexes:



Looking at the performance of individual holdings is always useful. Of course, DP Poland represented a huge chunk of the portfolio at the start of the year but that particular problem has been solved in that it is down substantially! I am pleased with the positive returns of the other holdings, although Murray International, Temple Bar and Aberdeen Asian Smaller companies produced a total return below inflation.

It might be easier to put it all in Fundsmith. :lol:



RUNNING COSTS

The annual account fee rose this year, which has had an impact on costs. As the portfolio grows, I hope the costs can come down.



Best wishes

Mark.


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