The Lemon Fool

This is my Investment Trust portfolio.

I originally started investing in IT’s some 25 years ago, and gradually increased my involvement after taking early retirement, some 15 years ago. I've built up the portfolio more significantly over the last few years, during which time I have been transferring holdings from a share dealing account across to my ISA., and also running down a HYP and transferring to the ISA.

The emphasis is on dividend income, but with growth, and diversification.

ABERDEEN ASIAN INC - 1.8%
ABERDEEN SMALLER C - 4.1%
BLACKROCK COMM INC - 2.1%
CITY OF LONDON INV ORD - 3.0%
ECOFIN GBL UTILITI ORD - 3.3%
EURO ASSET TST NV ORD - 3.6%
FINSBURY G&I TST ORD - 3.3%
HENDERSON EURO FOC ORD - 3.6%
HENDERSON INTL INC ORD - 4.5%
INT PUBLIC PARTNER ORD - 2.0%
INVESCO PERP GLOBAL EQTY INC - 5.7%
JOHN LAING ENVIRON NPV - 2.9%
JOHN LAING INFRAST ORD - 1.6%
JPMORGAN ASIAN IT ORD - 3.5%
JPMORGAN GBL GTH & ORD - 6.7%
MIDDLEFIELD CAN IN RED - 8.0%
MURRAY INTL TRUST ORD - 10.3%
NORTH AMERICAN INC ORD - 1.7%
PRIMARY HLTH PROP ORD - 1.6%
REGIONAL REIT LTD ORD NPV - 2.9%
SCHRODER ORIENTAL ORD - 3.6%
SHIRES INCOME ORD - 3.1%
STANDARD LIFE EQTY ORD - 5.3%
STANDARD LIFE PRIV ORD - 2.4%
STD LIFE INV PROP ORD - 5.3%
TEMPLE BAR INV TR ORD - 2.7%
CASH : - 1.4%

Subsequent to the Brexit referendum, I increased the exposure to Global sectors. The Infrastructure % Environmental Asset trusts have been added over the last year, as have RGL (property) and EGL (utilities).

The percentages shown are of each holding as a percentage of the portfolio as a whole. Sorry I haven't been able to space them out more presentably. I didn't dare tinker too much in case I messed them up.

I should have added that I also have holdings of Witan and Personal Assets still in my share dealing account, and which will probably be "Bed & ISA'd" next year, to join the above listing.

The Sector Analysis (which includes WTAN and PNL) is:

UK - 21%
Global - 29.7%
Europe - 6.7%
North America - 10.3%
Asia Pacific - 8.3%
Prop/REITS - 10%
Commodities - 2.6%
Infrastructure - 3.3%
Environmental 2.7%
*Utilities - 4.0
cash - 1.4%
*also includes some infrastructure

Seems like a bit of overkill to have so many IT's if you ask me

Id have thought there was a lot of overlap. Maybe a smaller basket would do the same.

Though that being said, you have lots of counterparty risk reduction there.

I thought the main observation/comment might be along the lines that I might as well buy a tracker, but I am quite happy to hold what I see as actively managed diversity. Different trusts within the same category, have different managers, different styles and varying objectives, so I am quite happy with that. They also spread out the dividend payment dates.

The North American category appears a bit overweight. That is mainly down to my holding of MCT which I am deliberately overweight in, and which invests mostly in Canada with some US exposure.

richfool wrote:I thought the main observation/comment might be along the lines that I might as well buy a tracker, but I am quite happy to hold what I see as actively managed diversity. Different trusts within the same category, have different managers, different styles and varying objectives, so I am quite happy with that. They also spread out the dividend payment dates.

The North American category appears a bit overweight. That is mainly down to my holding of MCT which I am deliberately overweight in, and which invests mostly in Canada with some US exposure.

I do not see anything wrong with mitigating manager risk by holding more than one trust covering a single area or sector.

Too many holdings for me. Appreciate your comments about fund manager diversity but if you end up getting some good and some bad, they’ll cancel each other out so my view would be tracker and some satellite ITs rather than a big IT portfolio. But given you’ve been investing 25 years who am I to judge

The question i would really like to know is whether a portfolio like this would beat a tracker just through the leverage, despite the higher active charges? I often wonder whether someone has considered operating an IT that would just track the all world, with similar charges to a passive etf but use leverage. Although didn’t Aberdeen close something similar to this recently?

I do not want to be dismissive but surely a few generalists would cover most of what you hold? I do not have time at the moment to compile a list but there are the usual suspects. Surprised you do not have Edinburgh IT for income.

Dod

Out of curiosity, what is the overall yield for the p/f as a whole?

Dod101 wrote:I do not want to be dismissive but surely a few generalists would cover most of what you hold? I do not have time at the moment to compile a list but there are the usual suspects. Surprised you do not have Edinburgh IT for income.

Dod

Dod, Most Generalists, having more of a growth focus, only pay out low dividend yields. Whereas I can be selective and pick out what I want to hold, such as Infrastructure. Noted I do hold Witan and also some Global G&I trusts.

I deliberately avoided Edinburgh and Woodford (both when he was at the helm and since he left), preferring Temple Bar and City of London, and FGT for the conviction and growth perspective. SLET was added about 3 years ago, as it tended to avoid the more usual FTSE 100 stocks and had a slightly higher yield.

monabri wrote:Out of curiosity, what is the overall yield for the p/f as a whole?

Monabri, I can't give you a meaningful yield for the portfolio as a whole, at this time, as the portfolio has only just been finalised. Over the last year it was in two places, - split between my ISA and my share dealing account,- and significant "Bed & ISA' ing" was taking place. Plus a number of the holdings were still being built up or added to, (e.g. the infrastructure trusts, JLIF, INPP, and JLEN, EGL, and commercial property trust RGL). The portfolio was finalised as of April this year.

I do have calculations and yield figures, for individual holdings, though as said some of those have been added new or topped up during this last year.

I am looking forward to being able to provide a figure in April next year.

Thanks richfool. I hold 9 ITs plus three Reits, PHP, British Land and Segro. Thinking of ditching B Land but the yield is fine.

My income ITS are Edinburgh, Murray International, Murray Income and Temple Bar. The weakest is Murray Income. Like you I like Temple Bar and Alistair Mundy's contrarian approach.

For growth I hold Scottish Mortgage, Caledonia, RIT, Finsbury and I recently bought back into Alliance. Each has a different characteristic and I will keep those indefinitely.

I prefer generalists of one sort or another and I think all of these are in that category, irrespective of the AIC categorisation which I never look at. Specialists, like Emerging Markets, infrastructure and the like tend to go in and out of fashion and I prefer to let the manager decide. I blend these into either my HYP or my Growth portfolio and do not really look at them as an IT portfolio, but each to their own approach. Depends what works.

Dod

Thanks for sharing your thoughts, Dod.

In the property sector, I originally only held SLI (Standard Life Prop Inc). I then added PHP, which I am aware you hold, along with RGL (Regional REIT), over the last year or so. I took up the recent rights issue on PHP.

Since June 2016, I added JPGI (JP Morgan Global Income) and then JAI (JP Morgan Asian Income), because of their exposure to growth stocks coupled with their higher dividend yields (currently: 3.86% & 4.34% respectively), supported where necessary from capital. That way I have been able to obtain exposure to growth and technology stocks whilst still achieving a higher dividend yield.

Hello Dod,

I hold British Land. May I ask why you are thinking of ditching it?

There is an Amazon threat to retail, a Brexit threat to offices and the risk of interest rate rises. Despite that I have so far viewed it as an LTBH investment. London is a great city and I am optimistic that if financial and other jobs move out because of Brexit other industries such as technology will replace them. The retail threat may be more serious - many retail REITs in the US have been getting killed but BLND have some great assets and big developments like Canada Water can add a lot of value in the coming years.

Pendrainllwyn

My only reason for ditching B Land would be that I am not sure that in the longer run London offices will be such a good investment. I think there is no doubt that London will lose some financial companies to Frankfurt, Paris and so on as the Brexit influence becomes real. I have not thought it through and will do nothing soon. I have been in and out of B Land and Land Securities over the years and have never convinced myself that they are a great investment.

Richfool. Being pedantic the fundraising by PHP was of course an Open Offer not a rights issue and I took it up. Some thought that 108p was not worth the effort but the share price has risen quite a bit now that it is out of the way so although it was a modest top up, I think it was a nice cheap way to modestly increase my investment. It may affect the dividend though because we have been diluted even if having taken up the Open Offer.

Dod

Dod101 wrote:Richfool. Being pedantic the fundraising by PHP was of course an Open Offer not a rights issue and I took it up. Some thought that 108p was not worth the effort but the share price has risen quite a bit now that it is out of the way so although it was a modest top up, I think it was a nice cheap way to modestly increase my investment. It may affect the dividend though because we have been diluted even if having taken up the Open Offer.

Dod, I wasn't sure if "rights issue" was the correct description, but yes I took up the offer, and I did also apply for shares in excess of my pro rata entitlement, which I received in full. So that topped up my holding nicely at the 108p price and without any trading costs.

I had previously topped up Regional REIT (RGL) at a healthy 7.85% dividend yield.

Thanks @richfool
Always good to see other portfolios, very useful. The only ones I hold are Finsbury (FGT) and Witan (WTAN) which have been good performers for me although both slacking a little recently On first viewing it looks too many holdings bur more careful review and reading your reasons for so many, makes things clearer. John Baron holds a similar number of trusts as well.

Thanks again,

Thanks for the thanks, Stomer.

Next time I will try and post the holdings within their respective sectors. That should make it more digestible.

Yes there is a logic to each holding. For example, within the UK sector my holdings include Aberdeen Smaller Coys Income trust (ASCI) for its exposure to smaller coys and its higher dividend yield. And I hold MRC (Mercantile) for its exposure to smaller coys from a growth perspective.

richfool wrote:I had previously topped up Regional REIT (RGL) at a healthy 7.85% dividend yield.

It's still at that level now, I see. Does anyone know why? Not REIT that I've ever followed, I have to confess.

MDW1954

FredBloggs wrote:

MDW1954 wrote:

richfool wrote:I had previously topped up Regional REIT (RGL) at a healthy 7.85% dividend yield.

It's still at that level now, I see. Does anyone know why? Not REIT that I've ever followed, I have to confess.

MDW1954

Fashion. RGL invests in pretty unfashionable assets. As far as I can see they do so very successfully too. Disclosure - I hold possibly far too much RGL, but I am enjoying the extraordinarily generous dividends.

..And it goes ex dividend again on 25th May (qtly dividends).

Further info and access to its Annual Report & Accounts available through HL:-

http://www.hl.co.uk/shares/shares-searc ... it-ltd-npv

MDW1954 wrote:It's still at that level now, I see. Does anyone know why? Not REIT that I've ever followed, I have to confess.

MDW1954

MDW, Noting your interest in RGL, there is a long thread on RGL on the REIT board, with links to several other sources of information, here:

viewtopic.php?f=87&t=8008