OLTB's Passive, IT and Small Cap Portolio - 2nd anniversary

[OLTB]

Morning all - here are the depressing results - Passive first:



The XIRR for the past 12 months has been 3.30%. I have topped up four of the holdings over the past 12 months when they fell in percentage terms to the others.

3.30% growth is probably at the inflation rate and I am only up in capital terms because of an employer pension contribution that allowed me a top-up.

Investment Trust and Small Cap portfolio:



I also hold Bankers (BNKR) and Caledonia (CLDN) as generalist IT's



I don't know why, but I included my ITs and Small caps together to calculate XIRR last year so thought it best to do the same this time. XIRR for the last 12 months was -5%

This was driven mainly by the small caps that have been very volatile (as I suppose they would be, being small caps). One of them (Tarsus) was bought out which gave a 30% return on purchase price. I am down a long way on capital on these small caps so will not be doing any more - lesson learned, it's not for me. I will hold on though and won't sell and force a capital loss - you never know, they might be bought out in the future.

My IT/small cap portfolio is at 53% of where I need it to be by 2033 and my passive portfolio is at 52% of where it needs to be. So, I have 14 years (I think) to double my capital + allow for inflation in order for me to roughly be where I would like to be. If I keep going like this, there will be little chance of retiring when I would like to, so I think I need to concentrate on building a reliable IT base, before thinking of anything else.

Cheers, OLTB.

[Hariseldon58]

I would not be too despondent, you have a lot of years to go.

I’m not too sure I would over emphasise the IT part of the portfolio. The IT portfolio is very reminiscent of a John Baron portfolio mix and I used many of these last year when I took a more active role when I thought that the Brexit mess was an opportunity and a resolution by March 31st would initiate a recovery of sorts.... that worked out well..not !

(Personally I have largely moved the active component back to the passive portfolio.)

In a low return world to which we seem to be in, then minimising costs matters a lot. I am even looking hard at ETFs like VHYL, global high yielding equities, whilst the cost is only slightly higher at .29% than the base global tracker, the foreign withholding taxes, on the higher yield are far higher...

On balance the lazy portfolio approach has much to be said for it, you don’t have to do anything and sitting on your hands with a low cost portfolio is likely to do better than constantly thinking one has to do something....

[OLTB]

I would not be too despondent, you have a lot of years to go.

I’m not too sure I would over emphasise the IT part of the portfolio. The IT portfolio is very reminiscent of a John Baron portfolio mix and I used many of these last year when I took a more active role when I thought that the Brexit mess was an opportunity and a resolution by March 31st would initiate a recovery of sorts.... that worked out well..not !

(Personally I have largely moved the active component back to the passive portfolio.)

In a low return world to which we seem to be in, then minimising costs matters a lot. I am even looking hard at ETFs like VHYL, global high yielding equities, whilst the cost is only slightly higher at .29% than the base global tracker, the foreign withholding taxes, on the higher yield are far higher...

On balance the lazy portfolio approach has much to be said for it, you don’t have to do anything and sitting on your hands with a low cost portfolio is likely to do better than constantly thinking one has to do something....

Thanks Hariseldon58 - the IT portfolio is indeed replicated from John Baron's Summer portfolio as updated each month in Investors Chronicle. The value of the portfolio is pretty small and I believe I have been over zealous in following to the half a percentage level in tinkering with the portfolio over the past 12 months. This has increased the tradings costs, pleasing Hargreaves Lansdown, but detracting from my performance. I eventually resolved just to leave things roughly in line with the suggestions and only trading if there were a full sale, or new IT brought on board. I did sometimes worry that John Baron was recommending trades to justify doing something rather than leaving things as they are, but I hope he's not. Fortunately I didn't follow his advice to invest in Woodford Patient Capital as he recommended selling it again a few months later - seemed daft to even consider it in my view. From the IT side, I think I'll choose to top up Bankers or Caledonia in the future.

The passive portfolio is pretty consistent so I will keep topping up as and when I can using accumulated dividends from the IT portfolio and HYP if there are no other options (such as IT or HYP).

I wish I had a stronger strategy as it all seems a bit higgledy piggledy and from The Life of Brian, 'he's making it up as he goes along'.

Cheers, OLTB.

[JuanDB]

Hi OLTB,

Out of interest, how many trades did you make re-balancing the IT+Small cap portfolio?

A lot of the holdings in your IT portfolio will be subject to stamp duty so you are losing a combination of the bid/ask spread + Stamp duty + dealing fees on each trade. That must have a significant drag on your portfolio performance.

I would suggest re-balance at most annually, reinvest dividends and adopt a LTBH mindset.

My personal IT portfolio is income rather than growth focused and with dividends reinvested income is growing at 10% per year. I'm actually quite happy that share prices have been relatively flat as that increases the buying power of my dividends.

Hold the course, resist the temptation to tinker, and results will come. 2 years is still very early in your portfolios development.

Cheers,

Juan.

[OLTB]

Out of interest, how many trades did you make re-balancing the IT+Small cap portfolio?

Thanks JuanDB

35 transactions in all - nearly three a month...

That's far too many - at £11.95 per transaction, that's £418.25 gone in fees...jeepers.

Time for a strong coffee.

Cheers, OLTB.