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Up 132% after 6.75 years

Posted: August 3rd, 2018, 7:04 pm
by forrado
See supporting documentation images at …
https://drive.google.com/drive/folders/10pA9Zb9veGl_z-ncXZKnphRttvNvsYtZ

29/10/2011
Opening cash balance of £150,759.97
Result of maturing with-profits personal pension plan being transferred to a SIPP

31/07/2018
SIPP valued at £350,111.40
An increase of £199,351.43 (132.2%)
Represents a CAGR of 13.33% over the course 6 years 9 months of operation, during which time no funds have been added and no funds withdrawn

Holdings (Current)
8 x Closed End ITs representing 67.2% of the capital value and 69.2% of the income generation
4 x Open End OEICs representing 32.0% of the capital value and 30.8% of the income generation
Cash representing 0.8% of the capital value
Annual portfolio yield currently 3.67%
Accumulated dividends are usually reinvested three times a year on a 17-week cycle

Asset Model (currently 100% equities)
30% UK:
City of London (CTY) : Lowland (LWI) : Jupiter Income Fund (RWAAAU)
25% Global:
British Empire Trust (BTEM) : Murray International (MYI) : Securities Trust of Scotland (STS)
20% Continental Europe (ex-UK):
European Assets (EAT) : Standard Life Euro Equity Income (STETYM) : Schroder Euro Alpha Income (CBERPO)
15% Asia Pacific:
Schroder Oriental Income (SOI) : Schroder Asian Income (SISIAN)
10% Private Equity:
Standard Life Private Equity (SLPE)

What’s the object of the exercise?
To provide myself with a form of longevity insurance should I live too long (I’m now coming up to 72). Such assets to be used in the event I need to fund social care in my dotage. If on the other hand, I don’t make it to my dotage then alternative arrangements have been made.

Hopefully, I can get the pot up to £600K, a quadrupling of the £150K I started with, before I start dipping into it. If I can keep this 13% CAGR pace going then I should hit the £600K in five years. Though, I have no illusions that the going will get a lot harder but I have every confidence that given a fair wind I’ll get to where I want to go at some point in the journey.

Re: Up 132% after 6.75 years

Posted: August 3rd, 2018, 8:28 pm
by Dod101
That looks very good from a selection of ITs, but by the time you reach your £600,000 (assuming you do) you will be too old to enjoy it! I am of the same vintage and I use my SIPP for a luxury now and again.

Your portfolio illustrates the power of reinvesting the dividends, well done.

Dod

Re: Up 132% after 6.75 years

Posted: August 4th, 2018, 12:38 pm
by BrummieDave
Well done, and thanks for posting.

Like Dod, I also hope you're spending, perhaps from other funds, to enjoy your retirement. :)

Re: Up 132% after 6.75 years

Posted: August 4th, 2018, 1:16 pm
by RececaDron
forrado wrote:If I can keep this 13% CAGR pace going then I should hit the £600K in five years. Though, I have no illusions that the going will get a lot harder but I have every confidence that given a fair wind I’ll get to where I want to go at some point in the journey.



You might think it churlish of me to point out that it is not you who is keeping a pace going.

The results are what they are because markets have done what they've done. When markets do different things then different results will occur.

Clearly, you know this from what you write next, but that bolded bit doesn't really reflect that. It's human nature to extrapolate and project, but with markets it can be a big mistake to do that. A newbie might not appreciate that, and ship up here thinking "I wouldn't mind 13% a year, ongoing" without truly grasping that's not how it works.

Nice result though. Seems like you've a plan.

Re: Up 132% after 6.75 years

Posted: August 4th, 2018, 1:53 pm
by Dod101
RececaDron wrote:
forrado wrote:If I can keep this 13% CAGR pace going then I should hit the £600K in five years. Though, I have no illusions that the going will get a lot harder but I have every confidence that given a fair wind I’ll get to where I want to go at some point in the journey.


The results are what they are because markets have done what they've done. When markets do different things then different results will


I would say two things about this post. Certainly we can all do the sums 'If I can keep this x% CAGR going then y in z years.' In itself that does not mean much.

But the choice of the ITs has surely had some effect and it is of course partly down to the markets but also to the managers who have been running the ITs. They are not simply tracker funds.

My point though is that at about the same age as the OP, I am not trying to accumulate capital; it is a bit late for that. It is time to enjoy it! And I am not knocking the success of the investments.

Dod

Re: Up 132% after 6.75 years

Posted: August 4th, 2018, 7:12 pm
by forrado
RececaDron wrote:Nice result though. Seems like you've a plan.

Essentially, what I’m attempting to demonstrate to myself, in the crudest of financial terms, is the relentless power of compounding. Though in this instance – given the belief that overtime buying into weakness will prove the better outcome than one of buying into strength - I have adopted the practice of recycling dividend payouts into the laggards, preferring to leave the leaders to fend for themselves. My contrarian outlook makes me reluctant to buy into winners, being inclined as I am to let winners run their races, choosing instead to support such holdings that find themselves out-of-investor-favour from time to time.

Re: Up 132% after 6.75 years

Posted: August 5th, 2018, 10:49 am
by ADrunkenMarcus
forrado,

Thanks for sharing with us. I think you have a very solid portfolio and, importantly, not over-diversified.

I think recycling dividends into the laggards gives you quite a nice bias to value in that sense - a few years ago, for example, Murray International was offering a 5-6% dividend yield.

If it were me, I might look at some of the unit trusts to see if a closed-ended investment trust might be better from a cost point of view or if there's an investment trust run similarly which might be at a discount to net asset value. Does Jupiter Income add much value? How does the ongoing charge compare to some of the investment trusts available in the UK equity income sector?

As you're with ATS, you benefit from the flat fee which should diminish as a proportion of your portfolio over time (assuming ATS don't jack the fees up again: I have a £90 annual fee noted for 2011 which was £252 for 2017, although they do now include a number of 'free' trades).

Best wishes

Mark.

Re: Up 132% after 6.75 years

Posted: August 5th, 2018, 1:27 pm
by RececaDron
Dod101 wrote:But the choice of the ITs has surely had some effect and it is of course partly down to the markets but also to the managers who have been running the ITs. They are not simply tracker funds.


My point was independent of whether the investments are index funds, ITs, or anything else.

Investment isn't like running - you cannot reliably project a "pace" of returns you've been achieving up to now into future time periods - it was that word I was picking up on. If markets had behaved differently in the past 7 years, the returns profile would have differed; if markets had behaved much differently, the returns would have been much different.

Stating the obvious, but sometimes it's worth doing that...

My comment was aimed mostly at less experienced investors who've not travelled through full or multiple market cycles, and so won't have the same visceral appreciation of this as those who have. But also as a gentle reminder to others, in case the lengthy favourable period for equities (and the returns) that we've enjoyed gets taken for granted as being the template to expect in the coming years.

Re: Up 132% after 6.75 years

Posted: August 5th, 2018, 2:03 pm
by FredBloggs
Nice to see a good outcome, well done. Thinking out loud - You are invested pretty much across the globe and pretty much across the largest to the smallest companies, it seems. Again, thinking out loud, there must be several thousand companies underlying that portfolio, around the world. I am wondering what a bench marking against a whole of world market index tracker might reveal? The markets have been very kind the last seven years, I am very curious how much value the various fund managers have been adding versus simply owning a slice of the whole world market. Is there such a world market tracker I could bench mark that against?

Re: Up 132% after 6.75 years

Posted: August 5th, 2018, 2:47 pm
by Dod101
RececaDron

Indeed

Dod

Re: Up 132% after 6.75 years

Posted: August 5th, 2018, 6:51 pm
by forrado
ADrunkenMarcus wrote:Does Jupiter Income add much value? How does the ongoing charge compare to some of the investment trusts available in the UK equity income sector?

The Jupiter Income holding has been very much a play on the manager, Ben Whitmore, who I have a high regard for. He took over at the start 2013 when the previous manager was eased out following a number of years of serial underperformance. Whitmore’s investment approach differs markedly from that of his predecessor being contrarian and value oriented in style. As for charges; the OCF for the Z inc clean class of share is currently qouted at 0.84%, which I’ve been happy to pay since Whitmore took over.

FredBloggs wrote:I am wondering what a bench marking against a whole of world market index tracker might reveal? The markets have been very kind the last seven years, I am very curious how much value the various fund managers have been adding versus simply owning a slice of the whole world market. Is there such a world market tracker I could bench mark that against?

On the subject of benchmarking I’m not especially interested. Rather, I’ve broadly tended to follow an ‘outcome’ strategy such as expanded upon via the Morningstar link below …
http://www.morningstar.co.uk/uk/news/167338/what-is-outcome-investing.aspx

You better believe, as you say, "the markets have been very kind the last seven years." I’m eternally grateful I happened to be in the right place, at the right time, with the necessary funds to take advantage.

Re: Up 132% after 6.75 years

Posted: August 7th, 2018, 3:05 pm
by StepOne
Interesting post, and it got me to take a look at my own pension schemes for a comparison.

It's a bit rough and ready, using an estimate of my annual contribution, but over a similar time scale I've been getting around 9%, so your returns look pretty good. These were company and personal schemes, now combined into a single SIPP, and have been mainly invested in UK/EU and USA tracker funds.

Cheers,
StepOne

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 9:17 am
by hiriskpaul
FredBloggs wrote:Nice to see a good outcome, well done. Thinking out loud - You are invested pretty much across the globe and pretty much across the largest to the smallest companies, it seems. Again, thinking out loud, there must be several thousand companies underlying that portfolio, around the world. I am wondering what a bench marking against a whole of world market index tracker might reveal? The markets have been very kind the last seven years, I am very curious how much value the various fund managers have been adding versus simply owning a slice of the whole world market. Is there such a world market tracker I could bench mark that against?

31/10/2011 - 31/07/2018 MSCI Developed World Index total return in pounds was 159.3%. Developed World small caps 178.8%.

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 10:06 am
by hiriskpaul
p.s. iShares Core MSCI World ETF (SWDA) is a useful real world tracker to compare against, although it was much more expensive before it became a "Core" ETF. It is accumulating and denominated in pounds, so no need to worry about reinvesting dividends and currency conversions. From Google finance, closing price on 04/11/2011 was 1700p and on 01/08/2018 it was 4281.5p, giving a total return of 152%.

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 11:04 am
by RececaDron
hiriskpaul wrote:It is accumulating and denominated in pounds


Confused :?:

ishares website shows SWDA (accumulating) with Share Class Currency of USD...

But has a variant share class, IWDG, which is hedged GBP Share Class Currency but is distributing.

https://www.ishares.com/uk/individual/e ... f-acc-fund

What gives?

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 11:27 am
by FredBloggs
hiriskpaul wrote:
FredBloggs wrote:Nice to see a good outcome, well done. Thinking out loud - You are invested pretty much across the globe and pretty much across the largest to the smallest companies, it seems. Again, thinking out loud, there must be several thousand companies underlying that portfolio, around the world. I am wondering what a bench marking against a whole of world market index tracker might reveal? The markets have been very kind the last seven years, I am very curious how much value the various fund managers have been adding versus simply owning a slice of the whole world market. Is there such a world market tracker I could bench mark that against?

31/10/2011 - 31/07/2018 MSCI Developed World Index total return in pounds was 159.3%. Developed World small caps 178.8%.

Thanks, though the OP has a decent outcome. As I suspected, he'd have had an even better outcome by just buying a slice of the world market.

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 11:40 am
by hiriskpaul
RececaDron wrote:
hiriskpaul wrote:It is accumulating and denominated in pounds


Confused :?:

ishares website shows SWDA (accumulating) with Share Class Currency of USD...

But has a variant share class, IWDG, which is hedged GBP Share Class Currency but is distributing.

https://www.ishares.com/uk/individual/e ... f-acc-fund

What gives?

Yes it can be confusing due to the multiple listings. There are 2 listings on the London Stock Exchange, IWDA priced in USD and SWDA priced in GBP. Both of these and the listings on Borsa Italiana, etc. are covered by the same iShares page. All the information gives details and performance history in USD, which is a little annoying. That is why I suggested going elsewhere to get the price of SWDA (not Yahoo finance though as prices are wrong!). Google Finance and Morningstar both look reliable.

IWDG is as you say a GBP hedged version of the ETF. It will not track the market in the same way.

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 12:28 pm
by Hariseldon58
Very interesting post, I have invested along similar lines in the past and moved towards more ETF's and less Investment Trusts over the last 8 years.

My electronic records from late 2011 are not as good as they could be as the software I used then was 'retired'....annoying.

I would say that my returns over that period using a fair chunk of ETFs that collectively are similar to the World ETF are in the same ball park, ie capital has slightly more than doubled ( approx 10%pa) but I have lived off the portfolio and financed other things (travel and house moves etc) and that probably represents an additional 4% pa for a total of about 14% pa

It suggests that Forrado's approach has worked well and I must admit I am moving the pendulum back towards Investment trusts etc, ie topped up Law Debenture with the current favourable discount, bought back Finsbury Growth and Income, moved some of an S&P500 tracker into Berkshire Hathaway 'B' shares.

Who knows where it goes form here ? My investment returns have been flattered by the decline in sterling and that is likely to continue to be volatile for the foreseeable future.

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 3:02 pm
by RececaDron
hiriskpaul wrote:Yes it can be confusing due to the multiple listings. There are 2 listings on the London Stock Exchange, IWDA priced in USD and SWDA priced in GBP.


What's confusing, and per the link I posted, is that the iShares Key Facts page for SWDA states: "Share Class Currency USD" with current price ~56.40 USD.

While the SWDA I see quoted on the LSE is ~4376p.

Why is the iShares page for SWDA stating it's a USD share class but you (and the LSE quotes) are saying GPB? Is the iShares product info wrong? Or something else?

Re: Up 132% after 6.75 years

Posted: August 10th, 2018, 6:56 pm
by hiriskpaul
RececaDron wrote:
hiriskpaul wrote:Yes it can be confusing due to the multiple listings. There are 2 listings on the London Stock Exchange, IWDA priced in USD and SWDA priced in GBP.


What's confusing, and per the link I posted, is that the iShares Key Facts page for SWDA states: "Share Class Currency USD" with current price ~56.40 USD.

While the SWDA I see quoted on the LSE is ~4376p.

Why is the iShares page for SWDA stating it's a USD share class but you (and the LSE quotes) are saying GPB? Is the iShares product info wrong? Or something else?

SWDA is the short name that iShares give for the ETF, but the ticker SWDA is used on 3 different exchanges and on each exchange it has a different currency! See the Listings section on the ETF page for all the details. If you want to invest in a USD priced ticker, listed on the LSE, you would use ticker IWDA. On the LSE the ticker SWDA refers to the GBP listing and this is the one that most UK investors would prefer to use as it does not require a GBP/USD foreign exchange conversion for GBP investors.

The ETF page is in all USD because that is the underlying currency used by the ETF, regardless of ticker.

Edit: Actually now you mention it, the Share Class Currency is stated as USD and this does look wrong, or at least inconsistent with the description of the Bloomberg Ticker given as "SWDA LN". SWDA LN is definitely priced in GBP.

https://www.bloomberg.com/quote/SWDA:LN