OLTB's other Portfolios - Annual Review
Posted: September 1st, 2018, 9:19 am
Morning all
With the 31st August ticking over yesterday and a flurry of dividend payments in for my passive and IT portfolios, it is time to review the performance over the last 12 months. This will be the first time I have reviewed the portfolios for a full 12 months as between 1st January 2017 and 31st Aug 2017, I was transferring over some deferred employer pensions that were invested in simple, cheap 'managed' funds and therefore they didn't have a full 12 months to answer for.
As a bit of background to those who aren't aware, I have a HYP that has been recently reviewed and has just passed it's two year anniversary. The passive and IT portfolios here, are designed for growth so that when I consider stopping work, mine and Mrs OLTB's standard of living can be maintained. I have roughly calculated our outgoings (without mortgage costs which I am currently paying) which mean I have a target of capital that I think will be needed. I have assumed that I will draw 4% from this target capital (income or capital - I'm not so worried on this board!) which hopefully will meet our spending shortfall. My HYP is primarily targeted to cover direct debit bills/standing orders in the first instance and these other portfolios are designed to cover food/petrol/social things. I am soon to be 49 and with our mortgage finishing when I am 62, this might be the time I think about stopping work - I might not though as I enjoy what I do, but I did notice for the first time this Summer a real desire to go on holiday again when we returned from the Greek island!
I am quite clear in that I do not know what approach is better - passive or an active IT portfolio. I decided to have one of each with pretty equal weightings and am relaxed about this as I won't be all wrong. The XIRR figures I have noted below on both portfolios don't include dividends generated as these aren't automatically invested - they accumulate in the SIPP cash account and I deploy them where needed (sometimes to my HYP, sometimes to these portfolio). I'm not sure if this effects the XIRR calculation, but happy to be educated and re-look at this. I have stated the yield on both portfolios separately.
Passive Portfolio:
The XIRR for the above portfolio over the last 12 months has been 5.15% and in addition, the income generated from this portfolio has been 1.69%. With 13 years to go to my passive portfolio target capital value, I stand at 50.1% of this figure. I have increased this initial target capital value by RPI, rather than CPI (as recommended by OZYU) in order to keep the target value aligned to inflation.
IT Portfolio:
This portfolio is far and away replicated from John Baron's 'Summer' portfolio which I look at monthly using my IC subscription. There are a few outliers though - Bankers, TMMG and OPM. Bankers is there as a 'Doris' type of fund that will hopefully just sit there and grow away. I have been recently conscious that as the portfolio wasn't very large in capital terms, spreading money over this number of ITs was initially quite expensive in charges. The monthly tinkering that John Baron (JB) suggests I don't now tend to follow unless it is a full sale or full purchase as it won't make that much difference. Rather than have any sales sat in cash (if JB suggests increasing cash) I drop into Bankers.
TMMG and OPM are there as longer term hopefuls to recover the capital I lost with Carillion - I may of course lose this capital as well, but I am ever the optimist!
The XIRR on the IT portfolio over the past 12 months was 5.63% and yield was 2.8%. The target to capital figure is slightly lower that the passive portfolio as I haven't included the 'cash' element - it's at 46.99%, but with the cash element added back in they are pretty much in line with each other.
I have made far more trades with the IT portfolio over this last 12 months, and performance has been pretty similar to the passive portfolio. I won't be doing so much 'tinkering' with the IT portfolio this next 12 months as it's not sensible from a charges view.
If any of you are still reading this, thank you, and I do welcome any comments!
Cheers, OLTB.
With the 31st August ticking over yesterday and a flurry of dividend payments in for my passive and IT portfolios, it is time to review the performance over the last 12 months. This will be the first time I have reviewed the portfolios for a full 12 months as between 1st January 2017 and 31st Aug 2017, I was transferring over some deferred employer pensions that were invested in simple, cheap 'managed' funds and therefore they didn't have a full 12 months to answer for.
As a bit of background to those who aren't aware, I have a HYP that has been recently reviewed and has just passed it's two year anniversary. The passive and IT portfolios here, are designed for growth so that when I consider stopping work, mine and Mrs OLTB's standard of living can be maintained. I have roughly calculated our outgoings (without mortgage costs which I am currently paying) which mean I have a target of capital that I think will be needed. I have assumed that I will draw 4% from this target capital (income or capital - I'm not so worried on this board!) which hopefully will meet our spending shortfall. My HYP is primarily targeted to cover direct debit bills/standing orders in the first instance and these other portfolios are designed to cover food/petrol/social things. I am soon to be 49 and with our mortgage finishing when I am 62, this might be the time I think about stopping work - I might not though as I enjoy what I do, but I did notice for the first time this Summer a real desire to go on holiday again when we returned from the Greek island!
I am quite clear in that I do not know what approach is better - passive or an active IT portfolio. I decided to have one of each with pretty equal weightings and am relaxed about this as I won't be all wrong. The XIRR figures I have noted below on both portfolios don't include dividends generated as these aren't automatically invested - they accumulate in the SIPP cash account and I deploy them where needed (sometimes to my HYP, sometimes to these portfolio). I'm not sure if this effects the XIRR calculation, but happy to be educated and re-look at this. I have stated the yield on both portfolios separately.
Passive Portfolio:
The XIRR for the above portfolio over the last 12 months has been 5.15% and in addition, the income generated from this portfolio has been 1.69%. With 13 years to go to my passive portfolio target capital value, I stand at 50.1% of this figure. I have increased this initial target capital value by RPI, rather than CPI (as recommended by OZYU) in order to keep the target value aligned to inflation.
IT Portfolio:
This portfolio is far and away replicated from John Baron's 'Summer' portfolio which I look at monthly using my IC subscription. There are a few outliers though - Bankers, TMMG and OPM. Bankers is there as a 'Doris' type of fund that will hopefully just sit there and grow away. I have been recently conscious that as the portfolio wasn't very large in capital terms, spreading money over this number of ITs was initially quite expensive in charges. The monthly tinkering that John Baron (JB) suggests I don't now tend to follow unless it is a full sale or full purchase as it won't make that much difference. Rather than have any sales sat in cash (if JB suggests increasing cash) I drop into Bankers.
TMMG and OPM are there as longer term hopefuls to recover the capital I lost with Carillion - I may of course lose this capital as well, but I am ever the optimist!
The XIRR on the IT portfolio over the past 12 months was 5.63% and yield was 2.8%. The target to capital figure is slightly lower that the passive portfolio as I haven't included the 'cash' element - it's at 46.99%, but with the cash element added back in they are pretty much in line with each other.
I have made far more trades with the IT portfolio over this last 12 months, and performance has been pretty similar to the passive portfolio. I won't be doing so much 'tinkering' with the IT portfolio this next 12 months as it's not sensible from a charges view.
If any of you are still reading this, thank you, and I do welcome any comments!
Cheers, OLTB.