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OLTB's other Portfolios - Annual Review

A helpful place to also put any annual reports etc, of your own portfolios
OLTB
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OLTB's other Portfolios - Annual Review

#163496

Postby OLTB » 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.

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Re: OLTB's other Portfolios - Annual Review

#163512

Postby Itsallaguess » September 1st, 2018, 10:30 am

ap8889 wrote:
VWRL total return over last 12 months is 10.9%.

Vanguard LS 80% is 7.56%.

Rather than deal with a very complicated IT portfolio, a simpler approach might save fees?


Whilst this has been asked in relation to OLTB's portfolio review, it's also an interesting and timely question with regards to my own investments, having taken a dip into some of the Vanguard funds this year for the first time.

I've been giving it some thought from a personal perspective, and I've come to the conclusion that for me, there's almost a philosophical side to the question, which might be best answered by asking a different question -

If there was a pleasurable walk to the top of a mountain, but also a lift that would get you to the same place, would those getting the lift consider the walkers were wasting their time and energy?

Personally, as a keen walker, I don't think they would be, but I can see why some people might think they were.

Is it the same with personal investment?

Do we gain pleasure from the walk itself?

I think I do, but the performance of some of the cheap Vanguard funds do make me think more about this, recently..

I've started another thread to discuss this here, if OLTB would rather his portfolio-review thread were kept free of such a topic -

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=13462

Cheers,

Itsallaguess

OLTB
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Re: OLTB's other Portfolios - Annual Review

#163517

Postby OLTB » September 1st, 2018, 11:06 am

Itsallaguess wrote:
ap8889 wrote:
VWRL total return over last 12 months is 10.9%.

Vanguard LS 80% is 7.56%.

Rather than deal with a very complicated IT portfolio, a simpler approach might save fees?


Whilst this has been asked in relation to OLTB's portfolio review, it's also an interesting and timely question with regards to my own investments, having taken a dip into some of the Vanguard funds this year for the first time.

I've been giving it some thought from a personal perspective, and I've come to the conclusion that for me, there's almost a philosophical side to the question, which might be best answered by asking a different question -

If there was a pleasurable walk to the top of a mountain, but also a lift that would get you to the same place, would those getting the lift consider the walkers were wasting their time and energy?

Personally, as a keen walker, I don't think they would be, but I can see why some people might think they were.

Is it the same with personal investment?

Do we gain pleasure from the walk itself?

I think I do, but the performance of some of the cheap Vanguard funds do make me think more about this, recently..

I've started another thread to discuss this here, if OLTB would rather his portfolio-review thread were kept free of such a topic -

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=13462

Cheers,

Itsallaguess


Thanks both...

I've been thinking that I'll see how both portfolios do over the next couple of years and that if a similar performance is enjoyed by the LifeStrategy80 fund then ap8889 is quite right to raise the point of why bother as that's the fund I would choose.

Now, Itsallaguess raises a matter that I hadn't considered...I do enjoy the 'walk'. Do I enjoy it enough for it to cost me money - probably not, but again, I'm going to see how the portfolios do for a few years before making any change.

Very happy for this post and any follow up posts to wander among the trees and see what others think.

Cheers, OLTB.

OLTB
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Re: OLTB's other Portfolios - Annual Review

#163527

Postby OLTB » September 1st, 2018, 11:36 am

ap8889 wrote:VWRL total return over last 12 months is 10.9%.

Vanguard LS 80% is 7.56%.

Rather than deal with a very complicated IT portfolio, a simpler approach might save fees?


Just thinking - the total return for my passive portfolio would be the 5.15% capital appreciation + 1.69% dividend return which totals 6.84% and IT portfolio would be 5.63% + 2.8% which totals 8.43%. Overall, pretty much in-line with the VLS80 more or less.

My SIPP holds all these assets with Hargreaves Lansdown and the charges are a fixed £200 p.a. so I'm not too worried from a charges point however, I will not be trading as much this year which means trading costs will be lower!

Cheers, OLTB.

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Re: OLTB's other Portfolios - Annual Review

#163535

Postby tjh290633 » September 1st, 2018, 11:57 am

What I feel is relevant is the level of fees on my share ISA, compared with those on the Vanguard funds and various ITs. What they do not disclose is their trading costs as far as I am aware.

For having the portfolio (management fees in IT speak) my average over the last 10 years has been 0.041% , with a maximum of 0.080% and a minimum of 0.008% , falling in recent years. Brokerage and stamp duty average 0.159% , maximum 0.489% and minimum 0.042% . Obviously the level of activity affects these costs and the highest number of trades was 2008-9, when there was a lot of portfolio adjustment. The lowest was 12 trades in 2014-15. In the current year there have been four trades in 5 months.

TJH

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Re: OLTB's other Portfolios - Annual Review

#164064

Postby Hariseldon58 » September 4th, 2018, 9:04 am

@TJH290633

With reference to the disclosure of trading costs for Vanguard ETFs and Investment Trusts the costs of turnover is available if you dig around.(Its a shame that one has to dig around !)

Look at Hargreaves Lansdown site, search for , say , Vanguard All World ETF, VWRL, go the Costs Tab, it has a figure for investment charges, click the down arrow for more info and you see transaction costs of £1.73 on £5,000 ie 0.035% , 3 basis points on top of the 25 basis points for annual management charges.

They produce annual reports on the Vanguard site that detail all the costs etc of a particular ETF, a much larger charge than transaction costs is the effect of foreign withholding taxes on dividend income, I haven't checked out this particular ETF in detail for a couple of years but these taxes will be around 25 basis points, ie the total charges will be around 0.54%.

Most overseas equity funds, trackers ETFs, Investment Trusts will be paying withholding taxes on foreign dividend income and not overtly displaying the information.

With some higher yielding overseas regional trackers, the difference between the distributed yield and the portfolio yield of the underlying market can be considerable...

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Re: OLTB's other Portfolios - Annual Review

#164069

Postby Hariseldon58 » September 4th, 2018, 9:16 am

With respect to the Passive and Investment Trust portfolios, running a blend of the two has a lot to be said for it.

The passive portfolio approach has worked very well for the last few years, hard to beat in fact and whilst over the very long term a pretty sound approach, at times such an approach has problems.

Late 1989 when Japan dominated the World Index and during the tech bubble it was a poor approach. The US markets had a very poor decade from circa 1999 to 2009 but have really flown since 2009. The World Index is dominated by the US now and has done well since 2009.

Every such run comes to an end and having some diversity from a US dominated portfolio has merit for a private investor, who has the freedom to invest where they choose , on a personal note I am rebuilding Investment Trust holdings as a source of diversity and adding to income/value tilts in my global portfolio.

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Re: OLTB's other Portfolios - Annual Review

#164466

Postby Wizard » September 5th, 2018, 5:49 pm

OLTB

I bought TMMG almost exactly 5 years ago. I am showing a gain of about 70%, but to be fair almost all of that was in the first 9 months I owned them and since them they have been up and down but struggled to ever hold a price above 50p. Still at least they now pay a moderately reasonable dividend with a 3.5% yield.

Terry.

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Re: OLTB's other Portfolios - Annual Review

#164488

Postby monabri » September 5th, 2018, 7:57 pm

I don't own shares in TMMG but they seem quite "robust" healthwise. The divi is well covered (factor of 3 on a 3.5%-ish yield).

Debt looks ok.

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Re: OLTB's other Portfolios - Annual Review

#164490

Postby Dod101 » September 5th, 2018, 8:09 pm

I had never heard of TMMG and having looked at their Annual Report for 2017, I still have not the slightest idea what they do to make a crust. They say they are an 'agency' but for what? Full of smiling and confident faces which may or may not be a good sign.

Dod

OLTB
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Re: OLTB's other Portfolios - Annual Review

#164494

Postby OLTB » September 5th, 2018, 8:38 pm

Dod101 wrote:I had never heard of TMMG and having looked at their Annual Report for 2017, I still have not the slightest idea what they do to make a crust. They say they are an 'agency' but for what? Full of smiling and confident faces which may or may not be a good sign.

Dod


Ha ha - that made me chuckle.

They seem to be a perennial underachiever with always the potential to do a lot more from what I can read. They are a group of agencies under one umbrella and seem to have a lot of big client names under their wing for marketing and PR purposes - I suppose a mini-WPP.

As monabri says, debt looks ok but I think it was quite high a few years ago when they bought out other ad agencies and have concentrated in reducing this. Previous trading update seemed good and still looking to repay debt and pay an ok dividend. This is very much a future growth punt, so we'll see what happens. The share price seems to struggle to free itself from the 50p range...

Cheers, OLTB.

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Re: OLTB's other Portfolios - Annual Review

#164497

Postby monabri » September 5th, 2018, 8:47 pm

.......but I'd buy WPP ;)

Yield over 5%, £16 billion mkt cap, divi well covered. Why go for a company listed on AIM?

OLTB
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Re: OLTB's other Portfolios - Annual Review

#164514

Postby OLTB » September 5th, 2018, 9:39 pm

monabri wrote:.......but I'd buy WPP ;)

Yield over 5%, £16 billion mkt cap, divi well covered. Why go for a company listed on AIM?



I think it's because it's a growth punt rather than a HYP and from what I can gather, the majority of mega caps don't multi-bag which is what I am after - to replace the lost capital from Carillion. If TMMG and OPM do this then I might roll over the profits back into my HYP. I hope they don't go the same way as Carillion... :shock:

Cheers, OLTB.

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Re: OLTB's other Portfolios - Annual Review

#166229

Postby Shelford » September 14th, 2018, 9:28 am

This all looks very sensible OLTB. You really only need to review this portfolio infrequently which is nice.

As someone slightly nearer retirement, I can say that the question of retaining gains is a bigger one than it needs to be for you. As you get closer then you may wish to reallocate a bigger percentage to bonds and other asset classes not linked to equities.

The John Barron models are useful in this but blogs like Monevator provide interesting model portfolio alternatives.

Keeping a sharp eye on charges makes sense too as you are.

I will be posting my warts and all annual review on the portfolio review shortly, maybe today even if I can make the time and work out how to post tables.

monabri
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Re: OLTB's other Portfolios - Annual Review

#166264

Postby monabri » September 14th, 2018, 11:18 am

Tables

With reference to http://lemonfoolfinancialsoftware.weebl ... ormat.html

You can post a table in 3 formats - the link shows you the three types ("code" , "table" and "pre").

I personally prefer the second option of "table".

(1) If you have your data in a spreadsheet, then select all the data to be posted ("copy") including headers and paste it into the "Input Text box", remembering then to select which one of the three table type options you want.

(2) Then press "create formatted text" which will reformat YOUR data into a suitable format. This is shown in the second window "Output Text" box.

(3) Click in the "Output text" Box and press Ctrl+A (Ctrl first, the the letter A - this will highlight all the newly formatted text) to select all the text in the box.

(4) Then "copy" (Ctrl+c) the formatted data which can then be "pasted" (Ctrl+v) into your new posting.

Press preview to check it looks ok.

H.T.H. !


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