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M&M's portfolio review December 2018

A helpful place to also put any annual reports etc, of your own portfolios
TheMotorcycleBoy
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M&M's portfolio review December 2018

#189342

Postby TheMotorcycleBoy » December 26th, 2018, 12:29 pm

Hi folks,

Well as all you folks are probably tired of hearing, myself and Mel started private investing at the end of March 2018. It has certainly been an interesting experience so far. We obviously started this thing in the middle of the Brexit debacle, the Trump world wide phenomenon, and post-QE etc.

The portfolio rose in capital somewhat for the first few months, but obviously (?) started to fall this autum and winter. But I guess that has happened to a whole bunch of others here, especially to other newbies.

We started off with just Mel's ISA last March, but in November I opened one too, as we had exhausted the limit on Mel's and my bonus from work came in pretty good too this year.

As I'm sure you people have realised/guessed we perhaps were a little gung-ho in some of our actions. But there comes a time where, I guess, one can no longer learn from books and advice, and must start to take the plunge one self. Anyway here is our combined portfolio ISAs, firstly sorted by currently most profitable holdings:


and this is the same portfolio sorted by the weighted contribution (according to current market price):


We did start by initially buying shares, and then we added the Fidelity World fund and several bonds. Now we are mainly buying equities. I'm now thinking that subsequent bond purchases (perhaps via bond funds?) should be delayed until equity prices rise next time.

I'm sure we have made many impetious decisions in the past several months. But we are committed to keep going. We'd certainly rather be doing this than just having the money in the bank shouting "spend me", and the whole experience is certainly a useful one in money management and so forth in the future.

If anyone has the time, we would appreciate any constructive advice re. our current holdings, in particular what people think were "stupid firms to buy", "good ones", and what holdings are probably the best ones to top up, or leave alone for the foreseeable.

Equity wise, our choices are towards firms with good operating margins, ROCE, and lower debt as possible, and they must pay some kind of dividend (even if very small like BUR, TUNE etc.).

In summary we have contributed £39031 to our folio and currently have £36465.59. So our net position is down 6.57%. Whilst this position could be better, we are content with our first step into private investing and things will improve, I guess, as the dividends (hopefully) start to arrive.

Matt and Mel

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Re: M&M's portfolio review December 2018

#189362

Postby doug2500 » December 26th, 2018, 3:35 pm

I don't really have anything to help you, but it's always nice to get a reply so.....

We share quite a few holdings but luckily for me I bought most years ago so am still up. Even Zytronic which is one of my worst performers is still about breakeven on capital and I've had years of large dividends.

A capital 'loss' of a few percent is a creditable performance this year. Reinvest the dividends and you'll be well set up for the recovery.

You were unlucky to start this year, and I do think it's luck. The time to start investing is now. Yes markets were high,or high ish but probably not in a bubble and could have risen for a couple of years yet. My wife started an ISA this year and we drip fed the money in all summer as I was aware of the possibility of a correction. Sure enough it came the minute it was all invested. It'll be fine in the long run.

I don't bother with bonds, but I have a long time horizon and high tolerance to risk. And a family business for security.

You seem to have a good and measured view of your capital 'loss'

I'd encourage you to unitise your portfolio. IMO it's the best way to track your performance and I wish I'd started earlier. I tried a few approaches first but they all got tied in knots with cash going in and out.

At some point you do just have to plunge in. You've done that and the reality check of a down year is better for you than easy gains (in the long run). Just keep going now.

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Re: M&M's portfolio review December 2018

#189370

Postby tjh290633 » December 26th, 2018, 4:30 pm

We only share about 6 holdings, all equities.Your experience is not unusual, and happened to me after I had opened my PEP in 1987, but I only had three shares in it at the time.

Just for amusement, here is the change in share price of all my holdings held on 31st December last, of which Carillion CLLN has vanished like the Oozlum Bird, and I sold Indivior INDV before its catastrophic fall:

Epic   Change  
PSON 26.11%
AZN 16.40%
GSK 13.22%
BHP 7.55%
DGE 2.57%
SGRO 2.56%
CPG 1.94%
ULVR 0.95%
ADM -0.97%
TATE -4.10%
RIO -4.24%
BP. -4.55%
RDSB -8.67%
INDV -8.87%
TSCO -9.20%
BT.A -10.42%
RB. -10.93%
NG. -11.04%
UU. -11.83%
S32 -12.26%
LGEN -17.09%
SSE -18.14%
MARS -19.51%
BLND -19.74%
BA. -21.20%
MKS -21.73%
LLOY -25.15%
AV. -26.52%
IMB -26.66%
IMI -31.13%
VOD -34.26%
TW. -34.67%
KGF -38.61%
SMDS -42.76%
BATS -49.80%
WMH -52.11%
CLLN -100.00%

You will note the few risers over the year. Because of trimmings and topping up events, I don't report changes in capital values of individual holdings, but look at my unitised results for unit value and dividends per unit over the year.

Income unit price is currently down just over 6% on the year. Accumulation units down 10.3%.

I've seen it all before.

TJH

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Re: M&M's portfolio review December 2018

#189375

Postby TheMotorcycleBoy » December 26th, 2018, 5:21 pm

doug2500 wrote: Even Zytronic which is one of my worst performers is still about breakeven on capital and I've had years of large dividends.

Thanks, yes I guess, we just bought our holding a bit high (August I believe). But we are holding since I think it's a fundamentally sound firm.

doug2500 wrote:The time to start investing is now. Yes markets were high,or high ish but probably not in a bubble and could have risen for a couple of years yet. My wife started an ISA this year and we drip fed the money in all summer as I was aware of the possibility of a correction. Sure enough it came the minute it was all invested. It'll be fine in the long run.

Yes, we opened our spirax, diageo, croda, unilever, games workshop and bioventix positions in the dip post November, and topped our legal and general, marshalls, and imperial brands too.

doug2500 wrote:I'd encourage you to unitise your portfolio. IMO it's the best way to track your performance and I wish I'd started earlier. I tried a few approaches first but they all got tied in knots with cash going in and out.

Thanks again! But what is unitise? And does it still work with our I WAs in different names?

Thanks Matt

PS any ideas for more top ups? I'm thinking focusrite, unilever, maybe next or manx?

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Re: M&M's portfolio review December 2018

#189384

Postby tjh290633 » December 26th, 2018, 6:42 pm

Matt, unitisation removes distortions caused be adding capital to the portfolio, reinvesting dividends and withdrawing cash from the portfolio.

You could start now by assuming a unit value of £1.00 and dividing the current value by that gives you the number of units. You can then work as either income or accumulation units. Accumulation units are simplest, in that units are created when you add capital at the then value of the units, so if you add £1,000 and the unit value has become £1.25, you would "buy" 800 new units. Likewise if you withdrew £1,000, you would "sell" 800 existing units. Dividends received roll up in the unit price and do not affect the number of units.

Income units are different, in that dividends retained in the portfolio are used to "buy" extra units at the unit value when received. Adding capital and withdrawing cash work the same way as with accumulation units.

If you want to compare your performance against other shares or indices, income units are directly comparable. Accumulation units are comparable with the Total Return versions of indices, and give a measure of the total return of the portfolio.

If you wish, you can go back to the beginning, which is not long ago in your case, and unitise from the very first injection of capital. It's not essential, though.

TJH

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Re: M&M's portfolio review December 2018

#189395

Postby doug2500 » December 26th, 2018, 7:59 pm

This is good:

https://monevator.com/how-to-unitize-your-portfolio/

This is a sample screenshot of my spreadsheet:

https://imgur.com/6O5802y

And if you search on here for unitisation it will bring up loads of stuff.

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Re: M&M's portfolio review December 2018

#189421

Postby Itsallaguess » December 27th, 2018, 5:51 am

ap8889 wrote:
https://www.bogleheads.org/wiki/Calcula ... al_returns

I use the google sheet linked from this wiki to provide my investment return.

What I like about it is it presents the result in the same way as most collective investments, meaning I can compare my annualised return, or return over a 5 year period against any investment trust or fund.

Plus it is easy to use, once a month plug in account values and any cash added or removed. That’s it.


If anyone wants to use the Excel version of the same tool, you can download it directly without registering using the link below -

https://www.dropbox.com/s/emjo61qdyfk87 ... .xlsx?dl=0

In the upper-right area of the above page, there is a 'Download' button, and selecting the 'Direct Download' option of that drop-down will then start a direct-download of the Excel version of the tool.

If a Dropbox registration pop-up appears at all, then there is a 'No thanks - continue to view' option at the bottom of the pop-up window that will close it and allow you to carry on with the direct-download.

Cheers,

Itsallaguess

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Re: M&M's portfolio review December 2018

#189426

Postby TheMotorcycleBoy » December 27th, 2018, 7:39 am

Thanks for the tips on unitisation and on the Google sheet.

Any comments on the folios constituents? I personally think it is maybe a bit heavy on AIM and correspondingly light on FTS100.

I wonder also if it's much of a problem that it lacks diversity since it has no mineral extraction firms and the only oil holding is 1k of PMO bonds.

Since I think that the folio already has quite a few entries to keep our eyes on, I'm keener on topping up than adding much to it right now, e.g.

ULVR unilever
IMB imperial - I like their interest in Oxford cannabinoid
NXT next - maybe, we keep ears to ground. Mum in law works there (15 years?) And says her store is moving to bigger vacant toys r us store and adding various concessions stores. [*]

TUNE focusrite

The only "adds" I'm thinking of could be construed as maybe a bit AIM heavy again e.g.
KETL Strix the kettle peeps
CAML central Asian metals

And on the FTS100 side maybe
HLMA halma (pricey!)
AV.or AV.B

Thanks Matt

[*] Is the addition of concessions stores a cry of desperation or a just good business sense in net cost reduction?

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Re: M&M's portfolio review December 2018

#189427

Postby 77ss » December 27th, 2018, 7:48 am

Itsallaguess wrote:
ap8889 wrote:
https://www.bogleheads.org/wiki/Calcula ... al_returns

I use the google sheet linked from this wiki to provide my investment return.

What I like about it is it presents the result in the same way as most collective investments, meaning I can compare my annualised return, or return over a 5 year period against any investment trust or fund.

Plus it is easy to use, once a month plug in account values and any cash added or removed. That’s it.


If anyone wants to use the Excel version of the same tool, you can download it directly without registering using the link below -

https://www.dropbox.com/s/emjo61qdyfk87 ... .xlsx?dl=0

In the upper-right area of the above page, there is a 'Download' button, and selecting the 'Direct Download' option of that drop-down will then start a direct-download of the Excel version of the tool.

If a Dropbox registration pop-up appears at all, then there is a 'No thanks - continue to view' option at the bottom of the pop-up window that will close it and allow you to carry on with the direct-download.

Cheers,

Itsallaguess


Thanks to you both. I shall try this out - New Years Day would seem like a good starting point!

A LibreOffice version can also be downloaded from

https://www.bogleheads.org/wiki/Calcula ... .28Calc.29

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Re: M&M's portfolio review December 2018

#189429

Postby jackdaww » December 27th, 2018, 8:18 am

i am avoiding NEXT - just so much competition for one thing .

strix , CAML and imps i hold and may add.

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Re: M&M's portfolio review December 2018

#189430

Postby TheMotorcycleBoy » December 27th, 2018, 8:41 am

jackdaww wrote:i am avoiding NEXT - just so much competition for one thing .

strix , CAML and imps i hold and may add.

Thanks for this Jackdaww. Yup, I'm kinda nervous on NXT. Definitely holding though, but will probably leave it be.

Thanks for the recs. on KETL and CAML. Will research these further some time.

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Re: M&M's portfolio review December 2018

#189436

Postby Wasron » December 27th, 2018, 9:23 am

What is the Contribution column describing? Is it the amount invested, or current value?

I work on the basis that I have no idea which of my individual holdings will perform best over the next year or so, so I work towards a similar amount invested in each. I use a variant of the HYP top up spreadsheet (HYPTUS) you can download from the financial software forum. As you have lower yielders you may wish to add additional parameters to promote holdings for a different reason to yield.

FWIW I have Next on my watchlist. I’m almost out of cash to invest (investing a pension transfer in since April 2018), but 4000p was where I was planning on making some kind of decision as the yield enters an interesting range.

As a counter to what i’ve said about equal investment amounts, I group my holdings and each group has a target percentage. Large investment trusts get 3x as much as niche investment trusts, which in turn are 50% larger than individual stocks.

I cannot comment on individual bonds as I haven’t looked into any, I use SLXX, a corporate bond ETF. It keeps things simple for me.

Wasron

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Re: M&M's portfolio review December 2018

#189463

Postby ADrunkenMarcus » December 27th, 2018, 12:14 pm

TheMotorcycleBoy wrote:Equity wise, our choices are towards firms with good operating margins, ROCE, and lower debt as possible, and they must pay some kind of dividend (even if very small like BUR, TUNE etc.)


We hold Diageo, Spirax Sarco Engineering and Unilever in common. In terms of dividends, Diageo, Unilever and Spirax Sarco Engineering sailed through 2008-09 by increasing their dividends. That sort of record provides reassurance when we experience the inevitable stockmarket downturns. And you can reinvest those dividends in bargain companies.

One general recommendation I'd make would be to make sure you have a focused portfolio and don't end up with a huge number of holdings. This makes it easier to keep track of each individual investment and ensure that each holding is in a position to make a meaningful contribution to your returns.

I've found unitisation invaluable to measure my progress. I'd recommend it.

I maintain a record of each company's return on capital employed and operating margin, so that I can track the progression of these year by year. We can see the fundamental progress of the companies. It can be very reassuring to see the fundamental progress the companies are making even as share prices yo-yo. Any company can increase profits by 5% by employing another 20% of capital. What is valuable is a company which can increase profits by 10% by employing only another 5% of capital - or less. One option might be to consider the effect of any new holdings on your chosen metrics. Obviously, quality is important, but for quantitative data I have an unweighed average of the ROCE and OM each year. I refer to this when I'm looking at potential new holdings, seeing whether they are superior to current holdings or would increase the average ROCE and OM. It's a helpful discipline, but not the only thing to look at.

Best wishes

Mark.

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Re: M&M's portfolio review December 2018

#189508

Postby tramrider » December 27th, 2018, 4:22 pm

tjh290633 wrote:If you want to compare your performance against other shares or indices, income units are directly comparable. Accumulation units are comparable with the Total Return versions of indices, and give a measure of the total return of the portfolio.

TJH


tjh290633 wrote:
Income unit price is currently down just over 6% on the year. Accumulation units down 10.3%.

TJH


Hi, TJH,
Those 2 prices look the wrong way round to me, as accumulation units with the dividend included usually go up more than income units?

One of my portfolios has lost 10.5% on the accumulation units this year so far, so we are in locked step.

Cheers,
Tramrider

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Re: M&M's portfolio review December 2018

#189510

Postby TheMotorcycleBoy » December 27th, 2018, 4:23 pm

Hi Wasron,

Wasron wrote:What is the Contribution column describing? Is it the amount invested, or current value?

That's the current value. I did umm and ahh about which one to include, as I wanted to keep the report/review fairly punchy and not include too much stuff.

Wasron wrote:I work on the basis that I have no idea which of my individual holdings will perform best over the next year or so, so I work towards a similar amount invested in each. I use a variant of the HYP top up spreadsheet (HYPTUS) you can download from the financial software forum. As you have lower yielders you may wish to add additional parameters to promote holdings for a different reason to yield.
...
As a counter to what i’ve said about equal investment amounts, I group my holdings and each group has a target percentage. Large investment trusts get 3x as much as niche investment trusts, which in turn are 50% larger than individual stocks.

Yes the similar %s is a good plan for us too. And in a similar vein to yourself, perhaps we should weight larger relative amounts to FTSE100, then FTSE250, then least to our AIM holdings. I think our weightings are arguably stacked too much towards smaller firms since Marshalls, Spirax-Sarco, GamesWorkshop (FTSE250) and Burford (AIM) are all in our top 7 in terms of current value. But some AIM shares (Focusrite TUNE, Burford Capital BUR) have already been quite good to us - in a few short months we sold chunks off in the summer/autumn and then re-bought when folk sold up in November. They are both starting to climb again.

Wasron wrote:FWIW I have Next on my watchlist. I’m almost out of cash to invest (investing a pension transfer in since April 2018), but 4000p was where I was planning on making some kind of decision as the yield enters an interesting range.

Yes, perhaps we are being rash not too reconsider a topup here. We did buy this one (about £1100 worth purchased) when it was perhaps too high at 5600p. I think they are quite shrewdly run TBH.....with a lucrative Store card, and online purchase click and collect system to boot.

Over to Mark...

ADrunkenMarcus wrote:One general recommendation I'd make would be to make sure you have a focused portfolio and don't end up with a huge number of holdings. This makes it easier to keep track of each individual investment and ensure that each holding is in a position to make a meaningful contribution to your returns.

Yes totally agree. We currently have 21 different individual shares (the rest being a fund and 5 bonds). We are not trying to add on many more firms, perhaps just to bring the number eventually up to 25 or so.

ADrunkenMarcus wrote:I've found unitisation invaluable to measure my progress. I'd recommend it.

Yes, I'm different going to do that - soon. I'm really glad that you lot have wised me to this.....and even better OZYU has PMd a really nice set of concise personal notes to get this scheme up and running.

ADrunkenMarcus wrote:I maintain a record of each company's return on capital employed and operating margin, so that I can track the progression of these year by year. We can see the fundamental progress of the companies. It can be very reassuring to see the fundamental progress the companies are making even as share prices yo-yo. Any company can increase profits by 5% by employing another 20% of capital. What is valuable is a company which can increase profits by 10% by employing only another 5% of capital - or less. One option might be to consider the effect of any new holdings on your chosen metrics. Obviously, quality is important, but for quantitative data I have an unweighed average of the ROCE and OM each year. I refer to this when I'm looking at potential new holdings, seeing whether they are superior to current holdings or would increase the average ROCE and OM. It's a helpful discipline, but not the only thing to look at.

Yes, more good stuff. Indeed high ROCE and OM are the metrics we aim for too, along with trying to minimise leverage, net debt/gearing etc. And of course minimise P/E!!

thanks again,
Matt

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Re: M&M's portfolio review December 2018

#189541

Postby TheMotorcycleBoy » December 27th, 2018, 6:08 pm

Hopefully just a quick question. Just along the unitising lines I have been recommended to follow.

Suppose we've decided to unitise the combination of Mel and my ISAs basically now (i.e. in time for Dec 31st etc.)

As I said earlier we had bought £39031 since March this year. However, if we want to unitise from now and don't want to backdate, should we first look at the current total values of the folis:

8,334.05 + 28,001.01 = 36335.06 (from today's figures for example)

Then choose the unit price = £10

Hence we have as of now, 3633.506 units @ £10

And if, let's say we do nothing until the April the 1st 2019, and we see that the total value of is 38000, hence (since we've not added or taken anything) then our accumulation units are worth at that point in time:

38000 / 3633.506 = £10.45

Correct?

Lastly, for today, at least. Like some of you may already know/have guessed we probably won't drawn on these folis for yonks - just add more cap. (and let the divs reinvest etc.). So what happens say if I want to buy/top up a holding in January 2019, e.g. add £1200 to an ISA and spend all (leaving a few quid change of course, due to the roundings and tax and fees etc.) on a load of shares......do I recalculate the number of units first before the purchase using the above unit price? e.g.

£1200 / £10 = 120 extra units, therefore now have 3633.506+120 = 3753.506 units in combined foli?

If my last bit above is correct, should we recalculate our unit price say monthly, half-yearly, annually etc.

thanks again, everyone
Matt (and Mel)

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Re: M&M's portfolio review December 2018

#189548

Postby tjh290633 » December 27th, 2018, 6:24 pm

TheMotorcycleBoy wrote:Hopefully just a quick question. Just along the unitising lines I have been recommended to follow.

Suppose we've decided to unitise the combination of Mel and my ISAs basically now (i.e. in time for Dec 31st etc.)

As I said earlier we had bought £39031 since March this year. However, if we want to unitise from now and don't want to backdate, should we first look at the current total values of the folis:

8,334.05 + 28,001.01 = 36335.06 (from today's figures for example)

Then choose the unit price = £10

Hence we have as of now, 3633.506 units @ £10

And if, let's say we do nothing until the April the 1st 2019, and we see that the total value of is 38000, hence (since we've not added or taken anything) then our accumulation units are worth at that point in time:

38000 / 3633.506 = £10.45

Correct?

Lastly, for today, at least. Like some of you may already know/have guessed we probably won't drawn on these folis for yonks - just add more cap. (and let the divs reinvest etc.). So what happens say if I want to buy/top up a holding in January 2019, e.g. add £1200 to an ISA and spend all (leaving a few quid change of course, due to the roundings and tax and fees etc.) on a load of shares......do I recalculate the number of units first before the purchase using the above unit price? e.g.

£1200 / £10 = 120 extra units, therefore now have 3633.506+120 = 3753.506 units in combined foli?

If my last bit above is correct, should we recalculate our unit price say monthly, half-yearly, annually etc.

thanks again, everyone
Matt (and Mel)

Essentially you are correct on all points. What I do is to update the number of units monthly, using the value of the units at the previous month end. This just happens to suit my spreadsheet. It's not perfect but it is close enough for my purposes.

The perfectionist would use the value on the day before the trade. I'm not a perfectionist.

TJH

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Re: M&M's portfolio review December 2018

#189590

Postby ADrunkenMarcus » December 27th, 2018, 9:17 pm

TheMotorcycleBoy wrote:Then choose the unit price = £10


You may wish to consider starting it at £1. That way, when your accumulation unit price has multi-bagged your spreadsheet column can be narrower. ;)

Best wishes

Mark.

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Re: M&M's portfolio review December 2018

#189592

Postby ADrunkenMarcus » December 27th, 2018, 9:23 pm

TheMotorcycleBoy wrote:Yes the similar %s is a good plan for us too. And in a similar vein to yourself, perhaps we should weight larger relative amounts to FTSE100, then FTSE250, then least to our AIM holdings. I think our weightings are arguably stacked too much towards smaller firms since Marshalls, Spirax-Sarco, GamesWorkshop (FTSE250) and Burford (AIM) are all in our top 7 in terms of current value.


I wouldn't worry too much about companies' size. Big isn't necessarily beautiful. I'd argue that the FTSE 250 is a far more dynamic hunting ground for quality growth companies than much of the rubbish in the FTSE 100. And many of the companies in the FTSE 250 are not really what we could consider as small.

As it happens, Spirax has now been promoted to the FTSE 100 because it has continued to grow. Long may it continue!

Best wishes

Mark.

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Re: M&M's portfolio review December 2018

#189629

Postby TheMotorcycleBoy » December 28th, 2018, 8:05 am

Thanks again people,

Seeing as the unitisation process is very simple to apply I will do another bunch of bookwork and get this sorted out properly in the next day or two, after making a bit more head way with our winter gardening project. TJH's mantra of a monthly update seems like the best interval for us.

ADrunkenMarcus wrote:I wouldn't worry too much about companies' size. Big isn't necessarily beautiful. I'd argue that the FTSE 250 is a far more dynamic hunting ground for quality growth companies than much of the rubbish in the FTSE 100. And many of the companies in the FTSE 250 are not really what we could consider as small.


Thanks for this - very good point. Have to admit that whilst attempting to stay dispassionate about it all, I do quite like a couple of the smaller (well FTSE250) holdings in our foli. I think there's one or two underrated ones that are perhaps missed by some people.

Will keep you all posted,
Matt


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