The Lemon Fool

This is the first annual review of our real-life Investment Trust Income Portfolio (“the PF” hereafter) which helps support mine, and Mrs MP's, retirement. The PF's initial construction, and a half year report from the end of January, can be found here:

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The PF is a diversified collection of 20 income-focused Investment Trusts. It was built over several years and received its substantial final funding from the transfer in of DC funds from our respective final employers in July 2018. There's a list of the trusts in the Capital section below.

It has 60% of the capital invested in Equity based trusts covering UK equities (4 trusts,) International (5) and Private Equity (2.) The remaining 40% is split between Debts/Bonds (2), Property (3) and Infrastructure trusts (4.) These are held within SIPP accounts with Hargreaves Lansdown in mine and Mrs MP's name which are now in drawdown.

To help with ongoing analysis, and for confidentiality, all of the £££ capital and income values in this report reflect that the starting capital has been rebased to indicate a £100,000 initial investment as at 31.07.2018. All income is being withdrawn. This is a “buy and hold” PF and there has been no sales or purchases within the PF over the year.

Income
The PF commenced at the end of July 2018 with a forecast yield of just under 5.7% and the expected income was therefore £5,677 for the year.

Income for the year actually amounted to £5,743, very slightly above the forecast. There were two dividend “cutters.” European assets annouced a 23% reduction in distributions for 2019, reflecting its poor performance in the market turmoil up to year end 2018 – this impacted the 3rd and 4th dividends in my financial year. Twentyfour income Fund redcued their final dividend from 2.73p in 2018 to 1.95p causing a 10% deficit for the year. The other 18 trusts fortunately had modest gains over forecast, making up the slack.

Capital
The PF is an income producer for us. Capital performance is secondary to me therefore, but still of interest of course. It's been a tumultuous year of course, with the market correction at the end of 2018 and the subsequent near-recovery. Overall, the PF is showing a 2.71% gain in share price performance. Here's how the 20 trusts have performed over the year. Add on the income and the total return is in the region of 8.5%, which I think is satisfactory.



Comments and queries are very welcome.

Thanks for reading

MP

Ref the review above, here are some comparisons I'm judging the PF performane against....



MP

Thanks for posting, it will be interesting to see how your approach (relatively high yield) does over the next few years, compared to the one I've adopted (much lower yield in the hope of better total return). I'm now on 3.37% expected yield.

Nice portfolio, looks good and balanced. Like the 60:40 split of higher/lower risk assets. I had a look at AJ Bell Passive Balanced which I invest in in my SIPP which has had a similar 12 months return - it will be interesting to see if your fund can beat this next year.

Thanks Mickey, always good to see someone else's portfolio and how it's fared!

Well done.

What is it worth today after all last week's turmoil?

Bouleversee wrote:What is it worth today after all last week's turmoil?

Less.

monabri wrote:

Bouleversee wrote:What is it worth today after all last week's turmoil?

Less.

Exactly the same in income terms... (its primary objective)

BrummieDave wrote:

monabri wrote:

Bouleversee wrote:What is it worth today after all last week's turmoil?

Less.

Exactly the same in income terms... (its primary objective)

Spot on! Honestly, I hadn’t checked the value since month end. It’s down about 1%. The PF tends to go up less than the market when it’s rising, and down less when it’s falling. The income keeps rolling in nicely regardless.

And bang on topic, Mr Cowie says the same thing this lunchtime: https://citywire.co.uk/investment-trust ... -news-list

Perhaps he reads LF

Bouleversee wrote:What is it worth today after all last week's turmoil?

I normally only do a proper valuation at the end of each month, but this piqued my interest.

The PF is down 1.5% from the end of July. The FTSE100 is down 4.4%. As I mentioned above, the PF tends to outperform a falling market and underperform a rising one - only to be expected I guess with the diversification it contains.