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Spiderbill's yearly review Jan 2020

A helpful place to also put any annual reports etc, of your own portfolios
spiderbill
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Spiderbill's yearly review Jan 2020

#275005

Postby spiderbill » January 3rd, 2020, 8:54 pm

Except that it isn't yearly as I was down with severe flu last year for 3½ weeks and didn't get it together. The 2018 one is at
https://www.lemonfool.co.uk/viewtopic.php?f=56&t=9359&p=107954#p107954 if anyone's interested.
I've dropped the HYP-ish part from the title as I've expanded the review to include ITs, ETFs, and OEICs, though the shares section is still mostly HYP-ish.

Individual Shares

Firstly a summary of where the share protfolio is now and how successful it's been so far.

Portfolio size is now £150k of which all but 26k would be considered HYPish. 71.4% of it is in ISAs.
A year ago it was about 124k.

                                                                                 Value     Div    Fcst 
Share Epic Sector %Total %Total Yield

Sun Life Financial Inc. SLF Life Insurance 13.03% 6.80% 2.90%
Legal and General Group LGEN Life Insurance 7.75% 7.94% 5.70%
Royal Dutch Shell 'B' RDSB Oil & Gas Producers 6.72% 7.73% 6.40%
National Grid NG Multiutilities 5.48% 5.02% 5.10%
Taylor Wimpey TW Household Goods & Home Construction 5.42% 9.15% 9.40%
GlaxoSmithKline GSK Pharmaceuticals & Biotechnology 5.34% 4.22% 4.40%
Rio Tinto RIO Mining 5.31% 7.45% 7.80%
Regional REIT Limited RGL Equity Investment Instruments 5.28% 6.75% 7.10%
Aviva AV Life Insurance 5.28% 6.93% 7.30%
HSBC Holdings HSBA Banks 4.70% 5.49% 6.50%
British Land Company BLND Retail REITs 3.37% 3.09% 5.10%
BAE Systems BA Aerospace & Defence 3.35% 2.41% 4.00%
Lloyds Banking Group LLOY Banks 3.05% 2.91% 5.30%
Imperial Brands IMB Tobacco 3.05% 6.09% 11.10%
Pan African Resources PAF Mining 3.00% 1.94% 3.60%
Charles Taylor CTR Financial Services 2.06% 1.30% 3.50%
Hansteen Holdings HSTN Industrial & Office REITs 1.71% 1.26% 4.10%
Vodafone Group VOD Mobile Telecommunications 1.57% 1.44% 5.10%
Chesnara CSN Life Insurance 1.54% 1.91% 6.90%
Petrofac Ltd. PFC Oil Equipment, Services & Distribution 1.52% 2.08% 7.60%
SSE SSE Electricity 1.44% 1.40% 5.40%
Schroders (Non-Voting) SDRC Financial Services 1.34% 1.09% 4.50%
Galliford Try GFRD Construction & Materials 1.30% 1.58% 6.80%
Marston's MARS Travel & Leisure 1.27% 1.33% 5.80%
Berkeley Group Holdings (The) BKG Household Goods & Home Construction 1.20% 0.22% 1.00%
Moneysupermarket.com Group MONY Media 0.99% 0.68% 3.80%
Unilever ULVR Food Producers 0.87% 0.50% 3.20%
Greencore Group GNC Food Producers 0.76% 0.31% 2.30%
MPAC MPAC Engineering 0.40% 0.00% 0.00%
Morgan Advanced Materials MGAM Electronic & Electrical Equipment 0.38% 0.23% 3.40%
Hyve Group HYVE Media 0.37% 0.16% 2.40%
Essentra ESNT Support Services 0.29% 0.25% 4.80%
Cairn Energy CNE Oil & Gas Producers 0.27% 0.00% 0.00%
RSA Insurance Group RSA Nonlife Insurance 0.26% 0.19% 4.10%
Majestic Wine WINE Retailers 0.23% 0.04% 1.10%
Centrica CNA Gas, Water & Multiutilities 0.11% 0.11% 5.60%

Running Yield: 5.56%

Value Div
Sector %Total %Total

Industrial & Office REITs 1.71% 1.26%
Electricity 1.44% 1.40%
Life Insurance 27.60% 23.57%
Oil & Gas Producers 6.99% 7.73%
Oil Equipment, Services & Distribution 1.52% 2.08%
Multiutilities 5.48% 5.02%
Media 1.37% 0.84%
Equity Investment Instruments 5.28% 6.75%
Gas, Water & Multiutilities 0.11% 0.11%
Mining 8.32% 9.40%
Retail REITs 3.37% 3.09%
Support Services 0.29% 0.25%
Household Goods & Home Construction 6.62% 9.37%
Mobile Telecommunications 1.57% 1.44%
Electronic & Electrical Equipment 0.38% 0.23%
Construction & Materials 1.30% 1.58%
Retailers 0.23% 0.04%
Nonlife Insurance 0.26% 0.19%
Tobacco 3.05% 6.09%
Banks 7.75% 8.40%
Aerospace & Defence 3.35% 2.41%
Financial Services 3.41% 2.39%
Pharmaceuticals & Biotechnology 5.34% 4.22%
Food Producers 1.63% 0.81%
Travel & Leisure 1.27% 1.33%
Engineering 0.40% 0.00%


I'd had two early share holdings as a result of mutuals changing to a normal companies. Then I started the portfolio around 2011; initially with small purchases and gradually larger as I gained confidence and cash.

Yes I know I have too much in Insurance - but I consider SLF in a different category to the UK ones. I've been trying to bring everything else up towards it - at one point it was down to 11% - but it just keeps growing and if I'd put all my money into it I'd be rich! (if maybe a little nervous)

25 out of 36 have positive total returns - 11 are negative.
19 out of 36 have capital gains - 17 have lossses.
Looked at that way it doesn't look good; however some of those losses relate to early shares that were low value holdings and thus are outweighed by the gains on more recent larger purchases. So thankfully the likes of Centrica, ITE, and Majestic Wine haven't had too severe an effect.

Total capital gains on currently held shares - around 10k.
Total divs over the lifetime of the portfolio around 24k. So overall there's a total return of 34k. (This is a lot better than it was a year ago when things were looking a bit grim and I was getting a bit doubtful about the whole HYP concept.)

If we look at the various shares sold/taken over/bust there's a further capital gain of just under 2k, despite Carillion and Debenhams being total losses.

The last 4 years of dividends have been:
2,147
4,819
6,186
7,694
with forecast divs for 2020 of around 8,400, so it's been building up nicely. Current forward yield according to HYPTUS is around 5.6% (corrected for witholding tax on SLF and the perpetually incorrect figure on BKG).

Winners and Losers - Capital (current holdings)

Top winners
SLF +126%
MONY +91%
BKG +72%
ULVR +65%
MPAC +66%
HSTN +54%
of these SLF has been the stand-out star as it's my top holding. Sadly the others have been rather smaller holdings so the cash gain has been much lower.

Worst losers
CNA -76%
WINE -58%
PFC -57%
IMB -46%
Thankfully the first two were small early holdings so no great loss. In contrast PFC and IMB have been fairly substantial.

Other Notables
RIO +29%
LGEN +23%
NG +19%
GSK +16%
RGL +11%

VOD -28%
AV -9%
RDSB -1.5%

RIO, first bought in mid-2017, has been a wise buy so far, and LGEN (late 2015) has been very reliable and had plenty of top-ups. National Grid has been recovering nicely from political turmoil while generating decent divis, and GSK is perhaps at last starting to fulfil its potential.
In contrast VOD, which for a long time seemed to defy gravity, is currently in the doldrums, Aviva just can't seem to get its price to move consistently in line with its dividends, and Shell is currently rather subdued.

Overall the portfolio suffered somewhat from poor timing, as I put a fair bit of an inheritance into it when the market was relatively high in late 2016 to early 2018 and this included some subsequent problems such as IMB, VOD, and Galiford Try, as well as Aviva at 5 quid and HSBC at 7 quid, which they've since declined from.

This Year's Buys

Buys in the last year have been pretty much all from dividends as my ISA allowance was taken up completely by bed-and-ISAing part of my OEIC. All these are top-ups.

RGL x3
RDSB x2
RIO x2
LGEN
TW
AV
PAF

This year's Sells

Takeovers
RPC
KCOM
Greene King
Inmarsat

Sold
1/3 of Charles Taylor, who are being taken over soon.

Bust
Debenhams

All but Inmarsat and DEB were profitable.

Having been as high as 41 different shares at one point it's now down to 36, but 8 of those are minnows of under £600 which are only waiting for it to be worth selling them.
The "trusted" core of the portfolio - holdings above 4k - is now only 14, with two of the next three closest to that about to be taken over.
If Petrofac ever get out from under the SFO investigation then they would likely join the top contingent, as might VOD if they ever get their profits flowing again. I may add to Schroders on their next dip, but will watch carefully to see how Marstons are doing before committing anything more there as I'm still below purchase price - as I was with their fellow brewers before the Greene King takeover. SSE has recovered a bit recently but it remains to be seen what the new version of the company without the retail side will look like.

Main lessons this last year or two

Don't Panic! - There was a point where capital values dropped so low that my total return was briefly negative. Even with Trump and Brexit hitting new lunacies things still improved. I could perhaps have been a little braver in buying low when the opportunities were there but I do seem to be geting better at that. (Still kicking myself for not buying more Shell in 2016 and housebuilders in 2014.)

Don't rush to buy - for a while I bought because I had the cash and was afraid to miss out on investing it. I should have stood back a bit and looked more at the political and social aspects and might have avoided some of the trade war drops and the tobacco weakness. Might have been better to stick it in ETFs/ITs until I had a clearer idea of my choices.
-------------------------

ETFs
(bought in 8/17)
No further purchases or sales this year.
VWRL is now up 16.5%
VERX is now just 1.35% up having been underwater for a large part of the time. I may sell the latter and buy more of the former.

Lessons - VWRL is a nice easy way to build money with no angst (assuming no global melt-down of course) so is a good fallback.
-------------------------

ITs

Still early days here as well - my first purchases were in Sept 17 - but the IT portfolio is now up to £14.5k with four purchases this year

Topped up
HFEL in July is -3.3% and the previous tranche is about level on capital, but good dividends (6.2%)
MRCH in early Dec +11% and previous tranche +16.35% (div 4.7%)

New Buys (in Aug 19)
BRNA +3% (div 4.2%)
JPGI +0.75% (3.6%)

FCIT (bought 3/18) is up 16.5% but of course has lower divis (1.4%).
MYI was around 16% down at one point but has recovered to only around 3% down.

Lessons - Merchants may not have as high a yield as my HYP but maybe it handles the balancing of the components better and avoids major calamities. I expect to feed more into this area as I learn more about it.
--------------------------

OEICs
There are two of these, both with Scottish Widows though the latter has moved to Schroder's control.
The 1st, a medium-risk "Balanced Growth", currently 49k (bought early 2012) is up 56% over its lifetime. Steady if not exactly spectacular.

The 2nd, slightly higher-risk but not massively so, "Dynamic Growth", currently at 86k (bought 6/18) is up 8.1% (having dropped 8% by 12/18 - the Don't Panic lesson applies here too).

It'll be interesting to compare longer term how these work against the more hands-on shares and also the ITs. By then it may be too late to make any significant changes in direction but at least I've got a diverse range of types and styles of investment as a bit of a hedge.
---------------------------

Pension Pots
Total 180k. Mostly in a Scottish Widows pension that seems to be doing pretty well, so the current plan is to leave it running for as long as possible before taking any drawdown, depending on how much of my cash buffer I spend on house improvements.
----------------------

Summary and What's Next
So, all told I'm in a far better position than I was when I first started investing in shares in earnest in 2011, but with retirement looming there will be less prospect of any further major improvements so basically this is what I have to work with.

I'm soon to be 65 but this year it looks like I'll need to make the decision by end-2020 to move to Slovenia full time - due to Brexit and the loss of freedom of movement putting my retirement plans at risk if I leave it any longer. That means a whole new tax regime and losing the protection of the ISAs, which may be a bit painful. Not sure yet how they handle pensions over there so I may take the pensions TFLS while I can be sure I won't need to pay anything on them.
It also of course means a complete rethink of my future financial plans and its unclear as yet whether income shares will be the most suitable vehicle. I will also have to look at my UK property situation to see how that might work out. I've been told that HMRC reserve the right to tax rental income on UK property so renting out my current main home might be an option if that tax would be lower, or it might be best to sell up while it is still my main residence and there is no CGT to pay. Haven't even considered UK state pension yet so if it comes in 16 months time without too much tax liability then it'll be a nice bonus. I'll be chatting to a Slovenian accountant again soon.

Thanks to all I've conversed with here and at the earlier place for some valuable lessons and advice. It's shocking to realise how much I didn't know back then - even though there's still a lot to learn now. But at least I feel much more in control financially than I did a decade ago.

cheers
Spiderbill

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