Spiderbill's Hyp-ish Portfolio Review Jan 2018

[spiderbill]

Last year's review can be seen at
viewtopic.php?f=15&t=2218&p=20757#p20757
there's been a lot of changes since then!

Overall Summary

Shares
End of year total value is 67% up on last year's finish - I've been buying a fair bit; partly transferring from a cash ISA and partly from an inheritance. (90% of them are basically HYP in nature.)

Dividends
Share dividends have naturally increased markedly from around £2,500 in 2016 to £5,340 in 2017. Projected figure for 2018 is currently £6,250 on a running yield for the whole share porfolio of 4.89% (up from 4.52% last year)

ETFs and IT's
I've been dipping a toe in the water to get a feel for whether they are a suitable for me and provide diversification from shares. Early days but so far so good.

OEIC (Balanced Accumulation)
Has made steady if unspectacular progress and continues to be just a little below the FTSE100TR with a 52% rise over five years.

Property
As the inheritance required the sale of the house my father (94) was living in, I needed to buy a small semi-sheltered flat for him to live in. So I now own my own house, his flat, and my retirement house in Slovenia.


Shares Strategy

I basically continued the thinking I'd decided on this time last year of choosing which of my holdings I felt fully confident in for the long term and increasing their levels to around double what they were, with a secondary list of slightly less trusted at about 2/3 of that figure, while most of the smaller holdings would be left alone and eventually be sold when the time was right. A few new shares would be brought in to cover sectors I felt I wasn't covering (notably building and construction) and I envisage a core holding of around 25 shares eventually once the tidying up is finished.

Top-ups
Glaxo
HSBC
Legal & General
National Grid
Imperial Brands
Royal Dutch Shell
BAE
Rio Tinto
Taylor Wimpey
Aviva
Chesnara
Charles Taylor
KCOM
Lloyds
Vodafone

Buys
Berkeley Group
British Land
Galliford Try
Greene King
Inmarsat
Marstons
Regional REIT

The only sales were Renishaw, and the open offer to buy back Hansteen, where I reluctantly sold half my holding to avoid what sounded like it might result in a price drop, but in fact they are now slightly higher than the offer price. I bought Regional as a part replacement.
Renishaw was supposed to be a manual bed-and-ISA over the tax year change and I sold at a 105% profit, but it went up immediately after and I held off only to see it soar away from there. I may eventually stop kicking myself.


The good and the bad in the year

Bad
You all know about Carillion - I was already down 33% last year but of course now it's 93% for a 2.3k loss
Petrofac also fell on the SFO enquiry though it's showing signs of climbing again now and I still believe it's a good company. However for the moment I'm down by a similar figure to Carillion.
My buying of booze shares turned bitter with both Greene King and Marstons dropping markedly. Attempting to diversify my telecomms holding also went badly with Inmarsat, and my long-time favourite KCOM has hit a period of negative opinion.
The surprise drops have been in what are normally considered HYP stalwarts - Glaxo, Imperial Brands, and National Grid - though the latter is slightly compensated for by the large special div that accompanied the small consolidation.

Good
Rio Tinto have been a great buy in mid-year - up over 25%
Shell have recovered well since the oil price crash (really should have bought more when I had the chance).
Berkeley Group has risen 50% and again I wish I'd gone more fully into it rather than splitting money across Galliford Try but that's hindsight. I was out of ISA allowance by then or I'd certainly have bought a bit more.
HSBC has continued its rise since my big top-up at its low point the previous year and I've topped up again this year.
British Land has come good recently after looking slightly iffy up till November.
Legal & General continue to climb steadily.
Taylor Wimpey has put on 20% in a year.
Sun Life had a fall in spring/summer and for a while I wished I'd top-sliced it but has recovered strongly and is pushing on again. It's often held the rest of the portfolio up despite many suggesting it was too risky holding such a large amount.
Hansteen was doing well and I wish I still had all of what I started with, but who knows how they'll go from here as a smaller company.

Minnows
Haven't got around to selling the minnows yet as it's barely worth it after costs. Molins has staged a dramatic recovery this year and may now be worth selling or even holding to see if it rises again when they restore the dividend, while the long-running disaster that was Majestic Wine is actually recovering at last, as is Laird, so I may yet escape those without a loss. Centrica is just a slow-motion Carillion as far as I'm concerned and Debenhams is likewise (especially on this morning's news). Just about written off all three.

Overall
So overall I was down on capital value compared to starting price for the year or buying price during the year by about 2.3%, but have now got a solid income generating portfolio that should be a good basis for the next few years, and also has some recovery potential. Without the Carillion and Petrofac crashes things would look markedly better, so while not overjoyed at falling in a rising market, I'm not too worried - no more than normal anyway!

ETFs and ITs
I bought £3.6k of Vanguard VWRL and half that of VERX. The latter hasn't done anything but the former is up 5% since August.
1.7k went into Henderson Far East Income in September and is up 4.5%, and a similar amount on Murray International which is marginally down. I'll probably be buying more as I don't see too many share bargains right now (that I don't already have high holdings of), but the higher yielders will have to wait till April and a new ISA allowance. Probably some Foreign and Colonial in the meantime.

Share Listing

* after witholding tax

Pension
The one area I haven't yet done anything about is deciding what to do with my pension pots. Whether to consolidate the two into a SIPP or just use the draw down facility which Scottish Widows now have and take the smaller Sun Life one in cash. Something to decide this year as I wind down my business.

Lessons learned this year

That really big companies with good foundations can withstand pretty much any crisis and recover. e.g When Shell was low I should have bought more - their purchase of BG was a clear indication that they knew what they were doing and were repositioning.

That sometimes you should put plans on hold or change the order around. I could have picked up more Glaxo and NG rather cheaper than I did but I ploughed on with what I'd decided.

That I need to keep a closer eye on trends. e.g. I should have bought into the housing sector earlier than I did and in greater amounts. When there's such a big housing shortage even the government can't screw the sector up completely (as was feared). The mining recovery is another example - I could have done better if I'd had a little more courage and bought more Rio Tinto for instance.

Dont chase yield - buy good companies. If a share price has been dropping for a year or more then that's more likely a big hint rather than an opportunity.

That quite often the market runs on fear rather than rationality, but you can't always tell when!

Hope that helps someone (even if it only helps send them to sleep!)

cheers
Spiderbill

[BrummieDave]

Very thorough update with something for everyone to dig into!

On what basis did you choose your ITs please, and did you only buy the two (Henderson Far East Income and Murray International)?

[spiderbill]

Very thorough update with something for everyone to dig into!

Thanks. Having been a total beginner 6 years ago I've learned an awful lot from the members here (and in TMF before) so anything I can do to pass on my experiences to other newbies coming in is something I feel is right to do.

On what basis did you choose your ITs please, and did you only buy the two (Henderson Far East Income and Murray International)?

Partly on advice from the boards here, partly on the basis that I was looking to diversify out of the UK-focused aspect that most HYPs are biased towards. Not having much Far East or US exposure these two, along with the VWRL ETF, seemed a good start. I do intend to buy others (e.g Foreign & Colonial) but am feeling my way gradually, and would prefer to put any higher-yielding ones into my ISA. I'm interested to see how different ITs perform overall comparing ones that have higher yield to ones that are lower with more growth.

cheers
Spiderbill

[tjh290633]

Thanks for a comprehensive review, spiderbill.

Other people's approaches are always interesting.

TJH

[Raptor]

Thanks spiderbill. Like your thoughts, moving into ITs seems to have been a well discussed topic, I did it a couple of years ago ànd have recently ventured into North America with MCT. Going forward I will probably be concentrating on buying more into ITs, aiming at at 60/40 split, shares/ITs.

Raptor

[spiderbill]

Thanks for a comprehensive review, spiderbill.

Other people's approaches are always interesting.

Thanks Terry, maybe when I've been doing it as long as you it'll make a bit more sense and I'll have fewer losses