A very interesting thread,
mickypops - thank-you; and thanks also for the interesting comments from others.
I too have a portfolio like this with aims (not too dissimilar to yours) which are:
>> A high and, where possible, a rising income at least covering inflation as measured by the RPI
>> Capital protection so that as much as possible can be left to the next generations
>> Easy maintenance (wife can manage it if I pop it)
>> a spread of Asset Classes (at the moment they are: a few retail bonds, some venture capital selected from VCTs and APAX, some specialist REITS, some green infrastructure funds and a tiny bit of ‘yeast’). I used to have some preference shares in the mix as well, but the yield on these dropped and there were better prospects elsewhere.
Asset ClassesRetail Bonds : WAS1 :yields over 6.50% on purchase price
VCTs : currently CRWN and CYS but have been through the Ventus, British Smaller Companies and the Northern Funds with admirable results in terms of income and capital growth. Recent changes in the law make these less attractive and so only the ALBION VCTs and CYS are of interest to me. I include APAX here as it is a high yield fund run by managers with a great reputation over the years.
Green Infrastructure funds Currently FSFL, JLEN and NESF but do swap between these and BSIF, TRIG and UKW, as all of these share prices go walkabout every year with little correlation between them – more dependent on where they each are in the fund-raising cycle. Trading between these often gives a 2-3 % uplift and the possibility of an extra quarterly dividend. As these are all registered in the Channel Isles there is no stamp duty on trades
REITS : currently : AEWU, IHR (invested in care homes), NRR but keeping an eye on RDI, RGL and SRE
Other : RMDL – yields 6.50% on purchase price
YEAST : currently REDT energy but has been LLOY, UU and Greene King over the past two to three years. These can leaven the portfolio with a capital gain but must be very carefully selected
Cash and Ex-Divs : about 1% of the portfolio but there is at least one dividend paid every month with the exception of October.
Measurement & Monitoring:The portfolio is unitised so every payment out or in either reduces or increases the number of units. Currently the portfolio is showing a 34% increase in unit value over the past two years.
Pot Yield is 7.03%
The withdrawal rate is 5.6% of the pot leaving 1.43% behind for investment
At least 31% of the pot is subject to RPI increases in yield each year
Bid Offer prices are updated daily and NAV and XDs etc updated as and when there is a relevant RNS
Buying and Selling - TradingIf I become aware of a share suitable for inclusion, then it is extensively researched before being added to the list
A share is selected for sale that is trading at or near the top of its trading range and then simple calculations against would be candidates for inclusion showing what the effect on income of the portfolio would be if the trade was made. If the increase in income is worthwhile and there will be no interruption in the dividend flow, then the trade is made but if there is some spare cash (not needed for withdrawal) that is added to the amount purchased to cut dealing costs. The size of trades here is of the order £15-20K with the switch between stocks being made in two or more back to back transactions.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This is the table that I use to decide whether to 'trade' in the Green Infrastructure funds.
Code: Select all
Stock Bid Offer DIVI Yld BID Yld/offer NAV Premium
BSIF 118.00 119.00 7.43 6.30% 6.24% 112.81 5.49%
Jlen 106.00 107.00 6.51 6.14% 6.08% 99.60 7.43%
TRIG 111.20 111.40 6.50 5.85% 5.83% 105.20 5.89%
FSFL 109.50 110.50 6.58 6.01% 5.95% 105.20 5.04%
UKW 126.80 127.00 6.76 5.33% 5.32% 114.10 11.31%
NESF 108.50 109.50 6.65 6.13% 6.07% 104.50 4.78%