My IT Portfolio Performance 2016

Closed-end funds and OEICs
MDS1951
Posts: 13
Joined: November 4th, 2016, 8:31 pm

My IT Portfolio Performance 2016

Postby MDS1951 » December 31st, 2016, 9:17 am

Two years ago in December 2014 I started to invest in ITs as a bond I had with the Cheltenham & Gloucester matured and I wanted a new source of income to replace that which the bond had earned. I didn't invest the bond capital all in one go, but bought the complete holding I wanted in some ITs and drip-fed the rest until I had holdings in 10 ITs. This process ended in July 2016 when I had invested roughly £2,000 in each IT. My basis for choosing the ITs was Luni's B7 and B8 portfolios, which I supplemented by looking at earlier posts about ITs to see where other contributors whose opinions I respect had put their money. I also looked at Morningstar's write-ups on my choices to see what their ratings were for these ITs. The portfolio is set out below. Luni didn't include Law Debenture in his two portfolios. As you can see I was more interested in Jam Today rather than Jam Tomorrow.



I decided to unitise the portfolio on an income basis from the start. At the end of 2016 each unit was worth £6.0737 (£5.5653 end 2015) and the income per unit was 21.42p (18.42p end 2015). Actual dividends received were £750 (£520 end 2015). I haven't calculated the IRR.

In August I began investing in 3 unit trusts - 2 trackers and a managed fund - and I'll include those in my report for 2017.

I hope some of you find this short report useful.

MDS1951

MDW1954
Lemon Pip
Posts: 84
Joined: November 4th, 2016, 8:46 pm

Re: My IT Portfolio Performance 2016

Postby MDW1954 » December 31st, 2016, 11:07 am

At the end of 2016 each unit was worth £6.0737 (£5.5653 end 2015) and the income per unit was 21.42p (18.42p end 2015).


A 16% increase in income-per-unit over the year? Am I reading that correctly? I don't unitise my holdings myself, but I have to say I'm surprised by that figure.

We hold many of the same ITs, and I recall the TMF threads you mention. My approach was more B7 than B8, but with a bias towards those trusts with lower costs, and/or discounts at the time of purchase.

MDW1954

MDS1951
Posts: 13
Joined: November 4th, 2016, 8:31 pm

Re: My IT Portfolio Performance 2016

Postby MDS1951 » December 31st, 2016, 12:24 pm

During December 2014 I invested £10,500 in my IT portfolio, so I would have received a full year's dividends on that investment. The ITs I invested in were:-

City (£500)
F&C
Lowland
Merchants
Murray Income
Schroders

and as the collective yield on those was approximately 4% they would have earned approximately £420 in dividends.

During the course of 2015 I invested a further £5,900 (just under £500 a month, £100 difference due to roundings) in:-

City (£1,500)
Murray Intl (£1,900)
Edinburgh (£2,000)
Temple Bar (£500)

The collective yield on those was 3.6% but for only half a year, earning £100 in dividends.

So the total dividends for 2015 pans out at £520 which, split across 2830 units, comes to 18.4p per unit.

For 2016 I received a full years worth of dividends on the above ITs ie £660 plus approximately 9.5 months dividends on £3,500 (Temple Bar and Loan Debenture) of £90 making £750 in total. Split across 3,495 units that comes to 21.4p per unit.

I pointed out that I hadn't bought all the IT shares in one go, but spread some of the purchases over 19 months - clearly I should have gone into more detail, the lack of which I apologise for. For 2017 the full year effect of 2016 purchases will add approximately £30 to total income.

MDS1951

MDW1954
Lemon Pip
Posts: 84
Joined: November 4th, 2016, 8:46 pm

Re: My IT Portfolio Performance 2016

Postby MDW1954 » December 31st, 2016, 12:34 pm

OK -- thank you. I think I understand. And I guess that the important thing is the income in £, anyway.

MDW1954

Arborbridge
Lemon Slice
Posts: 303
Joined: November 4th, 2016, 9:33 am

Re: My IT Portfolio Performance 2016

Postby Arborbridge » January 7th, 2017, 3:06 pm

MDS - so your are saying that the large increase in income per unit is an artefact caused by the fact that in 2015 some units were not producing income? Always a problem!

As a matter of interest, do you go back and checked your unit calculations? I always like to audit the whole year as mistakes do happen. In October 2015, I made a mistake by picking up the wrong number of units, which rippled down until December when I found it during the audit. Worth doing in my view, because we are all human 8-)

Dod1010
2 Lemon pips
Posts: 229
Joined: November 4th, 2016, 10:18 am

Re: My IT Portfolio Performance 2016

Postby Dod1010 » January 8th, 2017, 8:46 am

Surely what is being illustrated is the dividend 'drag' which happens all the time when new money is added (and sometimes when changes are made to an existing portfolio) It is though more noticeable in a smaller immature portfolio so you just need to ignore the yield for comparison purposes for the first two or three years at least.

Dod


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