My IT (Income & Growth) Portfolio - July Update

[Dod101]

I am no advocate of trackers but this is a discussion Forum and it is pleasing that you are prepared to discuss. I just think that no one really needs to cover the entire world of investment, but anyway it is not my portfolio. It would be far too much hassle for me, but thanks for putting it up.

Be interesting though, to know the broad outcome. For instance are you up or down since 1/1/22, and over say the last 5 years?

Whilst I have total valuation figures for previous years, it's difficult to give meaningful performance statistics, as until 2020 I was still adding ad hoc amounts of cash to the portfolio and reinvesting all dividends. Whereas from this year, I started having the dividends remitted to me.

The best I can offer you is:

Period 4/1/21 to 5/1/22 = +13% (1 year) (which will include dividends reinvested).
Period 5/1/22 to 6/6/22 = 0% change (shown as a matter of interest/coincidence)
Period: 5/1/22 to 14/7/22 = -7.5% (that negative figure, for this year, year to date, includes the fact that I withdrew all dividends received and took losses on a couple of holdings including Polymetal).
Period: 14/7/21 to 14/7/22 = 0% change (1 year) (note above comments).

I haven't unitised my portfolio.

Once I have made the final adjustments (increase global and USA exposure), my plan is to complete the move to being virtually totally "hands-off", which will mean that performance is easier to track and compare, and I can hopefully go off on my world trip.

Thanks the outcome is not that different from my own portfolio then, certainly for the current year to date. I think you could get by with rather fewer ITs and certainly a lot less hassle, by significantly reducing the number of holdings. You are not wrong of course because there is no right or wrong with investment but just a thought.

I would if, into only ITs, buy say up to 10 or so, maybe three or four generalists, and for the rest you could indulge your fancy with emerging markets, the US and so on but I would hold more generalists and let these managers decide the best areas to invest in.

Dod

[richfool]

Thanks the outcome is not that different from my own portfolio then, certainly for the current year to date. I think you could get by with rather fewer ITs and certainly a lot less hassle, by significantly reducing the number of holdings. You are not wrong of course because there is no right or wrong with investment but just a thought.

I would if, into only ITs, buy say up to 10 or so, maybe three or four generalists, and for the rest you could indulge your fancy with emerging markets, the US and so on but I would hold more generalists and let these managers decide the best areas to invest in.

Dod

Thanks for your thoughts.

Whilst the total overall number of holdings was I believe 32, that is in, what is effectively a combined portfolio.

Bearing in mind, of those, 7 were more specialised renewable energy companies and a further 4 property companies or REIT's, totalling 11. If you subtract that number (11) from the total and knock off a further one for SCIN which will be absorbed into JGGI, then that would bring the total down to 20, which I don't think is unreasonable, particularly in a portfolio that includes global exposure to: growth holdings, income holdings, multi-asset/defensives, infrastructure, utilities, energy, commodities, miners, bonds and the odd indulgence.

In view of your comments, I'm thinking that your recommendation regarding increasing my global growth exposure would be for me to add to existing holdings Mid Wynd and Brunner, rather than to add a new holding like: FCIT or STS?

[Dod101]

Thanks the outcome is not that different from my own portfolio then, certainly for the current year to date. I think you could get by with rather fewer ITs and certainly a lot less hassle, by significantly reducing the number of holdings. You are not wrong of course because there is no right or wrong with investment but just a thought.

I would if, into only ITs, buy say up to 10 or so, maybe three or four generalists, and for the rest you could indulge your fancy with emerging markets, the US and so on but I would hold more generalists and let these managers decide the best areas to invest in.

Dod

Thanks for your thoughts.

Whilst the total overall number of holdings was I believe 32, that is in, what is effectively a combined portfolio.

Bearing in mind, of those, 7 were more specialised renewable energy companies and a further 4 property companies or REIT's, totalling 11. If you subtract that number (11) from the total and knock off a further one for SCIN which will be absorbed into JGGI, then that would bring the total down to 20, which I don't think is unreasonable, particularly in a portfolio that includes global exposure to: growth holdings, income holdings, multi-asset/defensives, infrastructure, utilities, energy, commodities, miners, bonds and the odd indulgence.

In view of your comments, I'm thinking that your recommendation regarding increasing my global growth exposure would be for me to add to existing holdings Mid Wynd and Brunner, rather than to add a new holding like: FCIT or STS?

If your question mark is really asking me, I would probably take FCIT and then think about thinning out some of the more specialist trusts but I am no expert. Just that the point about ITs surely is that you leave strategic decisions to the managers and that is easier with trusts with a broad mandate such as FCIT has or say Alliance than with those which have a more specialist mandate. However as has been said before it is obviously up to you to go with whatever pattern you feel most comfortable. There is though no right or wrong with investing, until it is too late that is when you know the answer!

Good luck anyway,

Dod

[richfool]

I would like to increase my global growth exposure (which would include emphasis on the USA), and would be interested on any views as to whether to top up my existing holdings of either Brunner (3.8% of portfolio) and/or Mid Wynd (1.4% of portfolio), or whether to add a further global growth trust - FCIT.

I tend to think FCIT may be a bit unwieldy, being so large and will have some higher or double charging, as some of the management is outsourced.
Mid Wynd has the lowest yield of the three and trades at a slight premium.
Brunner has the highest yield - just above 2% and trades at a significant discount (-12%).

(My holding of JGGI will also overlap with the more usual holdings, particularly of MWY and FCIT.)

[Wuffle]

I view FCIT as a global tracker equivalent.
I own it in this context.
Possibly MNKS is a better fir for the description 'broad based global growth' - emphasis on the growth bit.
Both on about 10% discount currently, which is not uncommon for FCIT but represents a change for Monks, Monks having round tripped across the pandemic.

W.

[richfool]

I view FCIT as a global tracker equivalent.
I own it in this context.
Possibly MNKS is a better fir for the description 'broad based global growth' - emphasis on the growth bit.
Both on about 10% discount currently, which is not uncommon for FCIT but represents a change for Monks, Monks having round tripped across the pandemic.

W.

Yes, agreed FCIT seems too much like a closet tracker, albeit with some private equity (which I am more wary of at the current time), as does Bankers (without the private equity), which I looked at again today.

I have held Monks previously, but not convinced I would want to go for their more outright growth and "technologies yet to come to fruition" type holdings. I like, though have an adequate holding of, Brunner, so may just top up Mid Wynd.

[doug2500]

I like mid wynd and if it's only 1.4% of your pf I would think it's a good candidate for a top up. Probably not much overlap with your other holdings either.

[baldchap]

Some additional General Comments on the above portfolio:
I also have STS in mind, now managed by Trojan, (in the global G&I sector) as it is more defensive having a higher than normal exposure to Consumer Defensives (c 44%).

A late reply. but this is the reason I reentered STS after Troy took management.
Great consumer defensive exposure, and a breath of fresh air compared to Scottish American which has performed well, but has been suffering from a wider malaise which appears to be infecting BG managed ITs.
STS 12% of my pf.

[richfool]

Some additional General Comments on the above portfolio:
I also have STS in mind, now managed by Trojan, (in the global G&I sector) as it is more defensive having a higher than normal exposure to Consumer Defensives (c 44%).

A late reply. but this is the reason I reentered STS after Troy took management.
Great consumer defensive exposure, and a breath of fresh air compared to Scottish American which has performed well, but has been suffering from a wider malaise which appears to be infecting BG managed ITs.
STS 12% of my pf.

Thanks for your reply and thoughts.

In fact I backed off with STS after spotting an AIC article about the manager having been caught out after moving from Shell into Admiral and then Admiral and other car insurers) promptly fell. Though I suppose one would at least be buying in after that fall had taken place. Since then I have been "sniffing around" FCIT and possibly ATST.

Motor insurers’ crashing shares hit Troy income funds
18 July 2022
Troy’s global income portfolios are among funds feeling the crashing share prices of UK motor insurers like Admiral after a string of profit warnings in the sector.

Troy’s global income portfolios are among funds feeling the crashing share prices of UK motor insurers after a string of profit warnings in the sector.

James Harries, manager of £224m Securities Trust of Scotland (STS ), is one of those hit after he recently swapped pharmaceutical giant GSK (GSK) for Admiral (ADM) in the trust and similarly-run £807m Trojan Global Income fund.

Admiral shares have sunk 25% in less than a week as part of a sector-wide selloff sparked by smaller rival Sabre (SBRE) warning that rising costs will lead to a punishing 70% decline in its profit this year.

The small-cap insurer said its annual cost of claims would increase by 12% in a half-year trading update on Thursday, pointing to inflationary factors such as used car prices, hire car costs, wage inflation and reinsurance costs. In response, the shares have dived 43% since

Peer Direct Line (DLG) became the second name to issue a profit warning this morning, leading to another round of share selling. The company cited inflation as claims costs and car parts prices soared. Its own shares are down 23% in a week, including a fresh 13.6% fall today.

The negative updates have created concern that Admiral, the largest name in the sector, could soon follow suit with downgrades of its own.

‘[Sabre’s profit warning] led investors to become concerned about Admiral’s ability to release reserves which is a big driver of the group’s profit. Uncertainty has never been higher in UK motor insurance,’ said Berenberg analyst Thomas Bateman
.......

In the latest factsheets for Securities Trust of Scotland and Trojan Global Income, Harries discussed the Admiral trade, describing it as an ‘excellent business’ and an expert ‘in underwriting a specific cohort of the population, that being young men in fast cars.’

This specific data set affords accurate pricing risk which, in turn, supports underwriting profit over the cycle.

‘Costs are contained, giving the company a very attractive return profile. All of this together means the company has limited capital requirements and is, therefore, able to pay a healthy dividend,’ Harries (pictured below) said.

Harries added Admiral to the 2.5%-yielding trust’s portfolio in April, according to Morningstar data, at an ‘attractive valuation of 12.8 times price to earnings ratio’.

That followed an already very significant fall in the stock. The insurers’ shares, today trading at around £17.50 and on a 7.4% historic yield, have more than halved in value from a peak close to £36 last August after lower mobility during the Covid-19 pandemic had clamped down on claims.

Speaking on the Funds Fanatic Show podcast last week, Harries reiterated Admiral’s attractive valuation and emphasised his reasons for buying it. Following the recent share price fall, Troy Asset Management declined to comment further.

Other funds with more than 2.5% exposure to Admiral include the Argonaut Absolute Return fund managed by Barry Norris, the Liontrust Income fund managed by Robin Geffen, and the Trojan Ethical Income fund managed by Hugo Ure, according to Morningstar data.

Year to date, Securities Trust of Scotland has recorded net asset value (NAV) falls of 1.3% and its shares have slipped 1.8%, versus the MSCI World’s drop of 8.3%, according to broker Numis. The shares are trading at a narrow 0.9% discount to NAV, helped by the board’s zero discount policy.

Since Troy Asset Management took over the mandate from Martin Currie in November 2020, the portfolio has returned 14.4%, beating the Lipper Global - Equity Global Income index by 1.2%, according to the June factsheet.

https://www.theaic.co.uk/aic/news/cityw ... come-funds

[richfool]

In the end, as I couldn't decide, I split my investment between FCIT and Alliance. So they will enhance the global growth side of my portfolio, and enable me to easily compare their respective performances against each other (as well as against Brunner and Mid Wynd).

[richfool]

Some additional General Comments on the above portfolio:
I also have STS in mind, now managed by Trojan, (in the global G&I sector) as it is more defensive having a higher than normal exposure to Consumer Defensives (c 44%).

A late reply. but this is the reason I reentered STS after Troy took management.
Great consumer defensive exposure, and a breath of fresh air compared to Scottish American which has performed well, but has been suffering from a wider malaise which appears to be infecting BG managed ITs.
STS 12% of my pf.

I am just re-visiting the merits of STS.

What puts me off slightly is the fact that it holds tobacco stocks, - British American Tobacco and Philip Morris International are its top 2 holdings. I appreciate the defensiveness of those stocks, but I also hold Merchants which has BATS and Imps in its top two holdings, and I hold PNL which used to have tobacco in its top ten holdings, though I don't think it does now. As Troy now manages STS, I see some similarities in the type of holdings they hold (more defensives including Unilever, Diageo etc), though noted PNL holds a wide range of other asset classes like Gold and Gov stocks. So, apart from that, I am not convinced that STS would give me anything extra that I haven't already got covered.

I still like Dunedin (DIG), my largest UK holding, and also Merchants, but they don't have the global remit that STS has. I am almost tempted to top up PNL, now that I can afford more than a couple of shares at a time!

I am about to get a boost in my JGGI holding, as SCIN shares get transferred in at the end of this month. I am happy with BUT despite the recent loss of its manager. BUT is my largest holding in my global growth holdings, followed by MWY, and the two new additions, FCIT and ATST.

[baldchap]

Strange how perceptions differ, I never took to Tillet, but might look at BUT again now he has departed.
Not rational, but I couldn't shake the feeling

[richfool]

Strange how perceptions differ, I never took to Tillet, but might look at BUT again now he has departed.
Not rational, but I couldn't shake the feeling

Tillett hadn't been lead manager that long. He took over from Lucy MacDonald, in I believe 2020.

The new manager is now Schneider apparently with Merchants' Simon Gergel and another, Marcus Morris-Eyton, in support.

https://www.theaic.co.uk/aic/news/cityw ... nt%20teams.

[Shelford]

A useful list of investment trusts. I assume you are spending the income and relying on 'natural yield'. I can't comment on individual holdings (though Middlefield at 10% looks high to me & it's a small and fairly expensive trust from what I recall), other than to say there's rather alot of them (but I am guilty of such accretion too). If not reliant on income from the trusts, a world tracker would replace the UK/US/global equity trusts, at a fraction of the cost. I appreciate however this would mean selling some units per year and it sounds like me that you simply prefer the convenience of IT dividends.

As Itsallaguess pointed out, investment trusts are good ways of accessing alternative assets. I'm less convinced (largely on grounds of costs) that they do a better job than a tracker longer term for equities. However, if using them, I'd spend less time tinkering/guessing market trends, and more time in the garden, ideally when it's less hot than now...

Good luck

Shelford

[richfool]

This is my portfolio as at 14th July. The main focus is income with diversity and some growth.

NB.The % figures are the percentage of the overall portfolio:

UK GROWTH & INCOME TRUSTS
DUNEDIN INCOME GRO ORD 3.9%
LAW DEBENTURE CORP ORD 2.9%
MERCHANTS TRUST ORD 2.6%

GLOBAL G&I IT's
HENDERSON INTL INC ORD 2.3%
JPMORGAN GBL GTH & ORD 10.2%
SCOT INV TRUST ORD 1.6%
MURRAY INTL TRUST ORD 3.0%
SCOT AMERICAN INV ORD 4.7%

GLOBAL GROWTH TRUSTS
BRUNNER INV TR ORD 3.8%
MID WYND INTL INV ORD 1.4%

GLOBAL MULTI-ASSET/DEFENSIVE IT's
PERSONAL ASSETS TR ORD 2.9%
RUFFER INVEST SHS GBP 3.5%

ASIAN PACIFIC INV TRUSTS
ABERDEEN ASIAN INC ORD 5.2%
JPMORGAN ASIAN G&I IT ORD 1.4%

NORTH AMERICAN IT's
BLACKROCK SUSTAINABLE 2.6%
MIDDLEFIELD CAN INC PRF 9.6%

EUROPEAN INV TRUSTS
EUROPEAN ASSETS TR ORD 1.7%
JPMORGAN EURO GROW ORD 5.2%

COMMERCIAL PROPERTY IT's/REIT's
ABDN PROP INC ORD 3.0%
EDISTON PPTY INV C 2.9%
PRIMARY HLTH PROP 2.0%
WAREHOUSE REIT PLC ORD 1.4%

UTILITIES & INFRASTRUCTURE
ECOFIN GBL UTILITI ORD 4.3%

RENEWABLES
BLUEFIELD SOLAR IN ORD NPV 1.3%
DOWNING RENEWABLES ORD 1.5%
ECOFIN U S RENEWAB USD0.01 (GBP) 1.3%
GORE STREET ENERGY ORD 2.4%
GRESHAM HOUSE ENGY ORD 3.1%
JLEN ENVIRONMENTAL NPV 1.8%
NEXTENERGY SOLAR F RED ORD NPV 2.4%

GOLD/RESOURCES/ENERGY
BLACKROCK ENGY & R ORD 2.9%
BLACKROCK WORLD MI ORD 1.1%


PORTFOLIO CHANGES over the last 6 months:

NEW ADDITIONS:
MYI - Murray International Income (Global G&I)
Renewables: DORE and NSEF and RNEP (the latter US focussed)

TOP UPS:
During the down dips of the last 6 months, I have taken the opportunity to top up BUT (Brunner) in the Global Growth sector; SAIN in Global G&I's; MULTI-ASSET/DEFENSIVES: PNL and RICA; and LWDB and MRCH (UK G&I's).

DISPOSALS:
MATE - redirected funds into PNL and Ruffer (RICA).
SUPR (Supermarket Inc)
HFEL.(to stop the capital depreciation and reduce exp to China)

REDUCED:
WHR (top-sliced)

I believe SCIN will disappear into JGGI at end of August.

I'm currently sitting on some dry powder, and am pondering whether to deploy that into STS and either a new holding of FCIT or a top up of: Mid Wynd (MWY). The latter to increase US exposure. The former to add defensives.

The above was my portfolio as at 14th July).

1st November Update:

Just in case there is anyone interested left on LF, I thought I would post my portfolio (or stamp collection as some might call it), as amended since last July.

They key changes are:-

- the reluctant disposal of MWY (Mid Wynd) - effectively replaced by FCIT and STS.
- the disposal of HINT
- disposal of JAGI
- disposal of RNEP
- disposal of BRWM - effectively replaced by CYN.

- additions of: STS and FCIT global growth, (as under consideration in July).
- addition of HICL (Infrastructure)
- addition of CYN (CQS New City Natural Resources Growth & Income fund)
- addition of BHMG (BH Macro).
- the theme purchase of: WDS (Woodside Energy Group)

- and for bond/enhanced income exposure (bonds are an area fairly new to me), the addition of:
- NCYF (New City High Yield Fund) and
- SMIF (Twenty Four Select Monthly Income Fund).
- top up of MYI.
- top up of JLEN.

The percentages in the original listing quoted above will be slightly different now, but not really worth the effort of amending or re-listing the lot.

[richfool]

In posting the update, I was also rather hoping it might draw out a few comments from more experienced investors about the two new bond IT's that I added, i.e. - NCYF (New City High Yield Fund) and - SMIF (Twenty Four Select Monthly Income Fund).

I bought into them during the period of market disruption following Liz Truss and Kwasi Kwarteng's mini-budget, and when the market was, I suspect, expecting a somewhat larger increase in interest rates by the BOE in November (this week).

I bought them at yields of 9.00% each.

[88V8]

In posting the update, I was also rather hoping it might draw out a few comments from more experienced investors about the two new bond IT's that I added, i.e. - NCYF (New City High Yield Fund) and - SMIF (Twenty Four Select Monthly Income Fund).
I bought into them during the period of market disruption following Liz Truss and Kwasi Kwarteng's mini-budget, and when the market was, I suspect, expecting a somewhat larger increase in interest rates by the BOE in November (this week).
I bought them at yields of 9.00% each.

I have been topping up both this last fortnight.

NCYF is my largest IT holding. Not buying at present as they are at a premium.
They have some drawbacks: Low cover, minimal divi growth. However, they have been around since before the GFC and kept on paying.

SMIF is a new one for me. No gearing, but they may borrow which is a shade of difference.
No reserves, no divi growth. Monthly income which is unusual.
Only been around eight years so post the GFC.
The yield is attractive, more than I can find buying individual FI, so I will put up with the zero divi growth and lack of cover.
I hold about 40% of the pot that's in NCYF, which is probably more than their relatively short track record deserves.

V8

[JuanDB]

In posting the update, I was also rather hoping it might draw out a few comments from more experienced investors about the two new bond IT's that I added, i.e. - NCYF (New City High Yield Fund) and - SMIF (Twenty Four Select Monthly Income Fund).

I’ve held NCYF on and off over the last few years. I would never consider it a long term buy and hold due to the slow erosion / return of capital via the high dividend. What it does do is trade in a reasonable tight range and if you can time the troughs with a holding period of 3-6 months to wait for recovery and a couple of dividends then it’s usually worth 10% a trade.

[Wuffle]

I remain interested richfool, thanks.
I own and observe CMPI as they are supposedly the professionals at this and your portfolio has similar style.

I bought some APAX.
You tempted at all by any of the big discounts in PE?

W.

[richfool]

I remain interested richfool, thanks.
I own and observe CMPI as they are supposedly the professionals at this and your portfolio has similar style.

I bought some APAX.
You tempted at all by any of the big discounts in PE?

W.

Thanks for your comments Wuffle. Yes, I do "take a squint" at CMPI from time to time and noted its several holdings of PE trusts, also the healthcare exposure. I have held CMPI (BMPI) in the past, but offloaded it because of the higher costs and duplication of holdings.

I did hold a PE trust for a while (NBPE), but then felt that PE might be more vulnerable in a sell-off, so off loaded it.

It is somewhat reassuring to see that CMPI also holds the likes of JGGI and LWDB.

I hold DIG as opposed to MUT. DIG has similar holdings, but a slightly higher yield.