daveh's Income portfolio 2020 update

[daveh]

This is an update of my Income Portfolio. Earlier updates were on the TMF boards (but may well have been lost with the board closures, there were links in 2016’s update). My updates on LF for 2016-2019 can be found here:

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Executive Summary

Performance in income terms was abysmal, down -29% in cash terms for the year and even worse when looking at dividend per accumulation unit (down -33%) or dividend per income unit (down -39%). The cash income is back at levels last seen in 2016.

Capital performance, though down, has picked up since the vaccine announcement. Overall the portfolio is down -7.4% by XIRR for the year, in March it was down by -27%.

Details and Commentary

Portfolio Constituents



Sector Breakdown




This year, as with last year, I did a lot more trading than usual. I added a fair bit of new money (~5% of the portfolio value) as well as reinvesting dividends. I topped up PFC pre Covid (not a good choice in hindsight) and after Covid MNG, BP and HEFL which were near the top of my HPTUSS when bought. I also increased my FI investments, as I topped up LLPC and bought some AV.B when both were down due to Covid, but I was late off the mark and could have picked them both up at a price much closer to par if I’d bought in mid-March. I also topped up VWRL.

I sold VVAL (as it is to be closed in February 2021 and WMH as it is due to be taken over for cash. The takeover isn’t happening until at least March 2021, it isn’t paying a dividend, so I decided to sell now and reinvest in something that is paying a dividend.. At the moment the proceeds are sitting as cash, as I’m swithering on where to re-invest it.

I bought two new holdings, AV.B (mentioned above) and MCT (Middlefield Canadian Income Trust) for more exposure to North America. I also gained one, Bovis Homes (now renamed Vistry Group) as it purchased the profitable bits of GFRD which I own, using its own shares.


Performance
The portfolio was unitised from September 2003 and the details are shown below.

Capital Performance (dividends reinvested) Accumulation units and Income units



I found a couple of mistakes in last years data and have corrected them which accounts for the changes for 2019 performance compared to last years report.

Income Performance



My portfolio contains VWRL EMDV, IDVY and IAPD all exchange traded funds and HFEL and MCT which are Investment Trusts. These have been included to add extra diversification to high yielding companies in Emerging and non-UK Markets that I do not feel able to achieve by buying individual shares myself. I’ve also added TRIG, a high yield infrastructure fund investing in renewable energy assets, I’ve also wanted to invest more in the USA and in this case added VWRL last year, which though an all-world ETF is >50% invested in the USA and this year MCT. Though VWRL is not particularly high yield, neither is the high yield equivalent (VHYL) or ETFs investing in US dividend shares (eg QDIV only yields 2.5% similar to VWRL) so I went for the extra diversity and better total return of VWRL.

Last year the yield on end of year value was 4.80%. This year the portfolio yield on the end of year capital value has dropped back to 3.5% due to the Covid dividend cancellations. Dividends were beginning to be restored by the end of the year, and hopefully that will continue next year. The cash dividend is back to the level produced in 2016 and dividend per accumulation unit has fallen to the level seen in 2015. Let’s see how quickly dividends are restored going forward. After the GFC dividends took just over a year to return to previous cash levels and just over two years on a unitised basis.

The overall return is down from 7.9% pa to 6.4% pa calculated with XIRR on excel since I started the HYP.

[Wasron]

Thanks for the heads up about VVAL closing, as I’d not heard about it. If I’m reading correctly the proceeds are sat uninvested, so are you looking at alternative value-tilted ETFs?

This is something I’ll need to do over the next few weeks, and it’s something of a shame considering the funds strong performance recently, as I’ve been using it alongside VWRL for diversity in my capital-focused ISAs.

Wasron

[daveh]

Thanks for the heads up about VVAL closing, as I’d not heard about it. If I’m reading correctly the proceeds are sat uninvested, so are you looking at alternative value-tilted ETFs?

This is something I’ll need to do over the next few weeks, and it’s something of a shame considering the funds strong performance recently, as I’ve been using it alongside VWRL for diversity in my capital-focused ISAs.

Wasron

Some of the VVAL money was split between VWRL and MCT. The rest and the WMH money is waiting to go, but it is split between 2 accounts which adds an extra complication. Doesn't have to be a value orientated ETF, could be a HYP share or an income focused IT.

[Adamski]

Nice write up. Not easy to give full disclosure if not gone too well. Are you planning any changes in 2021 or hoping for UK to outperform when get back to normal?