FiL goes on a spending spree!

So, having just sold down some of my holdings of companies, I find myself with some cash sitting in my ISA. This gives me the opportunity to continue rebalancing my portfolio to my newer target allocations.

At present, I am heavily under weight on trackers (in an attempt to reduce the overall risk of my portfolio) so with all this cash I need to purchase some trackers. Now given that I have seen the change in my mentality when I am using trackers, I know that I have to get back in as soon as possible and make sure I hit the next quarters payout – who cares if the price fluctuates up and down a bit.

So, before I dive into what I bought, a quick reflection on what has happened since I sold the stocks. Well not surprisingly, they have gone up slightly. I do find this slightly hard, and wishing that maybe I had just hung on, and who knows what will happen in the future. Yes, I will keep an eye on some of them to see if I can make the most of a cyclic opportunity. For now, I keep reminding myself that I did this to stabilise my portfolio, so in effect the trackers will be fire and forget.

The allocations are not equal but do have predefined target allocations that I can start tracking against.

Purchase #1: Vanguard FTSE-250 – VMID.

Erm hang on a minute? Didn’t I just sell a FTSE-250 tracker?! Well yes. Thanks to a great article over on Monevator, I thought to check on the fees. My old tracker, MIDD, was charging 0.4%, compared to the Vanguard offering at 0.1%. Given the difference in costs, I changed to take Vanguard, and accepting that Vanguard are forming a larger and larger part of my trackers, which is a little worrying but hey ho!

Average purchase cost: £31.68

Purchase #2: Vanguard Asia ex. Japan – VAPX.

Although I have exposure to Japan with my Investment Trust, I have very limited Asia exposure, and so I have tucked in to some Asian holdings. No doubt I will forget about the holding until I need to start topping up the holdings over time but for now it gives me a little diversity!

Average purchase cost: £19.95

Purchase #3: Vanguard European ex. UK – VERX.

Be it a desire to derisk Brexit, or just a desire to increase non UK holding (I find that VHYL is quite heavily US based) or give me some other random exposure, who will ever know 🙂 I wanted to explore some of the wider markets, especially as it means I can now remove my watch list European shares and not care about the exchange rate against the individual shares. I buy a slug of the shares and forget about it – bliss!

Average purchase cost: £25.99

What next?

So I still have some cash left over but I will leave that as cash for now. What I want to see is just how much dividends come in from these new holdings – another couple of months and see how that holds up before I purchase anything further. I have as always done my “back of fag packet” calculations but there is nothing quite like seeing the real dividends drip in.

The portfolio is finally getting close to my allocation – in fact according to my rules, the next purchase will, subject to market changes, be Investment Trusts to build that portion of the portfolio up.

With any luck over the course of this year the rebalancing will complete, and allow me to get back to trying to time the market (remember folks, don’t do that!).

Shaking up the Portfolio and learning to count.

Following on from the “When to sell a stock” post, funnily enough, I have been on a mad selling spree in my actively managed portfolio!

This all started after I was playing around and working out the CAGR for a number of my stocks, when I realised something didn’t feel quite right with the overall picture of my portfolio. I redid the numbers and realised that when I had originally setup my annual tracker, I must either have been VERY tired, or rather very tipsy.

Being an idiot.

My calculations for my percentage returns actually divided my increase in value by my final ending figure, rather than the initial figure plus contributions! Whilst it is annoying that I made such a basic mathematical error, the plus side is that I made the error in my favour – I under reported. I have gone back and corrected last years figures – the tracking of the FTSE etc. was all calculated correctly (which is why no-one shouted I guess!) so only a couple of minor errors on the actual portfolios where I had copied and pasted the errors where I had added sheets. A valuable lesson learnt. To save you from the hassle of scrolling through however, the bottom line was that my actively managed performance was not the reported 30.9% as I claimed, but was in fact a staggering 44.7%.

Yup – taking my starting value and contributions, my returns added a further 44.7% to my portfolio. This was partly what made me sell off some of my shares to drive my balance back towards more into trackers – there are some huge shifts in values in there which could easily go wrong again (just look at AZN today – that hurt!).

I plan to use all the funds that I have raised from the sales, the dividends I have received since my last investment and put that all into a single tracker to help slowly rebalance my portfolio. The sooner I can rebalance, the sooner I can start buying individual shares again within my tolerances 🙂

Number Crunching

So, what has been sold, and what were the returns? Please note that the returns include the cost of fees (so book cost includes all transactional fees (dividend reinvestment, dealing charges, stamp duty etc.), and the end value was calculated on what I got credited to my account after the sale (i.e. after paying dealing charges).

Dividends reinvested in the same security were not added to the total value, but dividends not reinvested (i.e. cash thrown off that I spent on something else, was). I also calculated the return for the FTSE-100 over that period (although excluding dividends, so we will have to assume approximately 3%) to provide a comparison. It’s been pretty steady over the years, and for the last 3 years the FTSE-100 over that period was 4.6% (or 7.6% if you add dividends).

Sale Item #1

First to bite the bullet – HSBC. I’ve held the shares for 3 years now since I first bought them, and they have been a good steady performer. I will miss the quarterly dividends which have been steadily ticking up over the years. I sold out at just over £7.50 per share, which over the 3 years gave a CAGR of 24.2%. Not at all bad – I will chalk that as a win!

Sale Item #2

Next to go was MIDD. I was going to use this as my tracker of choice for mid-caps, but when Monevator recently posted on the charges, I realised I was paying 0.4% but could pick a Vanguard fund for 0.1% – I decided to switch, no two ways about it! I originally purchased the morning the Brexit result came through when there was panic on the streets. I sold out at just £19 per share, giving me a CAGR of 23.1% over the year. I can live with that!

Sale Item #3

Next up was MRW. This was purchased about 3 years ago as I looked at the underlying business and the usual arguments on the ownership of their stores etc. but with the ongoing grocery wars, Amazon entering the fray I have decided not to wait for my number to come up, but cash in while I am ahead. I sold out at just over £2.40 giving me a CAGR of 14.5%. Not anything great there but still not too bad – certainly beats a savings account!

Sale Item #4

Lastly, I sold in my BLT that I purchased a couple of years ago. I cashed out at just over £13.60 per share. I’ve been contemplating cashing in as the price does fluctuate a lot, but thought why the heck not. A total CAGR of 25.9% over 2 years so not really too shabby.

Now what?

The outcome of all of this is that I now have a fairly large chunk of cash to deploy into the market. As I am planning on buying trackers, and I shouldn’t be trying to time the market, I know I now need to purchase my required trackers within the next couple of weeks, so watch this space!



April & May 2017 Stock Purchases

So it has been a busy 6 weeks in my actively managed ISA as I continue to build up my portfolio to my target allocation – I find it a little frustrating as I am forced to not buy individual shares yet, but this isn’t a bad thing as it holds me true.

ETF Purchase – VHYL

So I further topped up by holdings in VHYL on the grounds of not trying to time the market just buying the damn stuff! VHYL is now about right for my target (it is overweight at present, but as I add more to the portfolio then it will come down to around on target, possibly even below).

This brings the average price paid for the stock now to £36.52

Investment Trust Purchase – SMT

I am a big fan of the SMT IT for a long term buy and hold approach. Dividends are automatically reinvested so it will continue to grow. It’s not as cheap as I would like right now but the main thing is getting that money to work as soon as possible. Including the dividend reinvestments, the average price paid for SMT now is £2.74 – so it has fared very well over the last couple of years!

Investment Trust Purchase – DSM

What?! Another IPO IT? Didn’t I learn after WCPT?! Well… no! I took the punt on Downing Strategic Microcap for several reasons. Their track record with other ITs is good (although this doesn’t mean this will be!), but also their investment target. This will help (hopefully!) to reduce my desire to dabble into smaller companies. They are focusing on between 12 & 18 holdings with a maximum cap of £150M at the time of purchase. They are targeting a 15% growth per year, which I think is pretty darn punchy but then it is high risk. For me this will be like WCPT in that I will need to hold it for many years so a buy and forget. As it was at IPO it was free of charges so I paid £1 per share. Since it started trading it has already gone up, but that is just noise!

Overall my Investment Trusts are now slightly underweight on my target allocations, however with the dividend reinvestment this should gradually build up over time to get to the right balance. The following on purchases now for the next year or so (at a guess) are all going to be on trackers. I really do think this will degrade the performance, however it will reduce the volatility which as the portfolio has grown in size will mean I can sleep better at night!

January 2017 ISA Changes

So, January was a fairly active month on the ISA front. It is more trading than I have done in a long time but this was in part triggered by an off from my provider (TD Direct) to allow stock purchases at £1 (including trackers).

Stock Sale – HGM

HGM has done me proud at last, the patience was well rewarded, although it has been one heck of a roller coaster run – it has done me well and provided a great return to the portfolio. I sold out in two tranches, one at £1.45 and a larger tranche at £1.67. This was a significant profit and was forming a huge part of my portfolio so it helps with my diversification. Some of the funds were redeployed (see below), some of it is still sitting in cash in the ISA ready to be put to work at the right opportunity. As I watch the price continue to tick up, do I regret it? Naturally a little as I have “lost” a huge amount more profit however the plus side is it has removed the volatility in the portfolio. If I hadn’t sold it would now be worth around 20% of the entire portfolio – not good for a single AIM stock!

ETF Purchase – VHYL

So as part of my work to increase the tracker funds in my portfolio I purchased further shares in the Vanguard High Yield. I will continue to add more and more to this until it makes up about 1/3 of my portfolio, although this will be a drag on the overall performance I believe (or it may save me only the future will show!).

It’s quite funny really – I didn’t even look at the price of it when I bought, I just bought. I hardly check the price now either (other than on my updates) as I know I don’t need to worry, the only way it will go wrong is if the entire world stock markets collapse to nothing in which case the value of my ISA is likely to be the least of my worries!

Stock Purchase – Braemer Shipping Services (BMS)

So this has been on my watchlist for some time, and I couldn’t believe me luck when I saw the initial price, and so I bought a slug of shares at an average price (including fees and stamp duty) of £2.85. This was another great lesson in why you should not try and time the market, as what happened next? A bad set of trading results and the shares plummeted. At one point I was down about 17% in a matter of days, and a dividend cut to boot (although it will still be giving over 6% on my price). I do believe that they will recover in time, and so give it a few years and I am sure I will have another healthy profit. Even now it is slowly starting to tick back up – I am playing the long game here!

Did you buy anything other than trackers in January?


2016 Stock Purchases

So at last, the final “nail” in the coffin to bring my portfolio into the full public eye (well apart from January update that is in progress!).

A very quiet year was 2016 on the purchasing side – a number of expenses meant I couldn’t save as hard as I would have liked, but such is life…

Just after the Brexit vote, when everything was going to pot, I decided to do my usual timing of the market – something you should definitely not do! I’ve been meaning to add to my trackers with a FTSE-250 tracker simply because I don’t have much exposure. Simple home bias has led me to add this one in, and it will continue to help diversify my ownership. I would expect over time that my exposure on this tracker will increase, and was chosen as a non Vanguard to help diversify from Vanguard as well. There really isn’t much to add to this other than that! I will add more en the price is lower.

Add at the right price