Friday, 21 April 2017

Crashed Computer Update

At the start of the month, my trusty old desktop presented me with a blank screen and a very weird bleeping noise. I consulted a techy friend and received the confirmation I suspected...a crashed hard drive! The computer is about 12 years old and well past its 'sell by' so time for a replacement.


Fortunately a member of the family had recently acquired a new laptop and I have therefore inherited the 'old' one which is a Dell Vostro running Windows 7.

Next step would be to transfer my files from the backup disks...unfortunately it turns out I have not been following the correct procedures and the disks appear blank!

The local computer shop had a look at my crashed hard drive and is unable to recover the files as the 'arm' seems to be broken. He says he can send it off to a specialist but may cost a 'few hundred £'....so that's the end of that!

I have therefore spent the past couple of weeks reconstructing some of my old files from scratch which has been rather time consuming however many of the basics are now back and updated. At the same time I have been finding my way around the new operating system and also the newer versions of Word and Excel so just about ready to resume with the blog.

The files are now backed up to Google Drive and I will probably also invest in a cheap external hard drive so I am hoping I will not be caught out again should the same thing happen to my laptop.

Apparently all hard drives will crash in time and I should have double checked my backup system worked before I really needed to use it for real...lesson learned.


Leave a comment below if you have any unfortunate computer experiences to share.

Monday, 3 April 2017

Dunedin Income Growth Trust - Final Results

I hold this UK income trust in my ISA portfolio.

They have recently issued results for the full year to 31st January 2017( link via Investegate).

I am pleased to see the figures for the year are an improvement on the previous year when NAV had fallen by 11.5% - NAV per share on a total return basis is up by a respectable 19.2%  - yet still underperforming against its benchmark the FTSE all-share index by 0.9% over the year.

Underlying income per share saw a modest increase to 12.55p.

The Board is recommending a final dividend of 3.975p, which will make a total of 11.7p for the full year (2016 - 11.4p) - an increase of 2.6%. As with last year, the uplift is a little disappointing and just about keeping pace with inflation. Dividend growth over the past 5 yrs is one of the weakest in the sector at an average of just 1.2% p.a. - maybe the trust needs a new name!

I am pleased to see dividend reserves have again increased to £25.7m (2016 £23.9m) and now represents 149% of dividends paid out over the past 12 months.

Ongoing charges for the trust are 0.68% (2016 0.74%) - around the average for the UK income sector.

3 Yr Performance -v- Vanguard Equity Income
(click to enlarge)

At the current share price of  255p, the trust yields a handy 4.5% but share price appreciation has been below par for the past couple of years. One of my Vanguard index funds I use as a benchmark to evaluate my collective investment is their UK Equity Income Fund which I updated last month. As can be seen from the chart, the Dunedin trust does not compare too well over the past 3 years.

I will retain my ISA holding for the time being for the income but without any real enthusiasm. This seems to offer yet another example of passive index funds outperforming the managed investment trust. My strategy transition in 2015 towards lower cost index funds is looking increasingly a good move

As ever, please DYOR.

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Unfortunately my computer crashed at the weekend and it looks terminal so normal service will be resumed as soon as I have a replacement.........  :-(

Wednesday, 29 March 2017

City Merchants Trust - 2016 Results

The stock market essentially deals in two kinds of asset; shares and bonds. These investments have very different characteristics; shares make you a part-owner whilst bonds, being debt instruments, turn you into a lender.

As a shareholder you've got to be fairly optimistic about your company's prospects; expecting that its shares will produce a better return than its bonds. In contrast, bondholders can be pessimists; as long as the company or government generates enough money to pay the interest they'll still be paid even if the shareholders are having a hard time.

They say shares are for optimists, bonds are for pessimists. I am still fairly optimistic on equities which is why I continue to maintain a 60:40 balance but there’s no harm in hedging your bets and bumping up immediate income with fixed interest, higher yielding trusts.

Similar to my other holding in this sector, City Merchants investment objective is to seek to obtain both high income and capital growth from investment, predominantly in fixed-interest securities.

It is almost two years since I purchased this IT for my ISA as a replacement for a few sales from my shares portfolio.

The overall portfolio is fairly defensive with a significant proportion of higher quality companies which the management consider to be ‘default-remote’.

They have this week announced final results for the 12 months to 31st December 2016 (link via Investegate).

Net assets have steadily increased over the year and taking the full year dividend of 10p per share into account, the total return was 11.8% (2015  2.7%).

CMHY  3 Yr Performance
(click to enlarge)

Dividends

The dividend target for the trust is 10p per share paid quarterly. This amount was paid in 2014, 2015 and 2016 and remains the target for the coming 12 months. At the current price of  190p the shares offer a yield of 5.2% which is obviously attractive compared to the rates on offer from our banks and building societies. The average cash ISA rate is currently a miserly 0.8% according to latest figures from Moneyfacts. In 2007, the average rate was 5.0%.

Of course, the share price will move around as can be seen from the chart and this may provide opportunities for a better yield at certain points.

For me, the trust provides some diversity to equities and a steady and predictable quarterly income stream.

As they say, slow & steady steps….

Monday, 27 March 2017

AJ Bell Passive Funds Launch

I was pleased to receive an email from my ISA provider AJ Bell this week to flag up the launch of their new range of passive funds from April.

I guess as the rise of passive index funds goes from strength to strength, it makes a lot of sense for the platform to offer a ready-made option for their customers.


Five Options

AJ Bell are offering a range of 5 funds which are a mix of equities, corporate bonds, gilts, property and cash. Each fund will hold a blend of underlying funds/ETFs from the likes of Vanguard, Blackrock, iShares and State Street etc.

The offerings range from cautious to adventurous and the corresponding equity levels start at 20% then step up to 30% for the moderately cautious, 40% for the middle option, 50% for the next step through to 60% for the higher level - so not overly adventurous.

I think the weighting for UK equities is less than the Vanguard Lifestrategy funds however, I was a little confused to see they seem to use 2 options for the S&P 500 - iShares ETF and Source ETF.

The bonds comprise a mix of gilts, corporate bonds and high yield bonds. The total percentage of bonds is 60% for the cautious and falls to 20% for the adventurous.

The portfolios also includes a percentage of property and cash across all options which my Vanguard Lifestrategy range does not offer so this could be good for those investors who require a broader mix of assets.

Charges

I was a tad disappointed to see the relatively high figure of 0.50% for ongoing charges - certainly high compared to the Vanguard funds at 0.22%. To mitigate, there is no charge on purchase and until 2019, AJ Bell will not levy their usual 0.25% custody fee.

Would it not have been possible to consolidate the underlying charges of the funds/ETFs together with a small admin fee to make a total of, say 0.4% and waive the custody fee permanently? …just a thought but possibly not practical.

Conclusion

Apart from the higher charges, which will take away from returns over the longer periods - I welcome this offering from AJ Bell and will certainly bear them in mind when the time comes around reinvesting some of the cash from various sales in recent months as the markets have risen.

Index investing is becoming very popular but of course, whatever index you follow, they are not immune to the bear market so however tempting the offering I will leave my cash in cash for a while longer.

The funds should be available from 19th April.

I would be interested to hear what others think - leave a comment below....