Wednesday, 29 April 2020

Gresham House Energy Storage - 2019 Results


Since its launch in December 2018, Gresham House Energy Storage (GRID) has developed the largest energy storage portfolio in the country. As we transition from fossil fuel generation to renewables such as wind and solar, we will increasingly need energy storage solutions due to the intermittent nature of renewable energy - the wind doesn't always blow and the sun doesn't shine at night. Currently we use gas fired generation to fill the gap but we have legislated for net zero carbon emissions by 2050 so the ability to store excess energy from an ever increasing capacity from renewables will be essential. As renewable capacity expands, gas-fired power stations will be required less frequently and they become less profitable to run. This means that renewables are forcing fossil fuels off the grid.


Interestingly, we have just passed a record of 19 days without coal generation - it is only 3 years that we had our first coal-free day in the UK. Coal is still used more in the winter months but currently accounts for just 2% of electricity generation and is due to be completely retired by 2024.

Results

The company have this week released results for the full year to end December 2019 (link via Investegate). Net Assets have increased by 6.5% on a total return basis to 100.8p and share price return is up 11% as the shares moved to a small premium.

Over the year, the company has acquired nine storage projects with a total capacity of 174MW. They have a further five projects in the pipeline with potential additional capacity of 190MW and looking further ahead, the manager has identified 250MW of additional pipeline projects.

50MW Thurcroft Project, S. Yorkshire

Lead investment manager Ben Guest outlines the storage imperative in the report:

"The disappearance of consistent baseload energy is increasing the need for flexible generation - made possible through battery storage. As the market share of renewable energy grows, the amount of temporary excess generation will get worse. By our estimates, instances of more than 10GW of excess power from renewables will occur frequently within the next four years - requiring 10GW of energy storage. In ten years, this could reach 30GW.

Industry forecasters are expecting the rise of renewables will lead to a surge in the volatility of power prices. With the current penetration of intermittent carbon-free generation in the UK energy market, we have already reached a tipping point whereby wholesale energy prices increasingly reach zero or negative levels when their intermittent generation creates supply in excess of demand. Nuclear power, whilst carbon-free, is not flexible and cannot provide a mechanism to balance the system in real time.

This is an excellent backdrop and financial incentive for energy storage operators to 'buy low' at times of overgeneration and 'sell high' when demand outstrips supply; either through participation in the wholesale market or by offering the available battery capacity to the National Grid through the Balancing Mechanism.

As GB's largest battery storage business, GRID is exceptionally well positioned to profit from the expected surge in energy storage demand. By investing in large-scale projects, the fund benefits from substantial economies of scale. This allows GRID to invest in large, operational batteries and run sites more efficiently at a lower cost.

We expect the deployment of battery storage and intermittent renewable energy generation to evolve in a complementary way.  Now that renewables have reached the tipping point we refer to above, every additional unit of power generation will cause an increasing oversupply at certain times while also reducing the market available for baseload, forcing this type of generation out of existence and creating a deeper trough in generation when renewables do not generate. Thus, there is an urgent need for battery storage capacity to catch up to and keep up with renewable generation installations".



GRID has several streams of revenue which include the wholesale market and National Grid balancing mechanism, Firm Frequency Response based on small-scale changes to the grid's electrical frequency, fixed fees for being on call to deliver power at times of extreme need and Triad payments from National Grid when there is peak demand.

The company has paid a total dividend of 4.5p over the past year as promised and has a target of 7.0p for 2020 but subject to review in relation to Covid-19.

I added this trust to my green portfolio last December, just before the general election, at the price of 105p. The current price is 97p.

Obviously this is early days for this relatively new venture. The UK only has around 1GW of storage but this is expected to grow ten-fold over the next 4 years so there should be plenty of opportunities for GRID to expand it's business. The focus so far has been batteries but I am wondering whether they have considered green hydrogen as another option as this also has lots of storage potential.

Finally, they say the business has not been too affected by Covid-19 so far however there will be some delays to the commissioning of projects currently under construction. The share price has dipped 10% to 97p and now trades at around par to NAV.

So far, so good it seems and one to put back in the bottom drawer pending further developments and possible new placings later in the year.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Sunday, 26 April 2020

A Defensive Move - Looking at Gilts


So, we are in the midst of a global pandemic. The markets have become volatile so now is a good time to re-evaluate my attitude to risk and make the necessary adjustments to my portfolio. We small investors have had a good run over the past decade but I sense this could be coming to an abrupt end and it could be more problematic over the coming year or two.

We have been in lockdown for several weeks and we don't know when it will be relaxed. When we start to come out of isolation there could be a second wave of coronavirus. A vaccine is the answer but it will likely be another year before one is available. In the meantime, the government is borrowing huge amounts to deal with the lockdown emergency - latest figure was £225 billion to cover the next three months! I suspect that may need to increase later in the year. 

The Bank of England has reduced the bank rate to an all-time low of 0.1% and savings rates have just been slashed by the banks and building societies. I've just been informed by the Coventry that my variable rate savings account will drop by over 50% to well under 1.0%.

Over the past year or so I have been moving toward more climate-friendly investing. This has involved ditching my global multi-asset index funds such as Vanguard Lifestrategy and HSBC Global Strategy and replacing them with a mix of renewable energy trusts and individual shares. This seems to be the right way to go as the world must embrace policies to address the climate crisis. However the shift away from VLS 60 for example with its 40% weighting of government bonds has increased the volatility of my portfolio. The sudden market downturn in early March when the FTSE 100 dived 30% in the space of a couple of weeks - 10% in a single day - has reminded me to pay more attention to asset allocation and restore a little more balance to the portfolio.

In early March I was thinking that after a sharp sell-off the markets would bounce back quickly and we would be back to business as usual by June/July. I think it is clear this is now very unlikely and the aftermath could be much worse than the financial crisis of 2008...maybe equivalent to the depression of 1929. On Wall Street the Dow Jones dropped by 35% in the October 1929, bounced back by 20% over the next couple of months before falling away a further 30% over the following year.



Asset Allocation

Earlier this year I took a little time to update my thoughts on Asset Allocation

As can be seen from this visual 'Asset Quilt' from the Blackrock website, any single class of asset is rarely at the top for two years running - some years equities do well and other years bonds are topping the chart, occasionally cash is king. I doubt equities will be topping the table in 2020.

According to the Barclays Equity Gilt study, over the longer term of the past 120 years, equities have delivered a return of 5% p.a. after inflation compared to 2% for gilts and 1% for cash. As should be clear from the asset quilt, this trend is not so clear over the shorter periods of a few years. As ever, it's all about time in the market and therefore the asset mix which matches the temperament and appetite for risk of each individual investor...which changes over time!
 
Barclays Equity Gilt Study 2019

So it's usually a good idea to have a mix of assets, if for no other reason than to reduce portfolio volatility associated with a large percentage of equities. Of course, a large proportion of my 'green' portfolio is made up of renewable energy infrastructure trusts which I regard as a hybrid between equities and property and they have performed well during the sell-off compared to conventional energy stocks such as Shell and BP.

With interest rates back to rock bottom on cash savings, it's tempting to load up on equities during the 'dip' but in the present circumstances I am thinking this would be a mistake so I feel the correct action is to be more circumspect and move towards a more defensive position. Currently I am a little too exposed to equities, I hold some property in the form of TR Property trust (and my house) but currently hold no bonds. So I think a reasonable move at this point would be allocate maybe 20% of my portfolio to bonds and gradually build this to 40% when we see more clarity on the Covid-19 situation.

The Options

Fortunately I do not require income so that makes the choice easier. Also I obviously want to maintain the fossil-free approach so I do not want a corporate bond fund as they will inevitable contain holdings such as fossil fuel companies and banks which I wish to avoid.

Therefore I will look at government bonds - gilts. A simple low-cost index fund from the likes of Vanguard, iShares or L&G will get the job done. So, what's on offer?

(click to enlarge)


The table above covers some of the more popular funds and ETFs from the largest providers. Of course there are many more index providers and lots of managed funds with higher charges but I will keep things fairly simple and select two or three options from these. I do not expect inflation to be a problem in the foreseeable future so will probably pass on index-linked gilts and stick to the low cost UK and Global gilts.

3 Yr Comparison  VGOV v IGLT...almost identical
(click to enlarge)

I think the main point of this is to try to protect some of the gains of the past few years and also find a way to stay in the game for the coming few years if the markets slump. Obviously equities provide the better returns but they are also the most volatile asset class. Bonds provide lower rewards over the long term but offer stability and help small investors to ride out the storms.

Finally, thanks to 'The Accumulator' for this article on the subject. I note that for their 'Slow & Steady' ongoing demonstration portfolio, the UK gilts element of the portfolio is represented by Vanguard UK Government Bond Index with OCF of 0.12% and this accounts for around one third of the total portfolio weighting. It's likely this is one I will go for also or possibly the ETF version (VGOV) which has slightly lower charges and may work out better with my broker on portfolio charges which are capped in my ISA for shares and ETFs.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!


Wednesday, 22 April 2020

Google - Portfolio Addition



Following on from my foray into the US market and my acquisition of Microsoft earlier this month, I have now added Google's parent company Alphabet to my portfolio.

I guess everyone who uses the web will be aware of what Google does - it is responsible for over 90% of everything we search for. This dominant position means it can generate huge amounts of revenue from advertising - firms will pay handsomely for their product or service to appear at the top of the list of search results. We basically live in the Google age where information and data are sources of power and influence.

I used their Blogger facility to create my diy investor blog in 2013. I use their Gmail service (1.4 billion users) as well as many other offerings - Google Maps, Google Drive, Play Store to search and download apps, watch videos on YouTube etc. etc.

One example of their ubiquitous influence (one of many) is Spotify which claims to have changed the way we all listen to music. It is clearly very successful with over 250 million users, around half of whom pay a monthly subscription. But Spotify, like all but the very largest tech companies (Apple, Amazon), relies on Google to host its infrastructure. Every time you hit play on a song, Spotify pay a fee to Google. In other words, companies like Spotify can only exist and grow due to the infrastructure created by the dominant giants of this new technology age like Google.

Climate

Over the past few years Google has invested billions of dollars to make its operation more carbon neutral and now operates its vast multi-billion $ business entirely from renewable energy. That's taking 5 million tonnes of carbon out of the atmosphere every year - the equivalent of taking one million cars off the road.

Google is the world's largest corporate purchaser of renewable energy and have been working hard for several years to make their extensive data centres as efficient as possible. Whilst global demand for cloud computing has rocketed in recent years, this efficiency drive has resulted in no additional energy usage. Their data centres account for around 1% of global electricity use and all of this is from renewables. They claim to deliver seven times more computing power compared to just 5 years previously but with the same level of energy.

Here's their latest 2019 Environmental Report.(pdf)

In a recent development, Google have rolled out their Environmental Insight Explorer to around 100 global cities providing high resolution data to monitor greenhouse gas emissions and enable action to be taken to reduce CO2 emissions. 

Furthermore, the EIE team have analysed data from 3,000 cities to provide emissions insight from 95 million buildings and 3 trillion km of travel. They found that if these cities were to maximise their solar potential they could generate over 1,000 GW of renewable energy. It's with data like this that governments and cities can develop policies in conjunction with local communities and business to combat climate change.

It seems to me that Google are taking their climate responsibilities seriously however, like Microsoft, they have been criticised by the likes of Greenpeace for their relationship with big oil by providing AI and cloud technology to help locate better drilling sites.  Hopefully Google will iron out this apparently inconsistent position and pursue more sustainable deals.

Latest Results

The company has recently released strong results for the full year 2019. Revenues increased by 18% to $162bn - the lion's share was provided by Google search at $98bn with contributions of $15bn from YouTube ads and $9bn from Google Cloud.

The company is highly cash generative and has reinvested lots of this capital into building its cloud operation over recent years to compete with Amazon and Microsoft. The group finished the year with net cash of $115bn. They do not pay dividends but use some of the cash for share buybacks which benefits shareholders.

The shares have done well in recent years hitting an all-time high point of $1,500 in February before retreating sharply due to Covid-19. I added the shares to my ISA with AJ Bell at the price of $1,230 (£1,000 approx.) earlier this week. I expect further short term volatility but think the longer term outlook is very positive. In the light of the dramatic fall in global oil prices, I am hoping the likes of Google and Microsoft will start to review their ties with the oil majors such as Exxon and Chevron and decline deals which compromise progress towards net zero carbon emissions by 2050 in accordance with the Paris Agreement.

3 Yr Comparison v FTSE All Share Index
(click to enlarge)
The current coronavirus pandemic has resulted in stay-at-home lockdown for millions of people all around the world for several weeks, maybe months. Suddenly there is huge interest in tools that help us all to maintain contact, run a business from our bedroom and for video conferencing. Even our parliament has agreed to trial this new way of doing business. Google has been updating its platform Google Meet and integrating this with Gmail in response to the success of smaller rival Zoom. When these restrictions are lifted in the coming months, it's very likely that many businesses, organisations and people all over the world will want to continue with this new technology - we will see far more working from home, far more meetings conducted via online video. This will be yet another expanding market to boost the likes of Google and Microsoft.

Of course I already hold Google and Microsoft in my Polar Cap. Technology trust. Together they make up 17% of the trusts portfolio but as the trust only accounts for around 3% of my portfolio I wanted to increase my exposure with these individual shares.

The shares have rewarded holders over the past decade with a return of 400% which equates to an average of 17% each year. Whilst that is not likely to be repeated over the next ten years, I would not bet against it!

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation. Individual shares usually carry more risk than collective investments such as index funds - always DYOR!

Monday, 20 April 2020

My Strategy is Evolving...2020 Update


We're in the midst of the Covid-19 lockdown. It started on 16th March and could well continue for several more weeks so, apart from my daily walk, I have lots of time on my hands and I'm busy doing not very much - luckily the weather has been good....which a bit ominous as it's only April.


Whilst the coronavirus pandemic is dominating the news, the climate crisis has not gone away. Following on from the extensive bushfires in Australia at the end of last year, Europe has just recorded its warmest Winter since records began. Average temperatures for the three months to end February were 1.4C above the previous warmest period recorded in 2015/16 and 3.4C warmer than the 30 yr average for 1981-2010.

If the Covid response is teaching us anything, it's that it's usually a good idea to take notice of the science and change our patterns of behaviour to minimise the global threats. President Macron suggested recently that if the world can do the unthinkable to their economies in an effort to confront the coronavirus, then surely it can do the same to arrest catastrophic climate change. Clearly the climate crisis is an existential global threat - i.e a threat to human existence. The way we invest our capital is just one of the big challenges that must be addressed to move towards a more sustainable world order.

As it's a couple of years since I last reviewed my investing strategy and my focus has certainly moved in relation to climate change, I thought maybe it's a good time to update on where I am going with it. Obviously any strategy needs to be flexible and adaptable to changing circumstances and needs...nothing is set in stone.

Looking back to early 2013 when I started this blog, it is clear there has been quite a few changes. Back then I was bridging the 10 year gap between early retirement and state pension and focussed on a portfolio of individual higher yielding UK shares combined with a ‘basket’ of investment trusts to generate the natural income I required.

By 2016 I was becoming attracted to the globally diverse multi-asset approach and the individual shares were sold along with some of the investment trusts. They were replaced by a large portion of Vanguard Lifestrategy and HSBC Global Strategy index funds.

In 2018, my circumstances changed as the state pension kicked in which means I have no need for income from my investments. Later that year I was re-evaluating my strategy in the light of the growing threats from climate change. I was becoming increasingly uncomfortable generating returns from a portfolio of passive index funds which inevitably hold a large proportion of fossil fuel companies such as Shell, BP and Exxon who continue to extract more and more oil which we just cannot afford to burn any longer and which continue to add to global warming.

The Transition

By early 2019, I had put my index funds under the spotlight and decided to remove the big oil companies and the banks which fund their activities. In May 2019, I posted a lengthy article which brought together my thinking on the important subject of climate change and which I regard as by far the most important article posted over the previous six years. I think it was at this point I decided to fully commit to the future and transition to a fossil-free portfolio.



There are many reasons why I was attracted to low cost passive investing but sadly I have come to the conclusion that, as it stands, it is unsustainable so long as it continues to treat the fossil fuel companies in the same way as the rest. As investors, we are part owners of everything we choose to hold in our portfolio. I just cannot continue to own these multinational oil companies which feature prominently in all the passive index funds - in the full knowledge of the fact that what they are doing will result in an uninhabitable planet by the end of this century. I am sure there will be many people who feel the same way.

My critique of passive investing is set out in this article from earlier this year. As for the ESG funds, I came to the conclusion that holding a bit less of an oil company exploiting the Arctic for more and more oil that we can't afford to use is just not going to cut it for me.

It would be good to have the option of a climate-friendly global index fund but so far there are no such funds available which meet my requirements. In the absence of such funds, I have decided to build my own fossil-free portfolio. So, the Lifestrategy and HSBC index funds were sold and replaced with a mix of renewable energy infrastructure trusts such as TRIG and Greencoat UK Wind. I have also added some stand-alone shares with the likes of Orsted, National Grid and some smaller company shares such as ITM Power and AFC Energy. My portfolio became fossil-free in September 2019.

These currently make up just under 90% of my portfolio and are listed here. I have retained three other investment trusts - TR Property, Mid Wynd and Polar Cap Technology which together make up the remainder.

Obviously it's early days but I was encouraged by the performance of my 'green' portfolio last year with a total return of 23.5% compared to 17% for the FTSE 100.

Obviously one of the big advantages of a globally diverse, multi-asset index fund such as the Vanguard Lifestrategy is the ability to manage risk. During the inevitable volatile periods such as we have seen with the Covis-19 pandemic, it's much easier to ride out the storm with a mix of 40% equities and 60% bonds which are rebalanced on a daily basis. Over the Q1 of 2020, the FTSE 100 was down 25% whereas the VLS40 was down just 6.5% and the VLS60 down 10.4%.

So, there is a conscious trade-off made by moving away from the traditional mainstream global index funds which contain all the fossil fuel companies (and will always do so) and my climate-friendly niche portfolio. Of course I have considered a half-way compromise - say, moving just 20% or 30% of my portfolio to the green funds but this approach would not sit easily with my personality. I think I am basically an all or nothing sort of person! If fossil-free is the right way to go then fully commit.

The Next Phase

Therefore the initial 10 year plan had been to generate income from my investments to bridge the gap to state pension...and that part of the journey became mission accomplished in 2018. My state pension is currently £9,000 p.a. and should keep pace with inflation.

I have always subscribed to the philosophy of 'keep it simple' - I enjoy the challenge of living with less; I hold no desire whatsoever to make a fortune, to become a millionaire. I seem to always have had an ability to live within my means so, whilst my lifestyle remains modest - some would say frugal - this is a deliberate choice. I accept most people would happily spend the additional money on more holidays, clothes, new car maybe and a host of other delights. However I choose voluntary simplicity of lifestyle and spending money on these things would not result in greater happiness so would be a bit pointless.

Plato said "The greatest wealth is to live content with little". The reality is that when you have enough...and you're content, there's no point trying to get more and more.


I now have a guaranteed income and therefore really have no great financial need to continue investing but I like to think I am supporting the areas and companies that are trying to address our climate emergency - renewable energy in particular. 


However, in the light of the global market turmoil brought about very suddenly by the Covid-19 pandemic, I am wondering how the markets will respond to the much greater threat of climate breakdown in the not-too-distant future if we fail to address these much bigger challenges. The big oil companies, airlines, holiday and leisure sectors have been casualties over the past month or so and the technology and renewable energy have held up reasonably well so far. If there was a green swan event in the future, I'm not confident any sector would fare well given the interconnected nature of our economies and lifestyle. Maybe now is a good time to reintroduce some government bonds.

So, some further reflection needed over the coming year or two and let's see if Trump gets a second term; let's see how the big oil companies respond to their pledge to move towards carbon neutral; let's see whether policies to address the climate crisis and a more sustainable finance system can ensure we do not return to business as usual post Covid.

Feel free to share any thoughts with others in the comments section below - has the coronavirus pandemic changed your approach to investing...how is your strategy evolving?

Wednesday, 8 April 2020

Microsoft - Portfolio Addition



Microsoft is one of the largest companies in the world with a current market cap. of over $1 trillion. It was founded in 1975 by Bill Gates and Paul Allen and went public with its IPO in 1986. It is probably best known for its software products Windows, Office/Microsoft 365 and also gaming console Xbox.

Obviously the early success was down to the dominance of their Windows operating system but more recently the focus has been on building cloud computing systems via Azure which will involve a lot of capital expenditure - over $15bn in the past year. This level of spending cannot be matched by many others - Amazon and Google are the main competitors - which should give the company a big advantage or 'moat' in the future. 

According to the most recent Q2 results, Cloud revenues increased by 27% to $11.9bn and generating profits of $4.5bn. It will be interesting to see how Covid-19 has impacted revenues in the coming weeks.

I think the shares continue to be attractive for long term growth however what has prompted me to add this to my portfolio is their strong commitment to reducing carbon emissions and tackling climate change. When the big global players like Microsoft start to take this issue seriously, it will have a huge knock-on effect so I appreciate what they are trying to achieve and want to support such companies.

Climate & Environment

I placed MSFT on my watch list in January following the announcement that it was planning to become a carbon negative company by 2030 (10 years ahead of Amazon) and would actually go further and by 2050 would remove all the carbon it has produced since 1975.

All data centres, buildings and campuses will be powered by 100% renewable energy by 2025. All vehicles will be electric by 2030 and over the next decade they will reduce Scope 3 emissions by over 50% via the introduction of an internal carbon tax and incentivise all suppliers to reduce their own emissions.

They have set up a new Climate Innovation fund to invest $1bn over the next four years into new technologies to tackle the climate problem.

The Carbon Reduction article posted on Brad Smith's blog is well worth a read as it provides an excellent summary of the historical context of the climate issues - economic growth, CO2 emissions and rising temperatures - as well as the solutions required on a global scale and the steps required to take responsibility.

"The scientific consensus is clear. The world confronts an urgent carbon problem. The carbon in our atmosphere has created a blanket of gas that traps heat and is changing the world’s climate. Already, the planet’s temperature has risen by 1 degree Celsius. If we don’t curb emissions and temperatures continue to climb, science tells us that the results will be catastrophic".

(click to enlarge)

However it's not yet clear how the company will address the criticism for their relationship with the big oil companies. I don't see how they can maintain credibility with the new climate policy whilst continuing to supply the likes of Exxon, Shell and BP with AI tools for pinpointing better drilling locations and speeding up refinery production....something has to give!

(Since posting, this Guardian article provides an interesting overview)

Microsoft is one of just 180 global companies (out of 8,400 assessed) to achieve the 2019 'A' list on climate change from CDP.

The share price has seen a good run over the past year rising from $120 last April to $190 in February. Obviously it has retreated over the past month due to Covid-19 but appears to be bouncing back just as swiftly. The shares were purchased in my ISA at the price of $164.

3 Yr Comparison v S&P 100 Index
(click to enlarge)

"Reducing carbon is where the world needs to go, and we recognize that it’s what our customers and employees are asking us to pursue. This is a bold bet — a moonshot — for Microsoft. And it will need to become a moonshot for the world".

"It won’t be easy for Microsoft to become carbon negative by 2030. But we believe it’s the right goal. And with the right commitment, it’s an achievable goal. We will need to continue to learn and adapt, both separately and even more importantly in close collaboration with others around the world. We believe we launch this new initiative today with a well-developed plan and a clear line of sight, but we have problems to solve and technologies that need to be invented. It’s time to get to work".

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation. Individual shares usually carry more risk than collective investments such as index funds - always DYOR!



Wednesday, 1 April 2020

Portfolio Review to end March 2020


I don't usually review my portfolio at this point however, given the dramatic start to the year, it seems worthwhile taking stock and seeing how the dust has settled.

We are clearly now in the midst of a crisis - pubs, cafes, theatres and gyms ordered to close; all sporting events on ice with the Olympic Games postponed for a year; the chancellor borrowing hundreds of billions to support businesses and pay 80% of everyone's wages; the Bank of England base rate reduced to the lowest ever 0.1%; the death toll rising exponentially - currently up 381 563 in the past 24 hrs to a total of 1,800 2,352...these are extremely worrying times.

Before the outbreak, the OBR were forecasting government borrowing for the coming year 20/21 at £55bn. The scale of increased borrowing is currently unclear as we don't know how long before business as usual resumes but the estimates are that borrowing could easily exceed £200bn next year. As with the financial crisis of 2008, the long term effects of this current crisis could be just as long-lasting.

Naturally there has been extensive volatility on the markets these past few weeks - possibly the worst I have seen. I must admit that I underestimated the impact this would have when the outbreak started in January. In early March the FTSE saw its largest one day fall -10.8% since 1987 with a similar pull-back in the US where the Dow Jones recorded its biggest one day points fall of over 3,000. Then, a week later, the FTSE records its biggest one-day points jump of 452 and the Dow Jones climbs a record 2,100 points and the biggest gain for 90 years...remarkable...the global markets don't get any more dramatic than this

The price of Brent Crude crashed from a high of $60 in February to under $25 in the space of just a couple of weeks. The oil stocks have been particularly hard hit with the likes of Shell and BP down around 60% at one point... all in just the past month. So, I am very pleased I decided to make my portfolio fossil-free last year. These oil majors make up a large part of the FTSE 100 and the index is down around 25% since the start of the year whereas the S&P 500 has retreated just 18%.
  
Portfolio Additions

Of course, these dramatic market drops provide an opportunity to pick up a few bargains...be greedy when others are fearful! Unfortunately I am not so good at timing these acquisitions, jumping in far too quickly - I added SSE in late Feb at £16...a couple of weeks later it was down to £12, Ceres Power at 427p...dropped to 250p and then a week later added Unilever at £43.40, National Grid at 875p, repurchased Legal & General at 168p and then Smart Metering for 558p.

I have also topped up various existing holdings as the market tanked including TRIG, UKW, INRG and TR Property.

Bargains exist in this market. Opportunity seekers waiting for the “right” time to buy will never find it. At some point, just do it. You’re practically guaranteed to be wrong in the short term, but right in the long term. It just takes courage. (Novel Investor)

So, quite a few additions to my portfolio over recent weeks, all of which stemmed from the market falls. For the time being, my spending spree has come to an end as all the spare cash has now been deployed but of course the new ISA allowance starts next week.
  
Portfolio Returns

The FTSE 100 started the year at 7,542 and following the sell-off during just a single month, dropped 1,870 points to 5,672 if we add back in say a further 1.0% for dividends paid, this will give a ballpark total return loss of 23.9% for the past 3 months.
  
Although no longer a part of my portfolio due to fossil fuel holdings, the Vanguard Lifestrategy 60 fund is a diverse mix of global equities and bonds and provides a good benchmark for a balanced global portfolio. The fund is down 11.1% over the year to date (the VLS 80 down 15%).
  
Green Funds

These holdings now make up 90% of the total portfolio and appear to be holding up reasonable well compared to the wider market.

The better returns have come from ITM Power up 69%, largest share holding Orsted up 5% and Proton Power 15%. My largest renewable energy trust TRIG has fared reasonably well and is down just 4% including the quarterly dividend paid today. Recent addition Smart Metering is up 15% and Legal & General up 16% however these have been offset by SSE down 14% and Ceres Power down 16%.

The total return including dividends for my green allocation is -1.5%.

The Complete Basket

My only other holdings are TR Property -25% and Mid Wynd IT -8%.

I have just updated my spreadsheet with the returns including dividends of my actual investment portfolios - sipp flexi drawdown and ISAs - for the 3 months to end March.

As a whole, the portfolio has delivered a total return of -3.2% over the past 3 months.

Conclusion

It is getting on for 18 months since I started to move my portfolio towards more climate-friendly investments and it is reassuring to see they have held up reasonably well during this market storm. I certainly feel much better investing in the likes of Orsted, a global leader in offshore wind, rather index funds with their fossil fuel companies and the big banks that finance their operations.

I imagine there will be volatility in the markets for some weeks or even months as this pandemic unfolds but at some time, hopefully sooner rather than later, optimism will return, the restrictions will be removed and we get back to something like normality.

What we are left with is the experience of a sudden market crash and the feelings it brings. Fortunately, storms like this don't come around very often - maybe once a decade or so but when they strike it's often very sudden and there is no time to react. As usual it takes courage to invest during such a dramatic downturn, patience to ride out the storm and humility to accept that the markets will often make our decisions to buy or sell appear foolish.

"Survival as an investor over that famous long course depends from the very first on recognition that we do not know what is going to happen. We can speculate or calculate or estimate, but we can never be certain". (Peter Bernstein)

For me there are a few positives from all this:

1. The pandemic has shown that it is possible to change global-scale patterns of human behaviour very quickly when threats appear. I am therefore hopeful that a similar response can be made in relation to the climate emergency. I suppose the acid test will be whether governments and enough people appreciate the scale of the climate threat in the same way as Covid-19.

2. The crisis is bringing out the very best in us - 2,000 former doctors and nurses return to the front line whilst 750,000 volunteers sign up online within a couple of days - and I believe it will help to unite the country after the division of recent years due to Brexit.

3. The traffic is much lighter, air quality has improved and it's so much quieter everywhere - something I really appreciate and such a contrast to normal times.

But investments aside, what I think I take away from the crisis is the increased sense of valuing the things that really matter - the health and well being of family and friends, a roof over your head, a warm comfortable bed at night, clean safe drinking water, food in our shops and supermarkets (despite some shortages at times), a first class national health service, a walk in the fresh air and just hearing the birds sing and see the green leaves of the hawthorn and the wildflowers. It's good to keep a sense of appreciation of these simple things we all often take for granted and retain a sense of perspective.

"All of humanity's problems stem from our inability to sit quietly in a room alone" Pascal.
(Click to enlarge)

Stay safe, stay at home wherever possible and help to take the pressure off the NHS which will be tested to the limits these next few weeks.

Feel free to share your thoughts on the crisis...and if you keep track of portfolio returns, feel free to leave a comment and share with others how your investments have fared over recent weeks.