Sunday, 2 January 2022

Portfolio Review - End 2021

Another year rolls by and this is now my 9th end of year review since starting my blog in February 2013 

Despite the extensive roll-out of the vaccine, Covid and its delta variant has continued to hang around and cause significant disruption. However the markets generally have recovered from the shock of 2020...and then along comes Omicron and yet another spanner in the works.

I guess this virus and all its variants are going to be around for many years and we will just have to learn to live with it and get our booster jab each year.

Climate Change

While Covid has dominated the past couple of years, the climate crisis has continued to get worse and the world gets warmer each year. 2021 is no exception... July was officially the warmest ever month in our history, we've just had the warmest New Year on record... we saw the devastating floods in Germany, Belgium and China - hundreds killed, many more missing and thousands made homeless. The increasing temperatures has also brought an increase in wildfires - Siberia, California, Turkey and Greece. Sardinia recorded Europe's highest ever temperature of 48.8C in August.

Governments around the world are starting to take the issue more seriously following the 'Code Red' warning in August from the IPCC. However, the climate scientists have delivered warnings for many years so I really do not have much confidence in the ability of politicians to act with urgency and in co-operation around the world to tackle this huge existential problem. But I am still hoping for the best and with progress being made at COP26 I think everyone is more aware of the importance of the challenges we face and the need to make some significant changes to many aspects of our everyday living. I am looking forward to seeing the new film "Don't Look Up". 

Another concern is rising levels of debt...the monetary and fiscal response to the pandemic was 3.5x higher than the response to the 2008/09 financial crisis. Global debt is now at its highest since the end of WW2 and it will take at least the coming decade to bring this down to more sustainable levels. This may be manageable so long as interest rates remain low and I am sure central banks will try to keep it that way but we are seeing inflation starting to rise and this could create instability in the markets and much higher interest repayments.

As a result of the climate situation and the significant increase in debts arising from Covid lockdowns, I decided to take stock and re-evaluate the potential impact to my investments and made some changes (see below). 

I published my "Climate Emergency" book at the start of 2020 and I am just about to publish the updated second edition!


So we have seen some volatility due to Covid and its variants and we have the significant threats posed by the climate crisis. We are living in uncertain times which throws up even more challenges for small investors. We need to have the strategies in place to deal with this uncertainty and the emotional resilience to stick with the plan when things get choppy.

It's therefore important to know yourself, your appetite for risk...and tolerance for losses. Not to get over-confident when things are going well and conversely, not to get too despondent and give up when the markets turn against us.

A well-thought through plan, attention to asset allocation and patience will go a long way counter the uncertainties that will always be present for investors.


So, after a rollercoaster year in 2020 due to Covid, global markets seem to have recovered well this year. Last year I had an unexpected exceptional run with my green portfolio and a return of over 50%...this year the bubble has deflated and my renewable energy and hydrogen stocks have fallen back. Although this was anticipated, it was still difficult to see portfolio valuations fall by 20% at one point.

It's now over 3 years since I started the move away from fossil fuel investments which inevitably include the global multi-asset index funds such as Vanguard Lifestrategy. I have now adopted a more focused theme for my portfolio which are

1. sustainable fossil-free & climate-friendly

2. technology.

3. defensives

The third element has been reintroduced this year as I realised the 100% equity carried too much risk as we face the uncertainties of global debt, inflation and how the global economies respond to climate change. The past decade has been very rewarding but maybe now is the time to remember Warren Buffet's rules of investing...Rule #1...don't lose money! Rule #2...never forget rule #1.

Charlie Ellis, author of "Winning the Loser's Game" has a strategy of winning by not losing. He uses an analogy of tennis in which you win not by hitting spectacular winners close to the line, but by constantly keeping the ball in play and making your opponent keep hitting one more shot. I think Djokovic must have read the book!

Since the last financial crisis in 2009, cash returns have totalled a measly 6% on average whereas UK RPI has been 39% so a 24% devaluation...there's more than one way to lose money!

So, this year I have sold around 40% of my equities - green and tech - and moved the proceeds into more defensive assets such as gold, precious metals, index-linked sovereign bonds and reintroduced the Personal Assets Trust which is now managed by Troy.

Portfolio Returns

I have just put in the final figures for the spreadsheet of my investment portfolios - sipp flexi drawdown and ISA - for the full year to 31st December.

The FTSE 100 has recovered this past year after a poor performance in 2020 and has risen from 6,460 to 7,384 and a total return of 14% for the full year. As a matter of interest, the FTSE 100 finished at 6,749 when I did my first annual review to the end of 2013. Not much progress over the past 8 years!

The Vanguard Lifestrategy 60 fund is a diverse mix of global equities and bonds and although I have disposed of my holding, it provides a good benchmark for a balanced global portfolio. The fund is up 9.9% over the past year and the VLS 80 is up 14.4%

Technology - Over the 12 month period, I sold Ocado and Zoom and have taken part profits on Google and Microsoft which have had a really good run in 2021 with share price returns of 67% and 54% respectively. Tech now accounts for just under 10% of my portfolio.

The total return for my tech sector over the year was 29.5%. Another good year after the 26% return in 2020.

Green - After triple digit gains for many of my green portfolio holdings in 2020, I think it was inevitable that there would be some pull back this year. Over the year I have taken profits on quite a few holdings - NIBE, Orsted and Vestas and sold Nel in August as it breached my stop-loss and with a 50% loss (ouch). These now represents 55% of the total...down from 80% at the start of 2021 After a stellar year in 2020 and gains of 52%, the green sector has come back to earth with total returns down -13.9% ...but still averaging just under 21% in each of the past three years.

The better returns have been provided by NIBE +85%, iShares World SRI +22.5% and Gresham House Energy Storage +23%.

The Complete Basket

As a whole, the portfolio has delivered a total return of -6.5% over the past year which takes account of all dealing costs. Here's my portfolio returns covering the past 10 years. 

2012 15.5%

2013 13.3%, 

2014   5.4%, 

2015   2.7%  

2016 11.4%

2017 11.3%

2018  -2.7%

2019  21.9%

2020  43.8%

2021  -6.5%

A sum of £1,000 at the start of 2012 has more than doubled to £2,800 and an average annualised return over the past 10 years of 10.8%.

Past 10 Years (click to enlarge)


Obviously an average annualised return of over 10% over the past decade is very acceptable. It could have been much better this year had I locked in returns from my green sector...investing is so much easier through the rear view mirror! Of course, patience and the ability to stick with the plan are key to successful investing and that has certainly been a lesson to be reminded about this year. The clean energy and hydrogen sectors have had a bumpy 12 months but I am confident they will provide a good return over the coming years as we transition the global economy away from fossil fuels to address the climate crisis. Return on my investments have been positive in 8 of the past 10 years.

Obviously as a grandfather to five, I am concerned about the climate situation and how badly it will impact the world over the coming years. The devastating images we have seen these past couple of years - wildfires over huge areas of the west coast states of the US and Siberia, devastating flooding and disappearing polar ice caps should  be a warning of what's coming down the line for the planet if we carry on with business as usual. Hopefully in the coming year we will get some real leadership after COP 26 and some real action to speed up the transition away from fossil fuels.

I am in no doubt that the risks to the global economy have increased this past 12 months  which is why I have moved my portfolio to climate-friendly alternatives. However, if the climate continues to get worse, the global markets may well become unstable and the better green companies could be dragged down with the rest.

So, whilst I have been directing my resources towards those areas that are trying to promote a sustainable planet and avoiding the fossil fuel companies, I also trying to preserve capital in the event of a downturn.

How we tackle the climate crisis over the coming few years will be the defining story of our generation. I hope the momentum of the past year can build in 2022 and we can speed up the transition away from fossil fuels and avoid some of the dire consequences which lie in store with warming over they say, it's going to be very interesting!

Finally, wishing all a happier New Year and thanks to all for dropping by during the past year... all best wishes for 2022.

As always, if you keep track of portfolio returns, feel free to leave a comment and share with others how your investments have fared over the past year.

Monday, 6 December 2021

AJ Bell - Portfolio Addition

I've held my SIPP with this platform (previously Sippdeal) for the past 15 years or so and in 2011 I transferred my ISA from Interactive Investor. Over that period I have been very happy with the service provided and tend to follow news and progress especially since they went public a couple of years back.

Established in Manchester in 1995, the company has grown steadily and is now the second largest platform in the UK with a market cap of £1.5bn. They became a FTSE 250 company in December 2018.

I was very pleased that their founder and CEO, Andy Bell agreed to write the foreword to my "DIY Pensions" book.


The company have recently released results for the full year to end September 2021 (link via Investegate),

This has been a record year with assets under management growing 29% to £72.8bn, profits up 13% to £55m and earnings per share up 13% to 10.67p.

As a result the dividend has been raised by 13% for the year to 6.96p and in addition there will be a special dividend of 5.0p payable in January. This gives a yield of 3.2% at the current price.

New App

In 2022, they will be launching their new low cost app - dodl - with no charges for buying/selling and an annual charge of just 0.15% compared to 0.25% + dealing for Youinvest. It will offer the full range of ISA, Lifetime ISA, Pension and General (Non-ISA) accounts and existing customers will be able to consolidate existing investments onto the new platform.

However, the range of investments will be initially limited to around 50 of the FTSE 100 shares and a further 30 or so funds including the Vanguard Lifestrategy and their own low cost index funds. US stocks will be added sometime later and other shares, investment trusts and funds according to customer demand.

This move is clearly a response to the competition from the fintech offerings from the likes of Freetrade and Revolut. In the US, the popularity of Robinhood has forced some brokers to lower their commission rates which is obviously good for investors.

The minimum charges for each account will be £1.00 per month however, unlike Youinvest, there will be no maximum cap. Charges for the average ISA with say £50,000 would be £75 p.a. compared to Youinvest charges currently £87.50 (funds) or £42 (shares/ITs) plus dealing charges. I currently pay £9.95 for each share purchase/sale.

I will need to do some analysis to see whether I would be better off with the dodl platform or carry on with Youinvest as normal...clearly it depends on the size of the portfolio and the likely frequency of trades. It will obviously be attractive to new investors with a few hundred pounds to 'invest' who will likely do a lot of buying and selling...because it's free. Whether that will produce good long term returns is debatable!

3 Yr Share Price compare HL v AJB
(click to enlarge)


I was surprised to see the share price fall back some 9% after the results were released. Maybe there is some concern about future profitability with the commission-free app. Anyway, I am hoping that the dip will be temporary.

This seems to be a well-run ship...record new customer numbers, record revenues and profits, new products, high retention rates year on year, 17 years of consecutive dividend growth and strong balance sheet with no borrowing.

I seem to recall being in receipt of some shares following the float but they were possibly sold to release funds for my house purchase. I have some spare proceeds from other disposals so decided to take advantage of the share price dip last week. The purchase price was 370p and the addition accounts for just 2% of my portfolio. 

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!

Thursday, 25 November 2021

Personal Assets Trust - Update

This 'Steady Eddie' capital preservation investment trust was added to my portfolio back in 2013...sold a couple of years later but then re-purchased in May last year as I was re-evaluating asset allocation following the Covid-19 shock to global markets.


The trust has this week published results for the half year to end October 2021 (link via Investegate)

Over the past 6 months, net assets have increased by 5.9% (total return) compared to 5.4% for the FTSE All Share index. Over the past 3 years the returns were 28.8% and 17.6% respectively. The trust's share price is maintained close to NAV and the price has increased by £22.00 to £493 since April.

At the end of the period, asset allocation remained defensive with liquidity at 59.3% (cash, gold and bonds etc.).

I was really pleased to note that the trust has now sold its last tobacco holding, Philip Morris which was previously my main concern. I was hoping they would consider dropping this unethical holding and I am sure my email correspondence on the subject last year swung the decision!  They also disposed of Buffett's Berkshire Hathaway, one of the reasons being the management have not yet fully grasped the ESG nettle.

3 Yr Share Price v FTSE All Share
(click to enlarge)

Commenting on the results, investment manager Seb Lyon said:

"For the past two decades, with a few brief exceptions, we have lived in an era of benign inflation.  Central banks, if anything, have been fighting deflationary shocks since the Asian and Long-Term Capital Management crises of the late 1990s and, more recently, the Great Financial Crisis of 2008, followed by the Eurozone debt crisis of 2011.  Investors may be ill-prepared for rising interest rates; fixed income investors offered low nominal and negative real returns are being driven to higher-return equities, which supposedly offer 'real' protection.

The discount rate, the basis of which is determined by the 10-year US Treasury yield, is key.  Equities have been supported by four decades of falling interest rates.  Should this dynamic change, investors may be in for greater volatility as the support from low rates is questioned.  This raises uncertainty over the value of the expected growth in earnings from equities, which becomes less precious when eroded by inflation.  A battle lies ahead between the 'inflation-protecting' qualities of stocks and the threat of nominal interest rate rises in the future. There is a risk that some 'alternative assets' such as highly geared real estate similarly may not offer much defence.

We consider these risks when structuring the Trust's portfolio.  Gold bullion and inflation-protected securities provide a foil for our equity exposure, which in turn is focussed on durable, profitable companies that continue to grow and have pricing power.  Looking ahead, the Trust's liquidity will provide both downside protection and the ability to add to our equities as opportunities present themselves, as we did in the first quarter of 2020".

The trust has paid a small dividend of £5.60 p.a. (paid quarterly) for several years and this is likely to continue for the foreseeable future. This gives a current yield of 1.1%.


Currently equities make up 40% and top portfolio holdings include Microsoft (6.2%), Google (6.0%), Unilever (3.6%), Nestle (3.6%), Visa (3.4%) and Diageo (3.2%).

US index linked bonds make up just over 30% with cash and UK treasuries a further 21%. Gold accounts for just under 8% of the portfolio.

The shares were re-purchased for my portfolio at £432 last May and have advanced to currently £501... just off their all-time high point.

The US markets continue to march onwards & upwards but with rising debt levels resulting from Covid, inflation on the rise and the threats posed by climate change, I think in these uncertain times it's probably a sensible idea to think about the potential downside of the markets and with an eye on capital preservation. I have also added the Trojan Ethical fund to my green portfolio which is managed by the same stable on very similar lines. 

I topped up my holding in both earlier this year and these two combined make up around 12% of my portfolio...up from 6% at the start of this 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!

Friday, 19 November 2021

COP26 - What Was Agreed?

Last month I took a look at what we could reasonably expect from the COP26 gathering in Glasgow. To be honest, I was not really expecting a great deal of progress from our world leaders given their track record over the past 25 years. Now the dust has settled, let's have a look at progress...

Well, we've had two weeks of intense climate talks, representatives from 200 countries, thousands of demonstrators, wall to wall media coverage what has all this achieved? Are we on track to limit global warming to 1.5C?

Here are some of the main points:

* Over 100 countries representing 85% of the world's forests signed up to an agreement to protect the world's forests from illegal logging and land degradation by 2030. Importantly, this included Brazil.

* India, the world's third biggest CO2 emitter pledged to get to 50% renewable energy by 2030

* The US, UK and EU have pledged to cut methane emissions by at least 30% by 2030

* 40 countries including the US, EU, China and India are signed up to a UK plan to speed up affordable green technology worldwide by 2030. The 'Glasgow Breakthrough' covers clean power, road transport, steel manufacturing, hydrogen and agriculture which together are responsible for 50% of global emissions.

* Coal accounts for just over one third of global energy and is the single biggest cause of global warming. 40 countries agreed to phase out coal use by 2040 but some large coal users refused to sign up including China, Australia, India and the US so this is a big disappointment. An agreement to 'phase out' coal was watered down to 'phase down' at the last minute.

* There was no agreement on the phase out of oil and gas but merely a call to phase out 'inefficient' fossil fuel subsidies.

* More countries signed up to the 'Beyond Oil & Gas Alliance' BOGA. Initiated by Costa Rica and Denmark, it aims to build an international coalition of governments and other stakeholders to take practical steps to phase out oil and gas production. Other members include France, Sweden, Ireland, Portugal, Wales, Quebec, California and New Zealand. So far the UK has declined.

* By 2023, all UK listed companies will be required to set out their plans showing how they will move to a low carbon future in line with our 2050 net zero target.

* Having already missed the target for $100bn per year by 2020, they agreed to raise $500bn for poorer countries over the coming 5 years to deal with the transition to cleaner forms of energy and also for 50% of this money to be spent on adaptation to the increasing severity of storms and flooding and rising sea levels.

* The US and China - together responsible for 43% of global emissions - announced they would work more closely over the coming decade and increase efforts to close the significant gap to achieve the 1.5C of warming.

Analysis by the IEA suggests that if all of these pledges are implemented, and that's a big IF, warming would fall from the 2.7C pre-COP figure to 1.8C. Obviously a big step in the right direction but still not where we need to be. The general consensus however is that 2.2C to 2.4C is more likely at this stage which still leaves a big gap to be closed.


Unfortunately, despite all of these pledges, we are still nowhere near on track for 1.5C. I prefer to side with the analysis by Climate Action Tracker, which suggests we are currently heading for 2.4C by the end of the century...assuming all of the pledges are implemented which is never a given.

Of course, this has huge implications for investors both large and small. "Global warming above 1.5C presents irreversible, foreseeable and large scale risks to investors and financial markets" Rebecca Mikula-Wright, CEO AIGCC (link

The big problem is that whilst many countries have a long term ambition for net zero, they mostly lack a solid plan of how to get there so the long term pledges lack credibility. However, they did agree to come back next year (and the year after) with more ambitious climate plans (NDCs) to try and close the gap. Also, it is encouraging that the focus is now firmly on this 1.5C limit rather than 'well below' 2.0C.

Of course, 2.4C  is still a little better than the 2.7C projections before the conference so some progress is made and maybe they can get to under 2.0C next year but I still feel there is a lack of urgency and plans for action over the coming few years to 2030 which is the critical period. But it must be incredibly difficult to get consensus from 200 global countries.

The recent IPCC 'Code Red for Humanity' report suggested that 1.5C was still possible "but only if unprecedented action is taken now". Sadly, the global world leaders have so far failed to take sufficient notice of this warning, and so on we go with more or less business much as usual for the time being and of course more intense floods, more widespread wildfires and billions more spent on the after effects and adaptation.

So, did the gathering achieve the main objective of keeping 1.5C within reach? Well, I think just about although many commentators say it is hanging by a thread.

But I get the feeling that climate change has become more of a priority for some of the big world players such as China, US and EU and I feel a little more optimistic that there is a genuine will to address the problem. Whether they actually implement all these decisions will be crucial but I hope we will look back to Glasgow and see it as a big turning point in the battle to move away from fossil fuels and avoid some of the worst effects of the climate crisis which await a world should we fail to keep warming below 2.0C.

So, I am a little more optimistic than before and I continue to be inspired by the younger generation who are protesting and seem determined to find a way through to a more sustainable world order.

So, on we go to Sharm el-Sheikh, Egypt starting 7th November 2022 and COP27.

Over to you...what do you think about the climate issues and the COP26 gathering? Leave a comment below.