Wednesday 1 July 2015

Half Year Portfolio Review

Following on from my end of 2014 review, I have just reviewed my portfolios - sipp drawdown and ISA - for the past 6m to the end of  June.

There have been quite a few changes including the roll-out of the new pension freedoms in April and my revised investing strategy which has seen a move towards low cost index funds and ETFs which have replaced some individual shares and a couple of investment trusts.

In May we had the general election and the surprise outcome of a Conservative majority which confounded many commentators.

Earlier this month saw the launch of my new ebook ‘DIY Simple Investing’. I wrote a guest post for the Monevator site which went out earlier in the week.

The Markets

On the markets, the FTSE 100 started the year at 6,566, by March/April it broke through new highs above 7,100 and then went down over the past few weeks and ended the 6m period at 6,521 - a drop of  -0.7% - if we factor in say 1.8% for dividends paid, this will give a  figure of 1.1% total return for the half year.

The main story has been the uncertainty surrounding Greece and the possibility of leaving the Eurozone. The FTSE 100 is down nearly 7% in the past couple of weeks alone and it looks like the turbulence may continue for some time.

Of course, the UK listed market makes up less than 10% of the global market place so focussing on the FTSE 100 for example can give a distorted picture. The total return on world equity markets in GBP terms for the 6m to end June was 2.2%.


As I concluded in my recent review of investment strategy, the individual shares have proved to be the weakest link of my portfolio in recent years and I have decided therefore to reduce my holdings and focus more on the low cost index funds & ETFs.

It is therefore somewhat ironic, but I guess inevitable, that my shares portfolio has outperformed my collectives and fixed interest over the past 6 months.

Disposals include Imperial Tobacco with a gain of 10%, Reckitt & Benckiser also +10%, DS Smith +16%, Vimto maker Nichols +30%, Charles Stanley +15%, Diageo +7% and Sainsbury +7%.

Of the shares that remain in my portfolio, all have been affected by the recent sell-off over the past few days. However, a few have provided a reasonable return - Berkeley 41%, Sky 17%, Next 11% and Tesco 13%.

The total return from this sector was 10.2% which includes dividend income received of 1.9%.

Investment Trusts & Collectives

Most have lost quite a bit of momentum in the past week or two - the better performances have been provided by the larger trusts - City of London 5.4% and Edinburgh 3.9% and a solid half year from Finsbury Growth & Income trust up 7.8%. Once again the best performance was provided by smaller companies specialist Aberforth with a total return of 13.0%.

Two year ago I purchased the Vanguard All World High Yield ETF to use as a benchmark for the performance of my actively managed investment trust portfolio. The total return on this tracker over the past 6 months has been -0.7% This will be a handy benchmark against which to assess the equity part of my portfolio as a whole.

In March, I added the Vanguard UK Equity Income fund to my portfolio. The fund gives investors access to a broad range of around 140 dividend-paying securities from across the FTSE 350, while reducing the risk of being overly invested in a small number of high-paying shares or particular industry sectors by limiting the percentage of the index invested in any one company or industry.

I have just received my first half-yearly dividend of 397.56p per unit which represent an uplift of 7.4% on the equivalent payment in 2014.

In May, I replaced 3 of my investment trusts with the lower charging Vanguard Asia Pacific ETF - this should save me ~1.0% in charges each year. It has just paid a quarterly distribution of 14.17p per share.

The final addition has been Vanguard’s LifeStrategy60 which was purchased in my new ISA with Halifax Share Dealing in early June.

The total return for my collectives has been just 0.8% including income of 2.1%.

Fixed Interest

As ever, the PIBS and fixed interest sector has provided a steady and predictable income of 3.1% however capital values have declined by -0.8% leaving a total return of just 2.4% for the half-year.

The Whole Portfolio Combined

The returns have been boosted by my individual shares which makes a welcome change. However, these now represent a smaller percentage of my portfolio so the impact on the combined portfolio is not so high.

Total return for the entire portfolio of shares, investment trusts, index funds and fixed income is 3.6% which includes income of 2.4%. Over recent years, I have had very good returns from my investments so I am expecting some downturn at some point - maybe this year or next, I don’t really know. I am hoping my allocation to bonds and fixed interest will help to cushion the reversion and help me to ride out the volatility.

As ever, I would be interested to hear how others have done over the past 6 months - leave a comment if you keep track of your portfolio.


  1. Thank-you for posting you review Diy Investor.

    It is always the way, you dispose of holdings for them to go up. Its happened to me many times.

    I have given up monitoring capital performance and concentrate on dividend income growth by trying to choose good value shares with sustainable dividends.

My year is the tax year and my first quarter is 7% up on the same period last year when I aim for 3%-5%.

I have a portfolio of Investment Trusts and a few UK shares and the rest US stocks.
    I find the US holdings provide the larger percentage increases.

    Kind regards

    Louis Gunn

    1. Louis,

      Good to hear from you.

      The increase for your first quarter looks similar to the uplift in dividend on my Vanguard UK Equity Income fund.

      It is interesting you are finding the US shares are providing the larger increases as traditionally, the yield from the US market is less than the UK.

      Thanks for stopping by and good luck with your portfolio for the rest of the year.

  2. There is a certain irony that your individual holdings have outperformed the collective investments. Be interesting to see the outcome over a longer term.

    I have not yet fully reviewed my portfolio's performance. However, I suspect it--like yours--is chiefly driven by income rather than capital changes. If I get time, I will try and work it out!

  3. Thanks DD - I look forward to see how your returns work out - I guess the shares will have taken a hit in the past week or so but maybe the dividends are rolling in as expected!

  4. Hi John,

    I'm surprised you track capital gains and losses so closely. You're in income drawdown mode aren't you (if I remember correctly)? Isn't the stability of your dividend income paramount, rather than the random ups and downs of the market? Or do you just track things closely out of interest? (sorry for firing so many questions at you!)


  5. John,

    Yes, I am retired and invest mainly for income. I guess I have always kept track of my investments on a regular basis...maybe old habits die hard but I am not particularly wedded to any one way of getting the better one time I thought the individual shares, a la hyp was the way to go.. then a mixture of shares and income trusts..more recently, having done quite a bit of research for 'DIY Simple Investing', I am swayed more towards the index funds.

    As I make adjustments to my strategy, I find it useful to monitor progress and compare the returns of one style to another.. and as I am doing this, I may as well share progress on my blog.. if I am making mistakes along the way, hopefully others can maybe avoid them..often there are some really useful comments which are helpful to me and have made a positive difference to my strategy or thinking about investments.

    The more that's out there, the more we can all benefit.

    Thanks, as ever for stopping by with a comment.

  6. A total return of 3.6% is a good result given Mr Markets Q2 behaviour. I'm still waiting for some laggards to pay up their end June dividends but in comparison I'm expecting only about +0.5%. That means after inflation I've gone backwards by about 0.6%.

    1. Thanks for dropping by RIT with your return figures.

      I think it was just the last week or two of June where there was a sharp sell-off - I suppose the situation in Greece had been simmering for some time so sooner or later...I am still a little surprised at how difficulties with a seemingly small economy (relatively) can have such a large impact. I guess some of this will be down to fear that the Euro will unravel or other countries with large debts will go the same way as Greece.

      All this is way beyond my understanding which is why I tend not to comment so much.

      Lets hope to get back on track with business as usual in the second half?

  7. Hello and congratulations on a good solid first half. According to the Inv Chronicle the FTSE all-share put on 2.9% for the first half and so you have beaten that. You have also done it with a diversified portfolio that should reduce volatility should Greece... Good result. My portfolio has nudged up about 2% this year. Beating inflation at least! PS: Great weather to be retired - hope you are enjoying it.

    1. FI,

      Good to see you are back in the blogging 'saddle' - enjoying recent articles as ever.

      If my memory serves, you are all equities in your portfolio so I guess there will have been some volatility in recent weeks as well as FX considerations with your overseas-listed holdings.

      Yes, good to be retired - spend time with the the tennis..looking forward to the first test next week..probably not much spare time for blog articles!

      Thanks for dropping by - enjoy the sunny weather.

  8. I've got Vanguard UK Equity Income in my son's ISA. It's been solid for the past couple of years and should be good for the long term. Nice to watch the divis roll in.