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.
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%.
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.