A Look Back at 2015

Its been another quite unpredictable year in retrospect. The FTSE rose to new highs above 7,000 in April and just as quickly, got a nose bleed and dived back to more familiar territory.

Writing my blog records my personal journey as I try to navigate the ups and downs of the investing cycles. It helps me to focus, as well as holds me to account for the decisions I take. Sometimes I get it right and sometimes….well, you wonder if I have been investing for 25 days not 25 years!

This year, my main focus has been to move towards more simplicity, more diversity and less volatility.

Here are a few of the more popular posts over the past year :

1. Investing Notes to my 21 yr old Self
Some advice I would pass on to myself if I were just starting over again.

2. Vanguard LifeStrategy - A One-Stop Solution
Far and away the most viewed post this year - currently approaching 5,000 page views. Some thoughts on helping friends with a simple, no frills investment plan.

3. A Simple Low-Cost Income Strategy
Why chase natural yield when you have the option to sell capital units to provide the ‘income’ I need?

4. A New Platform for my Funds
If I am to place a sizeable chunk of my portfolio in VLS funds, I need to think about platform charges!

5. “DIY Simple Investing” - My New Book
Launched in early June and featured on Monevator the following month - my 4th and probably final offering.

6. Vanguard All World High Yield Review
A two year review for this global passive income fund.

7. What Does it take to be a Successful Investor?
Ha ha, my guess is as good as yours! A few thought on what I think it may entail. As time passes, I am concluding all you probably need is VLS60 as a core and 2 or 3 investment trusts to maintain a little interest.

8. Selling Capital to Provide ‘Income’
A variation on #3 and how I will use a cash buffer to cover years (like this!) when returns are negative.

9. ‘Smarter Investing’- Review
I first read about Tim Hale’s book via Retirement Investing Today blog. It only took 3 yrs to get around to reading it but I was very impressed and would recommend to any would-be investor.

10. How My Strategy is Evolving
Only posted last month, it is already the second most popular with over 2,000 page views so far.
Six months in and the revised strategy is starting to bed down - not perfect, never will be but GOOD ENOUGH FOR ME!!

Just to say thanks to everyone who has followed my journey over the past year and special thanks to those who have taken the time to leave a comment.

Lets hope the coming year is a good one!    

Goodbye

Finally, a sad farewell to some people who passed away in 2015 and who have touched my life for one reason or another (no particular order) -

Leonard Nimoy

Cilla Black

Howard Kendall

Andy King

Jonah Lomu

Jimmy Hill

Brian Hall

Brian Close

Phil Hughes

Gerry Byrne

Dave Mackay

Pat Eddery

Tom Graveney

Richie Benaud

BB King

Errol Brown

Denis Healey

Geoffrey Howe

Charles Kennedy

Peter O’Sullevan

Colin Welland

Warren Mitchell

Ron Moody

As you may gather, I am a big sports fan!

gone but not forgotten - RIP.  

Vanguard LifeStrategy - Interim Results

I first purchased this fund earlier this year following a review of my investing strategy. The initial purchase was made in May/June and a top up in September at a lower price which helped to average down the overall purchase price per unit. It currently accounts for ~25% of my shares/collectives portfolios combined.

The VLS range of funds were used as the basis for my latest book “DIY Simple Investing”.

Vanguard have recently announced half-year results to 30th September 2015. The report covers all 5 index funds but I will pick out the relevant figures for the fund I hold which is the LifeStrategy 60 (acc) - which consists of a mix/blend of Vanguard’s stand-alone index funds - 60% equities and 40% bonds.

Over the 6 month period the fund returned a loss of -6.5% compared to the composite benchmark of   -6.1%. Average annualised returns since inception of June 2011 has been 6.85% p.a.

The fund is widely diversified -

Bonds

Global Bond 19.4%,
UK Gilts  6.2%
UK Corporate Bonds 3.6%
UK Index Linked Bonds 3.1%
European Corporate Bonds 0.9%,
European Government Bond 1.9%,
Japan Government Bond 1.3%
US Corporate Bonds 1.9%
US Government Bond 1.9%

Equities

N. American Equities 26.4%
UK Equities  15.0%
European ex-UK Equities 7.8%
Japan Equities  4.2%
Asia ex-Japan Equities 2.4%
Emerging Markets Equities 4.0%

Total     100%

The above percentage figures are of the whole fund combining bonds and equities. As a percentage of the equity element, the UK accounts for 25% and US is 44% - therefore a significant home bias towards UK equities.

Ongoing charges are 0.24% p.a. - the 0.10% dilution levy on the fund was scrapped from July. In addition to the fund charges, I pay a platform fee to Halifax Share Dealing of £12.50 p.a. which adds a further ~0.08% to overall charges.

More on this following the full-year results next June.

Finsbury Growth & Income Trust - Final Results

This trust is not the highest yielder but is the top UK Income Trust in terms of net asset value and share price performance over five and ten years, its returns far outstripping those of the FTSE All-Share index. A sum of £1,000 invested 10 yrs ago would now be worth £2,898 compared to a total return of £1,723 from the benchmark FTSE All Share index.

At around 2.2%, its yield is one of the lowest in the sector but its aim is capital appreciation and income combined, with a total return in excess of the FTSE All-Share. However, the trust's portfolio is constructed without reference to a stock market index.

Long standing manager Nick Train’s approach is based on that of Warren Buffett’s and involves building a concentrated portfolio of “quality” companies that have strong brands and/or powerful market franchises.

The characteristics that define a quality company for Lindsell Train are:

• durability – companies that can prosper through business cycles for many years to come;
• high return on equity – companies with the ability to grow earnings year-in, year-out are favoured over those with rapid short term growth, but uncertain long term prospects; and
• low capital intensity/high free cash flow generation – companies that do not have to make heavy balance sheet investment to generate earnings growth.

He holds shares for the long term regardless of short-term volatility, aiming for them to double or more in value over time. This results in extremely low portfolio turnover, which saves on transaction costs. These costs over the past year amount to just £736,000 or just 0.11% of net assets. The trust's total expense ratio remains reasonable at around 0.8%.

Results

The trust has today announced results for the full year to 30th Sept 2015 (link via Investegate). Share price total return is up 11.8% compared to -2.3% return for the FTSE All Share. A 14% outperformance in the current climate is quite an achievement.

Someone send for the police!! This year, the manager purchased a new holding for the portfolio - the first in the past 4 yrs! French drinks group Remy Cointreau has been added to the portfolio

Top five portfolio holdings are: Unilever 9.3%, Relx 8.8%, Diageo 8.4%, Heineken 6.5% and Hargreaves Lansdown 6.4%.

Over the past year the dividend has increased by a respectable 7.1% to 12.1p (2013 11.3p). Revenues were 13.5p (2014 12.6p) and therefore there is once again a small surplus after accounting for payments of dividends which will further bolster the dividend reserves.

3 yr chart FGT -v- FTSE All Share Index
(click image to enlarge)

Commenting on his portfolio, manager Nick Train said  "It was drilled into me many years ago that there should never be any slack or deadwood in an “active” investment portfolio. There should be a reason for every holding and a live, current justification for the disposition of every penny of the capital entrusted to you.

Your Company has a concentrated portfolio which we believe meets that test. Every holding is a business that meets our investment criteria. This is most simply summarised as – the business owns a brand or franchise that makes it more or less unique. We want to be convinced that it would be difficult for any competitor to replicate the assets of our investee companies; ideally at all, or failing that, not to be able to replicate them for anything like their current enterprise value. In addition, none of our holdings currently trades at a price which we regard as excessive – there is more or less upside to our valuation targets".


Over the past year I have been moving some of my investment proceeds into index funds but I think most investors will acknowledge there are always going to be a handful of managers who can consistently beat the index and it seems to me Nick Train is certainly one of them. You cannot argue with the consistent returns he has provided for shareholders over many years.

Train has recently said his ambition is to make the trust into a FTSE 100 company over the next 10 years - ambitious but good to know he is likely to be in charge over the longer term.

I am very happy to continue holding and would be very pleased to see the trust quadruple from here.

Berkeley Group - Interim Results

At the half way point last year revenues were up 24% at £1.022m. Pre tax profits were up by a stonking 79.9% at £304.9m (2013 £169.5m) and underlying earnings per share were up 28.9% at 128.9p (2013 100p).

Over the year, the share price has risen over 30% from £26 to reach a high of £35 in Sept. In addition the company has paid dividends of £1.80.

They have today issued results for the half year to end October 2015 (link via Investegate).

Revenues increased 11.4% to £1.14bn, adjusted profits increased 10.2% excluding ground rents assets.

In 2011, Berkeley put in place a framework to deliver £13 per share to shareholders over a ten year period, as the market began to recover from the global financial crisis. The Company is now proposing to increase the 2021 target from £13.00 per share to £16.34 per share, with the remaining £12 per share to be paid in annual dividends of £2 per share over the next six years

The board have therefore declared a further interim dividend of 100p payable in January 2016 - xd 18th December and propose to deliver a further 100p dividend in September.

Berkeley remains ungeared with net cash of £263.1m.

Commenting on the interim results, Chairman Tony Pidgley CBE said: "Berkeley's contribution to housebuilding, job creation and the wider economy remains strong. Our contribution to UK GDP was £2.1 billion in 2015, up 40% from 2014 and the seventh consecutive year of growth. Over the last five years, Berkeley has built over 17,750 new homes and contributed a total of £1.8 billion to the Treasury through direct and wider taxation. We are now supporting 26,000 jobs in the business and our supply chain. Meanwhile, since its inception in 2011, the Berkeley Foundation has committed over £6.7 million to more than 70 charities, of which £2 million has been raised by Berkeley's staff".

2015 year to date (click to enlarge)

There can be no doubt these are once again very good figures. The results were well received by the market and by lunchtime the share price was up over 6% at £35.90. The yield is currently 5.5%.

I have sold around half my individual shares this past year but I am happy I decided to keep hold of Berkeley!