Friday, 1 July 2016

Half Year Portfolio Review

Following on from my end of 2015 review, I have just reviewed my actual investment portfolios - sipp drawdown and ISA - for the past 6m to the end of  June. I must say it’s good to get back to more familiar territory after the political upheaval of the past week or so.

Naturally, the period has been dominated by the political agenda and referendum campaign culminating last week in the momentous decision of the UK voting to leave and followed by the prime minister announcing a decision to step down in the Autumn.

As ever, the markets have been up and down…and back up - as unpredictable as usual!

The Markets

On the markets, the FTSE 100 started the year at 6,242.

The first couple of months were very volatile with the FTSE slumping to 5,537 by mid February, later recovering to 6,400 by April. We then saw further weakness in the run-up to the EU referendum however a surprise outcome for ’leave’ sent global markets and our currency into a tailspin last Friday/Monday followed by a rapid recovery of the FTSE in the past few days. Maybe the markets are not overly concerned about the Brexit situation?

Whilst equities have bounced back, the pound is languishing around the $1.32 mark having risen to $1.50 on election night.

The index ended the 6m period at 6,504, the highest point of the half year - a gain of  4.2% - if we factor in say 1.8% for dividends paid, this will give a  figure of 6.0% total return for the period.

Of course, the UK listed market makes up less than 10% of the global market place so focussing on just the FTSE 100 for example can give a distorted picture.

Post Brexit, the value of the pound has fallen ~10% against the dollar and this has had an impact on the price of global funds and commodity related equities. Gilt yield have fallen and the Bank of England has signalled that interest rates will need to come down and there will be a further round of QE. This will not be good for savers.

The total return on world equity markets in GBP terms for the 6m to end June was 10.2%.


Following the sale of Unilever in April, my portfolio is reduced to just 8 individual shares.

A few have seen double digit gains since January - Tesco, Amec Foster and BHP Billiton and others have been adversely affected post Brexit - Berkeley, Next and Legal & General are all down over 20%. I suspect the sale of some of these remaining shares may have to be put on hold awaiting a recovery of the prices.

The total return from this sector was a disappointing -8.0% which includes dividends received of 1.8%

Investment Trusts

Most have gained quite a bit of momentum in the past week or two - the better performances have been provided by the trusts which have under performed over the previous year - Murray International is up 23% and Blackrock Commodities up 25%.

After a stellar performance over the previous 3 years, my smaller companies specialist, Aberforth has lost ground over the period and is down -22%

Share price total return from my basket of trusts has been 2.3%.

Index Funds

My global index funds and ETFs have put in a solid half year and were boosted over the past week by the fall in the pound against the dollar.

6m chart VLS 60 -v- FTSE 100
(click to enlarge)

My Vanguard LifeStrategy60 which was purchased in my new ISA with Halifax Share Dealing has also benefited from a strong rise in the price of government bonds. This is now my largest holding and has seen a gain of 9% over the 6 months period and ~5% over the past week.

The total return for my index funds has been 8.2%.

Fixed Interest

As ever, the PIBS and fixed interest sector has provided a steady and predictable income of 3.4% however capital values have declined by -1.0% leaving a total return of just 2.4% for the half-year.

My long standing holding in Coventry BS PIBS which were held in both ISA and SIPP have just been redeemed and the proceeds are currently in cash awaiting a decision on where to reinvest - probably Vanguard LifeStrategy however, with the weakness of sterling, I may hold off for a while.

I will need to review my equity/bond allocation as my equity weighting is currently well over 60% following the redemption of the PIBS.

The Combined Portfolio

The returns have been boosted by my global index funds following the fall in the value of the pound. My shares have not fared so well however, as these now represent a smaller percentage of my portfolio the impact on the combined portfolio is not so marked.

Total return for the entire portfolio of shares, investment trusts, index funds and fixed income is 3.2% which includes income of 2.4%. Since 2008, I have had positive returns from my investments and I am hoping this will be another good year however I am expecting a downturn at some point - maybe later this year or next, I don’t really know.

I am hoping my revised strategy and the move to the likes of VLS will help to cushion the inevitable 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 - feel free to leave a comment if you keep track of your portfolio.


  1. I enjoy the blog - I am up 15% this year so far.
    Check out my blog -

    1. Mr M,

      15% is very good going over 6 months, well done!

  2. Hi John

    I know we've discussed the detail quite a bit in the past and our portfolios do perform quite differently however with your shift towards Vanguard LifeStrategy I would have thought we'd now start to become much closer performance wise. You've clearly had me quite a few times in the past but your total return YTD of 3.2% sounds a bit low given your LS shift. In contrast (and I am waiting for some laggards to pay divi's as always) I look to be up about 9.4%.

    Your shares and IT's look to have held you back for H1. What percentage of your portfolio are each of these currently?


    1. RIT,

      Excellent news - 9.4% will be moving you very close to your target!

      I double checked the spreadsheet and cannot make any improvement on the 3.2% figure.

      The rough split is now - shares 10%, ITs 30%, Index 30% and PIBs and fixed interest 30%.

      The poor returns on shares will not have such an impact but the main drag has been ITs due to widening of the discount to nav and FI although income from both has been much as expected.

      Hopefully things will even up over the full year.

      Good luck with your plans in the run up to FI.

    2. Thanks for clearing that up John. With PIB's, IT's and Shares totalling 70% I can see why you've lagged a bit in H1. For some reason I thought you had transferred a lot more to index trackers like the LS...

  3. I am 100% in equities and just about flat for the year. A couple of shares, 32 Red and Boo Hoo have made up for some horrific 40% overnight falls on a couple of shares like ITQ, Creston and Entu.

    1. Stephen,

      Sound like you are doing well to break even with some 40% losses. I guess however there's always the possibility these smaller company shares could rocket up at some point - high risk/high reward strategy!

      Good luck for the remainder of the year.