Collectives Income Portfolio - Update

There have been a few changes to the portfolio since my last update at the end of 2016 so as it is fairly quiet on the results front, I will take this opportunity to bring things up to date.

This started off in 2013 as my investment trust income portfolio. Over the past year or so, it has morphed into a collectives portfolio as its scope broadens to include my low cost index funds. Also last year, as I have been selling down my individual shares portfolio, I decided to merge the two portfolios.

The starting capital for the shares portfolio was £36,000 and the starting capital for this portfolio was £28,000 - a combined total therefore of £64,000.

Although this is demonstration portfolio, it largely mirrors my own holdings.

Portfolio Changes

As the markets have been hitting new highs in recent weeks, I have taken the opportunity to sell down a few more individual shares including IMI, Berkeley and Amec Foster. The net proceeds were £5,110. There are now just two shares remaining - 30 Next and 800 Legal & General.

In addition I have recently disposed of Law Debenture trust and top-sliced my smaller companies specialist Aberforth - sale of 140 shares and also Edinburgh - 365 shares sold which brings it closer in weighting to City of London and Finsbury.

The proceeds have been recycled into new additions HICL Infrastructure, iShares Corp. Bond and most recently Capital Gearing Trust.

Performance

My demonstration portfolio has now been running for 4.5 years. Many of the investment trusts have been there from the start - City of London, Aberforth, Edinburgh etc.

The main development over the past 18m or so has been the introduction of the passive Vanguard funds and the decision to abandon the individual higher yield shares, although a couple still remain.

The portfolio has been on the rise over the first few months of 2017. So, how have the various investments fared and are my investment trusts adding additional value compared against my Vanguard trackers?

Returns

The only investment to have lost ground in 2017 is Blackrock Commodities however it is the smallest holding by value and also, as it gained 69% last year, I am not too troubled.

Leading the pack is smaller companies specialist Aberforth with 24% and new additions TR Property 19%. Most of the others have reached double figures which is good.


There has therefore been a little more progress since 1st January. The value of the combined portfolios at the start of 2017 was £85,398 compared to the current value of £92,244 - a rise of £6,846 and total return of 8.0% year to date.

The total return for the FTSE All Share index is 8.2%.


Here is the combined portfolio

Portfolio to 9th June 2017
(click to enlarge)

There is currently a large percentage of cash sitting on the sidelines. Some is from recent shares sales and some from a top slice of my Lifestrategy fund last October. One of the reasons for turning to the addition of Capital Gearing was my concern about the high valuation of equities. The US markets have seen the second longest 'bull' run since 1945 and the CAPE ratio is approaching 30 compared to the long term average of 16.8.

In addition, the slump in sterling post Brexit - currently $1.27 - makes global investments relatively expensive so I will stay in cash for a little while longer.

The average annualised return for this demonstration portfolio after 4.5 years is ~9.0% - so far, so good...well sort of...because the average return from my VLS 60 fund over the same period is over 10% p.a. - how simple would it have been to invest the £64,000 in that from the very start? The price of the fund in January 2013 was £111.71 and the portfolio would now be valued at £99,000!

I will return to this in December for my annual end of year review.