Collectives Portfolio - Easter 2018 Update

It's a wet and unseasonably cool Easter Monday so a perfect opportunity to stay home and catch up on the blog. There have been a couple of changes to the portfolio since my update last October so I will take this opportunity to bring things up to date.

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

Portfolio Changes

The markets have seen a little more volatility in recent weeks which feels more familiar compared to the month-on-month rises throughout the whole of 2017. There was a significant pull back towards the end of February and a similar downturn in March - we are back to the rollercoaster for a while it seems. The FTSE 100 is down -8.2% over the past 3 months.

As this period saw a strengthening pound, rising above $1.40, I took the opportunity to reinvest some of the cash which has been sitting on the sidelines over the past 12 months or so.

In addition, at the start of the year I sold some of my Vanguard UK income fund as I am looking to reduce equities a little generally and UK in particular and also adjust the allocation towards a more globally diverse mix and introduce a wider variety of assets. The proceeds from the UK income fund have therefore been divided between HSBC Global Strategy Balanced fund and also Royal London Sustainable Managed Growth.

I have taken some of the cash to purchase a new holding in Vanguard Lifestrategy 40 with the Vanguard Investor platform. I have also added Kames Diversified Income and, most recently Scottish Mortgage (which I also acquired for my SIPP last year).

My demonstration portfolio has now been running for over 5 years. There have been a few more changes than I would ideally like and, looking at the portfolio, there are probably a few too many holdings and I will be looking to reduce and simplify at some point.


Returns

Many of my holdings have lost ground in recent weeks. My investment trusts have retreated by an average of 5.0% over the year to-date and my largest holding with Vanguard Lifestrategy 60 faring a little better, down 3.5%.

Since the start of 2018, the FTSE All Share index is down 6.9% (total return) and the global markets are down 4.4% adjusted for sterling exchange.

There has therefore been little progress over the past few months with the portfolio treading water. The value of the combined portfolios at the time of the last update in October 2017 was £93,679 compared to the current value of £92,493 taking account of income withdrawn.

Income

Last year the portfolio generated a natural income of £1,899 and also I took £1,200 from cash on the sidelines to save selling units from my VLS 60 fund. This makes a drawdown of 3.6% of the current value or 4.8% of the original starting value in 2013.

Here is the combined portfolio

(click to enlarge)

Last October there was over £21,000 in cash however much of this has recently been reinvested. The Lifestrategy funds (60 & 40) now account for 36% of the total, UK income funds a further 21%, Corporate Bonds around 10%, Property/Infrastucture 8%, Mixed Asset funds are around 21% and global growth in the form of Scottish Mortgage 4%.

There remains just over £5,000 in cash awaiting reinvestment plus my Vanguard cash buffer of £3,400.

My aim with the portfolio is to generate an average return which is significantly better than the return from my building society and also ahead of inflation - currently the rates are 1.25% from the Coventry (reduced from 1.4% grrrr) and 3.0% respectively.

The average annualised return for this demonstration portfolio after 5.3 years is ~8.0% - down a little on last year partly due to cash on the sidelines delivering no return for the portfolio. However, it continues to deliver the income I require of around 4% each year plus a little capital appreciation on top - so far, so good...

If you have any thoughts on the portfolio, feel free to leave a comment below.