Monday 2 April 2018

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.


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.


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.


  1. Ciao DIY,
    I also took the opportunity of this market downturn to deploy some cash, and from what I read we have similar targets as a whole (beating inflation and building society return)! This is my "bottom" target, meaning that if I go below this it means that the PF is not working well. I am curious to see what will happen once Brexit will come to more "advanced" stages, I am trying to understand what might happen but there are little information yet to base a sound research/prediction on. What are your feelings over in the UK about it?
    Ciao ciao

    1. Stal, I hope you are enjoying the Easter break and have better weather in Florence compared to the wet and cold here! Yes, I guess keeping ahead of inflation and cash returns has to be the bottom line and keeping above this target has not been too difficult in recent years - well certainly the past decade.

      On Brexit, it depends who you ask. I have been pleasantly surprised by how well things have progressed so far and the economy has not collapsed as all the 'experts' predicted...just the opposite. We now have a broad agreement on the transition deal to December 2020 so I am not expecting much change for the next couple of years.

      From next March when we will officially leave the EU we can negotiate and sign our own trade deals and I am sure there will be many countries wanting an early agreement with the UK. I am hoping the trade talks go well over the coming months with the EU as it will be in everyone's best interest but there will no doubt be a few bumps in the road and not least the thorny issue of the border between Northern Ireland and the Republic and how it will affect the Good Friday agreement.

      There are still many here who are attempting to undermine or reverse the referendum outcome in June 2016 but Mrs May seems determined to see this through and her confidence is growing so I am more optimistic we will leave with a reasonable deal.

      There are many strands of opinion however the issue remains divisive and finding impartial facts on the subject is difficult. The BBC should be a good starting place but many Brexiteers say it is pro-remain...I could not possibly comment!

  2. Well 8% p.a. is certainly acceptable - especially when it covers your income needs. There seems to be a bit of a shift away from local sharemarkets of late. The trend has been the same here in Oz, and not to long ago I added a little Finsbury Growth and Income and Aberforth Smaller Companies to my portfolio to give it a greater European exposure.

    Pleasure as always keeping up with the goings on in your world.

    1. As always WfT good to hear from you. How is life in Oz? Finished that PhD yet? The big story over here in the past week has been the ball tampering from the cricketers...there were some good memes going round on social media!

      Interesting to see your portfolio diversifying into the investment trusts. I have held Aberforth and Finsbury for many years now and I hope they will deliver for you over the longer term. Of course you have the currency exchange issues but the ups and downs should even out long term.

      I have been impressed to see your savings rate...over 50% is great and I am wondering what is your anticipated period for FIRE?

  3. Can you believe the tampering!? They're copping it big time over here. Hashtag of the week was #Isandwithstevesmith haha.

    I am quite glad to own those two trusts - UK is really leading compared to Aus regarding lower management fees and both trusts operate in a similar style to what I try and emulate in my direct purchases. Thanks for the regular updates re your portfolio - they are what got me curious to start with!

    PhD is still a few months away, but I'm in the final phase. Then up to 6 months for it to be marked, so it could be close to end of year before it's returned. As for FI - I'm not sure when I'll reach FI. I suspect 10-15 years though - a partner/kids would shake the estimate up!