Saturday, 29 August 2020

Portfolio Review - End August 2020

Two-thirds in and what a year we are witnessing!

Lots of new language...and customs...ways of working and ways of interacting...


           social distancing       


furlough       flatten the curve        

 'R' value <1          stay at home           <--2m-->       ZOOM                      
                          facemask                       PPE    

wash your hands            rainbow             work from home    

The Covid pandemic is still playing out around the world but the markets seem to be adjusting to the new normal and have recovered the ground lost earlier in the year...except for the UK FTSE 100 which remains moribund, down -20% for the year to date.

Many are anticipating that we will return to business as usual when the restrictions are lifted but I am sceptical. First, the restrictions may remain for quite some time, certainly until a vaccine is available some time later next year and maybe longer. Secondly, the pandemic has uncovered weakness in many sectors of the economy which were struggling before Covid such as retail, real estate, banking, tourism and oil & gas. Now add in the hospitality sector and aviation and I think there's a strong possibility that many companies in these sectors may never recover.
We have also seen a massive financial stimulus from the central banks around the world combined with the slashing of interest rates to almost zero.

Here in the UK before the outbreak, the OBR were forecasting government borrowing for the current financial year 20/21 at £55bn. The scale of increased borrowing is currently unclear as we don't know how long before business as usual resumes but the estimates are that borrowing could easily exceed £250bn next year.

In July, public sector borrowing rose above £2 trillion for the first time in our history which equates to 100.5% of GDP. We last witnessed this level of borrowing during WW2 and it's unlikely to be coming down anytime soon.

As with the financial crisis of 2008, the long term effects of this current crisis could be just as long-lasting.

Portfolio Changes

I have been moving some of my portfolio to cash to finance a potential house move later in the year (more on this in a future post). There have been several additions to my portfolio as well as some top slicing and a few sales over the past few months.

Additions include US big tech - Microsoft, Google and more recently Tesla, also McPhy, NIBE and Powercell, Trojan Ethical and several government bond funds/ETFs.

Sales include Smart Metering, Legal & General, Air Liquide, National Grid, TR Property and Proton Power.

Finally, I have top sliced some of my holdings which have seen significant share price rises since April. These include AFC Energy, Ceres Power, ITM Power, McPhy, Orsted, Vestas Wind and most recently Tesla and Microsoft.

Portfolio Returns

The FTSE 100 started the year at 7,542 and is currently 5,964, if we add back in say a further 2.0% for dividends paid, this will give a ballpark total return loss of -18.9% for the past 8 months. The UK market has not been kind to investors for at least the past decade as this excellent article by IT Investor illustrates.

Although no longer a part of my portfolio due to fossil fuel holdings, the Vanguard Lifestrategy 60 fund is a diverse mix of global equities and bonds and provides a good benchmark for a balanced global portfolio. The fund is up 0.8% over the year to date (the VLS 80 down -0.7%).

FTSE 100 ETF v S&P 500  2020 to date
(click to enlarge)

Green Funds

These holdings now make up around 80% of the total portfolio. They held up better than the market during the downturn in Feb/March and have done really well these past four months as fund managers and pension funds move towards ESG and more sustainable options.

The better returns have come from ITM Power up 290%, largest share holding Orsted up 43% and recent addition McPhy 300%. My global clean energy ETF is up 47% and Tesla gained over 50% since purchase last month. My largest renewable energy trust TRIG has fared reasonably well with a gain of 10% including dividends but other renewable infrastructure trusts are struggling - Foresight Solar -8% and NextEnergy Solar -6%.

The total return including dividends for my green allocation is 27.5%.

The Complete Basket

My only other holdings are TR Property (recently sold) -15%, Mid Wynd IT is up 10% and Polar Capital Technology up 30%.

I decided to add a few bond funds earlier in the year to balance the element lost when I sold my Vanguard Lifestrategy funds last year. So far they are down 1.5% but I think that is to be expected given the strong rebound by equities.

I have just updated my spreadsheet with the returns including dividends of my actual investment portfolios - sipp flexi drawdown and ISAs - for the 8 months to 28th August.

As a whole, the portfolio has delivered a total return of 21.6% for the year to-date.

Just for comparison, Scottish Mortgage Trust (SMT) is up 63% so far this year, Finsbury Growth & Income (FGT) down -6.5% and City of London (CTY) down -25%.


It's now getting on for two years since I started to move my portfolio towards more climate-friendly investments and it is reassuring to see they have done so well during this market storm. I certainly feel much better investing in the likes of Orsted, a global leader in offshore wind, rather index funds with their fossil fuel companies and the big banks that finance their operations.

It's obviously better to be up 20% than down 20% with a FTSE 100 index fund which will have taken a big hit from holding the big oil companies such as BP and Shell.

However, I doubt this is the end of the Covid pandemic and I expect the ramifications to play out for at least the next couple of years. The huge negative impact on global economies contrasts strongly with the rise in global markets - the S&P 500 has risen to an all time high - and suggests a disconnect which must be squared at some point.

Wile E Coyote about to experience the disconnect...

The other big event on the horizon is the US elections in November and whether Trump gets another four years. Climate change is the big dividing point between the presidential candidates and I am hoping Biden can win the election and implement the $2 trillion Green New Deal which would be a huge boost for all things green. If Trump wins, I'm off to find a log cabin in the hills with my solar panel and a years supply of baked beans...yes seriously!

It's going to be an interesting few months and I honestly have no idea how it will pan out by the end of the year. It feels like unprecedented times.

"Survival as an investor over that famous long course depends from the very first on recognition that we do not know what is going to happen. We can speculate or calculate or estimate, but we can never be certain". (Peter Bernstein) 

As always, if you keep track of portfolio returns, feel free to leave a comment and share with others how your investments have fared over recent months.


  1. Congrats on a great year so far. Sensible to top-slice as well I reckon, given many of those have some pretty punchy valuations.

    I hope your log cabin has a good broadband connection, should it come to that! Seems the vote could go either way, although US elections are often very close.

    1. Thanks IT. The returns for 2019 were 21.9% so I would be more than happy to repeat this year but I'm thinking there will be a few twists and turns in the coming months.

      As for the US, it's looking too close to call at this point but I am fearful on many fronts if Trump were to pull off a victory and gets another four years...fingers crossed.

  2. Nice review. I bought ITM partly driven by a post of yours at the start of the year and, obviously, pretty happy with the results :-) It's just a smallish punt so I don't intend to 'top-slice' at this point.

    I also did quite well out of Terraform who have been bought out by Brookfield Energy Partners. I think Terraform was another one that I inevestigated based on your articles.

    1. Thanks Hague. Yes ITM has done well so far this year but it can be problematic dealing with quickly rising small company share price movement. It started the year at 80p and by mid Feb had doubled in price then in March fell back below 100p then surged to 360p by June before falling back to the current 280p. Obviously its good to see the share price appreciating but also it creates problems when one AIM-listed share becomes a big percentage of the portfolio.

      I have not heard of Terraform but sounds like you have had a good run!