This blog is designed to record the investment journey of a UK based small investor. I hope to make a modest contribution to the collective wealth of investing knowledge made freely available to ordinary people. I am the author of five books [see sidebar and books tab]
Lots of new language...and customs...ways of working and ways of interacting...
coronavirus social distancing lockdown
furloughflatten the curve 'R' value <1stay at home<--2m-->ZOOM facemaskPPE
wash your handsrainbowwork 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
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.
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
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)
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
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%.
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.
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
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
Wile E Coyote about to experience the disconnect...
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!
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.