year rolls by and this is now my 8th end of year review since starting my blog
in February 2013...and what a year - one theme... Covid-19... coronavirus social distancing lockdown
of coronavirus outbreak in China started to emerge in February. The virus soon
spread to Europe and the rest of the world, but I don't think anybody
anticipated the huge global impact it would have and in such a short period.
March saw a one-day fall of 10% on the FTSE and 3,000 point fall on the Dow
Jones. At the same time the price of oil fell from $60 per barrel to $25 in the
blink of an eye and at one point was trading at a negative price. This was a
scary time for investors and one of the most volatile times I can remember.
Certainly a good time to re-evaluate asset allocation!
the panic subsided over the next couple of months and the markets bounced back
led by the technology sector and by July had recovered most of the lost ground....well,
apart from the FTSE which had yet another disappointing year.
we thought we may be over the worst, the Covid rates started to increase again
in September and by October we were moving back to regional lockdowns followed
by another national lockdown in November and then a further tier 4 lockdown
just before Christmas as new strains of the virus emerged.
some light at the end of the tunnel when in November when it was announced by
Pfizer that their trials were successful and subject to passing the regulation,
they hoped to release a vaccine which was 90% effective. A week later and along
came positive news from two others including the Oxford AstraZeneca trials. By
early December we had delivery of the first batch of vaccine and ready to begin
the roll-out starting with the most vulnerable people in care homes and front
line health workers. We have 100m of the Oxford vaccine on order and with
approval coming at the end of December, this will start to roll-out in January.
the vaccines will work on the new strains and we can start to move back to
something like normality in the coming months.
has dominated the year, the climate crisis has continued to get worse and the
world gets warmer each year. 2020 is no exception. However, I feel this has
been a breakthrough year for the climate - governments around the world are
starting to take the issue seriously and everyone is more aware of the
importance of the challenges we face and the need to make some significant
changes to many aspects of our everyday living.
the UK we saw the governments 10 point plan for climate in November confirming
a four-fold increase in offshore wind to 40GW by 2030 and 5GW of hydrogen
capacity by the same date. The EU has put in place it's green deal with a €1
trillion green stimulus plan, China has pledged to become carbon neutral by
2060 whilst Japan and S Korea announced plans for net zero by 2050 in October.
boost was the defeat of climate denier Trump in the US election. Joe Biden has
pledged to tackle the climate crisis and will rejoin the Paris Agreement and
will spend $2 trillion to support the transition to renewable energy by 2035
and make the US carbon neutral by 2050. China and the US are the world's
dominant economies and account for over 40% of all global carbon emissions.
Therefore the new pledges from these two countries will have a huge knock-on
effect around the world and will inevitably mean increased investment into renewable
energy such as wind and solar, energy storage, hydrogen, EVs and lots of other
green technologies. Which is all good for my green investments!
been one of the worst, most dysfunctional presidents of my lifetime and I was
therefore pleased and relieved that Joe Biden eventually came out on top.
However, I was really surprised at how many Americans still voted for the
former president - more than voted for him in 2016 which shows the influence of
carefully targetted social media campaigns and the likes of Fox News.
pledges are welcome but they have to translate to implementation which will be
challenging. I guess the coming decade will be a make or break period. We
either make the changes to limit global warming or we fail and face the
consequences. I fully agree with President Macron when he said that if the
world can do the unthinkable to their economies to confront coronavirus, surely
it can do the same to arrest the much bigger threats from catastrophic climate
despite the economic slowdown from Covid, 2020 has been the warmest year on
record...the past 6 years have been the hottest on record and unless we tackle
the climate emergency, the Met Office have forecast that temperatures in the UK
could be 3 to 4 degrees warmer on average by 2100.... ( they have risen by just 1.1C
over the past 150 years).
Of course, there will be no vaccine to save us. "Once climate
change becomes a defining issue for financial stability, it may already be too
late." Mark Carney, former Governor
of the Bank of England. Tom Slater, joint manager of the £17 billion Scottish
Mortgage Trust says "The wholesale shift away from carbon is set to be one
of the most significant societal and investment transitions of our
lifetime". "What happens next is up to every one of us." Sir
David Attenborough. The clock is ticking, the time to act is now.
simple fact remains that whether we are cautious or adventurous, active or
passive, DIY investors are part owners of everything we choose to hold in our
portfolios. Back in 2018, I decided I did not wish to carry on being part of
the climate-change problem by continuing to hold multinational fossil fuel
companies which feature prominently in all the passive index funds, even the so called ESG offerings. I made the
changes and feel better for bringing my investments into line with my values. So
far, my move to embrace more climate-friendly investing options has proved very
my "Climate Emergency" book at the start of the year...not yet as
popular as DIY Pensions....but I remain hopeful!
a long time coming but following the end of the remainer Parliament and a
landslide victory of Boris Johnson last December, we left the EU at the end of
January and, against all odds secured a Canada-style++ trade deal in just 11
months. So it was Merry Brexmas for all the 17.4m who took on the establishment
in June 2016...democracy remains in tact.
course, the full details of the agreement have to be analysed and there is no
guarantee that we will be economically better off as a result of leaving but
for me, the important element is that democracy has prevailed. We were given a
simple choice in 2016...leave or remain. Against all expectations the majority
of the people voted to leave and that decision has now been respected. It's now
time to move on.
dramatic rollercoaster year in global markets. Fortunately, my green/tech
investments have weathered the turmoil better than many other sectors. Sadly
the FTSE had yet another year of underperformance. I cannot understand why the
iShares Core FTSE 100 ETF is consistently the best selling fund on the HL
over two years since I started the move away from fossil fuel investments which
inevitably include the global multi-asset index funds such as Vanguard
Lifestrategy. I have now adopted a two-themed focus for my portfolio which are
fossil-free & climate-friendly
these two areas to provide the better returns for my portfolio over the coming
decade or more.
there are no collective funds which deliver on these themes in a combined way
and so I have increasingly assembled my own mini fund which combines many
individual company shares as well as some collective investment trusts and
Over the past year I have (reluctantly) sold into
the rising prices of many investments during the second half to release funds
for my house purchase which completed in November.
just put in the final figures for the spreadsheet of my investment portfolios -
sipp flexi drawdown and ISAs - for the full year to 31st December.
100 has struggled for most of the year post Covid and has dropped from 7,542 to
6,460 and a total return of -11.5% for
the full year. The FTSE All Share index is down -10.0%.
matter of interest, the FTSE 100 finished at 6,749 when I did my first annual
review to the end of 2013. Not much progress over the past 7 years!
Vanguard Lifestrategy 60 fund is a diverse mix of global equities and bonds and
although I have disposed of my holding, it provides a good benchmark for a
balanced global portfolio. The fund is up 6.9%
over the past year and the VLS 80 is up 6.6%
Technology - Over the 12 month period, I sold TR Property trust and replaced it with
Allianz Technology to complement my other tech trust Polar Capital. I have also
added a few individual companies - Google, Microsoft, Ocado and Zoom
return for my tech sector over the year was 26.2%.
|A Good New Year's Day Walk...|
Green - Over the year I have continued to
build my climate-friendly section which now represents over 75% of the total portfolio.
Many of the investments have not had a full year so I am pleased that the total
return for this sector compares very well with the wider market. It shows that
you don't have to compromise on portfolio returns when investing for a more
sustainable world, in fact just the opposite, returns have been enhanced.
better returns have been provided by offshore wind specialists Orsted +95% and Vestas Wind + 130%, iShares Global
Clean Energy ETF +135%, green hydrogen smaller companies ITM Power +490%, Ceres
+225%, AFC Energy (now sold) +325% and McPhy Energy +500% ....and in the US,
Tesla 130%, Ballard 120% and Plug Power 135% Unfortunately, my renewable
infrastructure trusts have been a drag on overall performance... TRIG -0.5%,
NextEnergy (now sold) -11% and Bluefield Solar -1.5%. I will reduce my
weighting to these trusts in the coming months.
some of these renewable energy companies will become a part of the small
percentage (1 in 20) of stocks which are responsible for the wider equity
market outperforming bonds. Here's the article from 2018...
return including dividends from my green portfolio has been 52.5% which is brilliant and shows that
it's possible to invest ethically, align my investments with my values and
still make a decent return.
course, after such a strong run this year, some pull-back is to be expected but I am confident longer term progress will be supported by the underlying fundamentals of a
global shift from fossil fuels to renewables.
The Complete Basket
As a whole, the portfolio has delivered a total return of 43.8% over
the past year which takes account of all dealing costs. It is my best ever year
surpassing the 37% of 2009 which saw a big bounce after the economic crisis. Here's
my portfolio returns covering the past 10 years.
A sum of £1,000 at the start of 2011 has
increased almost three-fold to £2,890 and an average annualised return over the
past 10 years of 11.3%.
In these times of low interest rates, low inflation and corresponding
low returns from cash deposits which have persisted since 2008 - and is likely
to continue for at least another decade - for a little more risk, an average
annualised return of over 10% over the past decade is obviously very
acceptable. Return on my investments have been positive in 8 of the past 10 years
and the two negative years have been modest. And the returns from these
investments - especially the past two years - have provided the funds for a
nice retirement bungalow with garden and conservatory in the quiet leafy
Obviously as a grandfather to five, I am concerned about the climate
emergency and how badly it will impact the world over the coming years. The devastating
images we have seen this past year - wildfires over huge areas of the west
coast states of the US, disappearing polar ice caps should be a warning of what's coming down the line
for the planet if we carry on with business as usual. Hopefully in the coming
year we will get some real leadership in the run-up to COP 26 and some real
action to speed up the transition away from fossil fuels. I am in no doubt that
the global economy will be affected including equities which is why I have moved
my portfolio to climate-friendly alternatives.
For me at this stage, investing is more about directing my resources
towards those areas that are trying to promote a sustainable planet and
avoiding the fossil fuel companies and associates which refuse to change and that
have little or no regard for our environment. If supporting those greener
companies can also deliver a decent return on capital as I have seen these past
couple of years, then that is a bonus but it's no longer my primary driver.
I don't have a crystal ball but my strong feeling would be that we
passed peak oil in 2019 and the game could soon be up for the big oil companies
that refuse to change their business strategies and fall into line on climate
change. Likewise the banks and insurers that continue to support their operations.
I hope the momentum of the past year can build in 2021 and we can avoid some of
the dire consequences which lie in store with warming over 2.0C....as they say,
it's going to be very interesting!
all a happier New Year and thanks to all for dropping by during this challenging
year and hoping we can enjoy a much better 2021.
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 the past year.