Friday, 21 January 2022

Keystone Positive Change - Portfolio Addition

A year ago, this long-standing investment trust moved over from Invesco to the Baillie Gifford stable with a new ethical remit under the management of the team running their Positive Change fund. The move was flagged up by IT Investor who decided to pick up the trust at that early stage.

I have had a good run with the Positive Change fund in my green portfolio since the initial addition back in October 2018. The fund price rose from 154p to reach a high point of 425p last September and a rise of 176%. In recent weeks the price has retreated quite sharply and currently 330p.

However, it seems to make sense to now switch to the investment trust and save platform costs associated with holding funds as the charges are capped for my portfolio of shares and trusts.

Latest Results

The first full year results under the new focus with Baillie Gifford to end September 2021 were released last November (link via Investegate)

Under the previous management, the trust was basically a UK focused growth and income fund with all the usual suspects such as Br American Tobacco, BP, Shell, Barclays Bank etc. and obviously with the new management and a focus on more ethical and sustainable sectors, there has been a complete change of portfolio holdings. These are arranged under four main impact themes similar to the Positive Change fund :

 Education and social inclusion with the likes of ASML (semiconductors), Shopify and Mercado Libre.

Healthcare/quality of life includes largest holding Moderna which has worked hard on finding vaccine solutions to Covid, also Illumina and Dexcom.

Environment and resource use holds the likes of Tesla, NIBE, Orsted and Beyond Meat

Finally base of the pyramid with a focus on social justice has Safaricom and an Indonesia bank

Commenting on future direction, lead managers Kate Fox and Lee Qian said:

“We don't make any attempts to predict the direction of bond yields or markets.  Rather, we try to understand what the next waves of innovation might be and what implications they might have for society and our planet over the next 5, 10 or 25 years.  It feels as if we are on the cusp of several waves of innovation and transformation, including the energy transition, electrification, a material revolution, genetics, AI and quantum computing.  Each of these waves in isolation are exciting; in combination, they could be incredibly powerful. 

Our focus is on identifying the wave makers - the companies driving change and disrupting the status quo - and to play our role in helping the development and scaling of innovative solutions to global challenges by providing long term and supportive capital, something which has sadly become increasingly scarce over the years.  By doing so, we step up to our responsibility in steering towards a more sustainable and inclusive future and can identify exceptional businesses that will deliver attractive returns for shareholders.  We thank you for joining us on what we believe to be an important and rewarding journey for savers, people and our planet”.

The NAV return for the year was 17.3% however due to a reduction in the discount on news of the change of manager, the share price return was 40.9%. It is worth noting that the returns for the BG Positive Change fund have averaged over 30% p.a. these past three years.

Needless to say this is no longer classed as an income fund and dividends going forward will be significantly lower than the 4% generated previously.


More people are starting to realise that we are facing some big challenges from the climate situation. Time is running short to make the changes required to address this existential threat.

How we change a system that has been in place for well over a century will not be easy but there is no doubt that finance will play an important role in the transition and I believe the positive changes promoted by the team at the helm of the Keystone trust are steps in the right direction. These sorts of changes to a more sustainable model need to quickly become the new normal across the business and investment universe. Changing the world starts with investing in the companies that are addressing these global challenges.

The markets have become very choppy in the past few weeks and the share price of KPC has dropped back over 20% from 340p in November to currently below 260p. I have added the trust to my green portfolio at 257p and will top up should there be any further significant weakness later in the year.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Sunday, 2 January 2022

Portfolio Review - End 2021

Another year rolls by and this is now my 9th end of year review since starting my blog in February 2013 

Despite the extensive roll-out of the vaccine, Covid and its delta variant has continued to hang around and cause significant disruption. However the markets generally have recovered from the shock of 2020...and then along comes Omicron and yet another spanner in the works.

I guess this virus and all its variants are going to be around for many years and we will just have to learn to live with it and get our booster jab each year.

Climate Change

While Covid has dominated the past couple of years, the climate crisis has continued to get worse and the world gets warmer each year. 2021 is no exception... July was officially the warmest ever month in our history, we've just had the warmest New Year on record... we saw the devastating floods in Germany, Belgium and China - hundreds killed, many more missing and thousands made homeless. The increasing temperatures has also brought an increase in wildfires - Siberia, California, Turkey and Greece. Sardinia recorded Europe's highest ever temperature of 48.8C in August.

Governments around the world are starting to take the issue more seriously following the 'Code Red' warning in August from the IPCC. However, the climate scientists have delivered warnings for many years so I really do not have much confidence in the ability of politicians to act with urgency and in co-operation around the world to tackle this huge existential problem. But I am still hoping for the best and with progress being made at COP26 I think 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. I am looking forward to seeing the new film "Don't Look Up". 

Another concern is rising levels of debt...the monetary and fiscal response to the pandemic was 3.5x higher than the response to the 2008/09 financial crisis. Global debt is now at its highest since the end of WW2 and it will take at least the coming decade to bring this down to more sustainable levels. This may be manageable so long as interest rates remain low and I am sure central banks will try to keep it that way but we are seeing inflation starting to rise and this could create instability in the markets and much higher interest repayments.

As a result of the climate situation and the significant increase in debts arising from Covid lockdowns, I decided to take stock and re-evaluate the potential impact to my investments and made some changes (see below). 

I published my "Climate Emergency" book at the start of 2020 and I am just about to publish the updated second edition!


So we have seen some volatility due to Covid and its variants and we have the significant threats posed by the climate crisis. We are living in uncertain times which throws up even more challenges for small investors. We need to have the strategies in place to deal with this uncertainty and the emotional resilience to stick with the plan when things get choppy.

It's therefore important to know yourself, your appetite for risk...and tolerance for losses. Not to get over-confident when things are going well and conversely, not to get too despondent and give up when the markets turn against us.

A well-thought through plan, attention to asset allocation and patience will go a long way counter the uncertainties that will always be present for investors.


So, after a rollercoaster year in 2020 due to Covid, global markets seem to have recovered well this year. Last year I had an unexpected exceptional run with my green portfolio and a return of over 50%...this year the bubble has deflated and my renewable energy and hydrogen stocks have fallen back. Although this was anticipated, it was still difficult to see portfolio valuations fall by 20% at one point.

It's now over 3 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 more focused theme for my portfolio which are

1. sustainable fossil-free & climate-friendly

2. technology.

3. defensives

The third element has been reintroduced this year as I realised the 100% equity carried too much risk as we face the uncertainties of global debt, inflation and how the global economies respond to climate change. The past decade has been very rewarding but maybe now is the time to remember Warren Buffet's rules of investing...Rule #1...don't lose money! Rule #2...never forget rule #1.

Charlie Ellis, author of "Winning the Loser's Game" has a strategy of winning by not losing. He uses an analogy of tennis in which you win not by hitting spectacular winners close to the line, but by constantly keeping the ball in play and making your opponent keep hitting one more shot. I think Djokovic must have read the book!

Since the last financial crisis in 2009, cash returns have totalled a measly 6% on average whereas UK RPI has been 39% so a 24% devaluation...there's more than one way to lose money!

So, this year I have sold around 40% of my equities - green and tech - and moved the proceeds into more defensive assets such as gold, precious metals, index-linked sovereign bonds and reintroduced the Personal Assets Trust which is now managed by Troy.

Portfolio Returns

I have just put in the final figures for the spreadsheet of my investment portfolios - sipp flexi drawdown and ISA - for the full year to 31st December.

The FTSE 100 has recovered this past year after a poor performance in 2020 and has risen from 6,460 to 7,384 and a total return of 14% for the full year. As a 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 8 years!

The 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 9.9% over the past year and the VLS 80 is up 14.4%

Technology - Over the 12 month period, I sold Ocado and Zoom and have taken part profits on Google and Microsoft which have had a really good run in 2021 with share price returns of 67% and 54% respectively. Tech now accounts for just under 10% of my portfolio.

The total return for my tech sector over the year was 29.5%. Another good year after the 26% return in 2020.

Green - After triple digit gains for many of my green portfolio holdings in 2020, I think it was inevitable that there would be some pull back this year. Over the year I have taken profits on quite a few holdings - NIBE, Orsted and Vestas and sold Nel in August as it breached my stop-loss and with a 50% loss (ouch). These now represents 55% of the total...down from 80% at the start of 2021 After a stellar year in 2020 and gains of 52%, the green sector has come back to earth with total returns down -13.9% ...but still averaging just under 21% in each of the past three years.

The better returns have been provided by NIBE +85%, iShares World SRI +22.5% and Gresham House Energy Storage +23%.

The Complete Basket

As a whole, the portfolio has delivered a total return of -6.5% over the past year which takes account of all dealing costs. Here's my portfolio returns covering the past 10 years. 

2012 15.5%

2013 13.3%, 

2014   5.4%, 

2015   2.7%  

2016 11.4%

2017 11.3%

2018  -2.7%

2019  21.9%

2020  43.8%

2021  -6.5%

A sum of £1,000 at the start of 2012 has more than doubled to £2,800 and an average annualised return over the past 10 years of 10.8%.

Past 10 Years (click to enlarge)


Obviously an average annualised return of over 10% over the past decade is very acceptable. It could have been much better this year had I locked in returns from my green sector...investing is so much easier through the rear view mirror! Of course, patience and the ability to stick with the plan are key to successful investing and that has certainly been a lesson to be reminded about this year. The clean energy and hydrogen sectors have had a bumpy 12 months but I am confident they will provide a good return over the coming years as we transition the global economy away from fossil fuels to address the climate crisis. Return on my investments have been positive in 8 of the past 10 years.

Obviously as a grandfather to five, I am concerned about the climate situation and how badly it will impact the world over the coming years. The devastating images we have seen these past couple of years - wildfires over huge areas of the west coast states of the US and Siberia, devastating flooding and 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 after COP 26 and some real action to speed up the transition away from fossil fuels.

I am in no doubt that the risks to the global economy have increased this past 12 months  which is why I have moved my portfolio to climate-friendly alternatives. However, if the climate continues to get worse, the global markets may well become unstable and the better green companies could be dragged down with the rest.

So, whilst I have been directing my resources towards those areas that are trying to promote a sustainable planet and avoiding the fossil fuel companies, I also trying to preserve capital in the event of a downturn.

How we tackle the climate crisis over the coming few years will be the defining story of our generation. I hope the momentum of the past year can build in 2022 and we can speed up the transition away from fossil fuels and avoid some of the dire consequences which lie in store with warming over they say, it's going to be very interesting!

Finally, wishing all a happier New Year and thanks to all for dropping by during the past year... all best wishes for 2022.

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.