I’ve had my second jab today, with no side effects so far, and I am feeling more optimistic for the future. It’s interesting that nearly 24 million people in this country are older, less healthy, or otherwise more entitled to a second vaccination than me. I’ve enjoyed a couple of indoor pub drinks with friends and a family meal in a restaurant in the last ten days. That’s nearly normal apart from the wearing of masks when you are not sat down. Britain’s economic prospects are being talked up by some pundits, stock markets are holding up, and as of yesterday my portfolio is inching nearly back to pre-pandemic levels, and is about 1% ahead in the month to date.
Here is a late update on my portfolio for the previous month of April.
Investment changes
In early April, in the old tax year, I sold investments in my dealing account and then, in the new tax year, I re-invested that cash in my ISA. I sold one UK equity income trust and bought another one with a slightly higher dividend yield. In late April I sold a slice of one of my Asia Pacific income investment trusts and bought shares in an Asia Pacific smaller companies investment trust that will target growth rather than income. That represents 0.76% of the portfolio and is a second small step in re-positioning away from high income towards growth.
April
The FTSE All Share Total Return index, my chosen benchmark, went up by 4.3% in the month, and it was up by 9.7% for the year to date.
My investment return for the year to date was a rise of 8.25%, including 3.96% in the month. Lagging the index slightly. My individual holdings recorded share price movements ranging from a loss of -0.15% to a gain of 18.92% with an unweighted average result of a gain of 7.79%.
Capital
This capital graph shows the portfolio value at each month end since 31 December 2013, taking an index value of 100.00 as the starting point. This capital measure on the graph is now at 136.2. At this month end, the capital value of my investment portfolio is at a new peak and is up by 7.21% since the end of the 2020 year. Investment returns, growth and income, were 8.21%, and draw down expenditure deducted -1.00% for the year to date.
Income
I have tracked the annual level of my dividends received since 31 December 2013 as shown in the income graph. This income graph shows the annual dividend income as a percentage of the opening portfolio value. My income has increased from 3.37% on 31 December 2013 to reach a new peak of 6.67% at this month end.
Portfolio income has increased by 3.02% in the year to date. The income measure on the graph rose to 6.67%. That is a 98.02% rise since draw down started on 31 December 2013. Increases in income arise from the re-investment of dividend income in more shares, from dividend increases announced, and from portfolio changes. Going forward any increase is likely to be small because increases arising from re-investment and increased payments are likely to be matched by decreases from portfolio changes as I reduce higher income holdings and increase growth holdings. The two small switches made so far have sacrificed income growth of about 1.25%.
Portfolio
The table below shows the composition of my portfolio at the end of the month. This has been analysed by sector, that is by geography for equities, or by type for non-equities.
| Yield % | Capital % | Income % | |
|---|---|---|---|
| UK | 4.30 | 40.00 | 35.14 |
| Asia Pacific | 4.78 | 23.81 | 23.24 |
| Global | 4.20 | 19.33 | 16.60 |
| Bonds | 8.26 | 7.66 | 12.92 |
| Property | 8.13 | 7.23 | 12.01 |
| Cash | 0.22 | 1.98 | 0.09 |
| 4.89 | 100.00 | 100.00 |
I have also analysed based on the income and growth characteristics of each holding. I have classed my holdings as high income (dividend yields greater than 5%), as income (yields between 4% and 5%), as growth and income (yields between 3% and 4%), and as growth (yielding less than 3%). I am aiming to gradually reduce my investment in high income and income holdings and increase my investment in growth holdings. The latter have risen from 7.81% of capital in February to 9.49% of capital now, as a result of the two small steps taken so far.
| Yield % | Capital % | Income % | |
|---|---|---|---|
| High Income | 7.00 | 34.99 | 50.07 |
| Income | 4.49 | 39.38 | 36.15 |
| Income & Growth | 3.57 | 14.16 | 10.33 |
| Growth | 1.73 | 9.49 | 3.36 |
| Cash | 0.22 | 1.98 | 0.09 |
| 4.89 | 100.00 | 100.00 |
Cash
My annual draw down spending is now around 3.26% of my portfolio value, based on the last two years spending and the opening and closing values for that period. My cash holdings are sufficient to cover about eight months of spending. In addition to this, dividends being paid out each year are sufficient to cover about four months of spending. My other dividends received are being immediately re-invested in more shares in order to grow my income. This cash position means I will need to sell some investments every few months in order to cover spending.
Expenditure
Draw down expenditure was only 60.12% of my portfolio income for the last twelve months. This compares to draw down spending being 73.88% of my portfolio income in the previous twelve months. Portfolio income has risen by 16.43% whilst expenditure has fallen by -5.24%. The increase in income includes inheriting extra capital in April last year, and the continued effect of dividend reinvestment, dividend increases, and portfolio changes. The expenditure comparison is mostly one of pre-lockdown and lockdown. The fall in spending is mostly a result of lockdown restricting spending opportunities. Spending this April was higher than last April leading to a slight worsening of the position since the previous month. Spending increased as lockdown was eased this April compared to last April, but also a new washer dryer was purchased in the month.
Conclusion
In the last two months I have added to my growth holdings which are now 9.49% of my portfolio. Going forward I aim to use further increases in portfolio income as an opportunity to continue this switch by reducing my higher income and income holdings and increasing my growth holdings. This will be stalled by any dividend cuts, but I am hopeful that this will not happen.