Markets and my holdings have rebounded in July and in August so far. That is despite increasing inflation, predictions of a prolonged recession, a cost-of-living crisis, and a war in Europe.
My portfolio total return was a loss of -4.99% for the six months to June, but as I write, in mid-August, my total return is a loss of only -0.93% for the year to date. That’s just one down day in the markets.
July
The FTSE All Share Total Return index, my chosen benchmark, was up by +4.36% in the month, and down by only -0.41% for the year so far. My investment return for the month was a gain of +2.79%, and a loss of -2.36% for the year so far. That’s some underperformance against my benchmark.
My individual holdings recorded an unweighted average share price movement of a loss of -7.39% for the year so far. My worst performer continues to be a UK small company investment trust that is now showing a loss of -35.32%. My second worst performer is a commercial property REIT that is down -21.94%. My third worst performer is an Asia Pacific small company investment trust that is down by -14.55%. These are all positions that I have added to in recent months, so I’m hoping for better times ahead. The best performer continues to be a global equity income trust that is up by +7.27%.
Capital
Starting from an index value of 100.00 at 31 December 2013, my capital is now 134.67, as shown in the graph above. This is -4.50% down from March’s peak, the high-water point for my portfolio. My capital value remains below its ten-month average. There has been a decrease of -3.94% in the year to date. Investment return of a capital loss of -4.90% and dividend income of +2.56%, totalled an investment return of a loss of -2.34%. Draw down expenditure deducted -1.60% during the year so far.
Income
Annual dividend income as a percentage of the opening portfolio value on 31 December 2013 has increased from 3.37% to reach 6.83% at this month end, as shown in the graph above. This is another new peak. My current portfolio dividend income yield is 5.07%, i.e., 6.83 divided by 134.67.
Investment changes
In July I made a small switch from my best performing global equity income trust to my worst performing UK smaller companies trust. This was only about 0.6% of my portfolio and only slightly shifts their weightings in my portfolio. This is part of my ongoing but slow-moving shift towards more growth holdings and less income holdings in the portfolio. There were also some dividends re-invested in my tax-sheltered accounts during the month.
Portfolio
The table below shows the composition of my portfolio at the end of the month.
| Yield % | Capital % | Income % | |
|---|---|---|---|
| UK | 4.06 | 39.46 | 31.61 |
| Asia Pacific | 5.26 | 24.80 | 25.75 |
| Global | 4.34 | 18.13 | 15.50 |
| Property | 7.70 | 8.99 | 13.66 |
| Bonds | 8.62 | 7.84 | 13.32 |
| Cash | 1.05 | 0.77 | 0.16 |
| 5.07 | 100.00 | 100.00 |
I also analyse the portfolio by the income or growth category of each holding.
| Yield % | Sectors | |
|---|---|---|
| High Income | above 6% | Property, Bonds, Asia Pacific |
| Income | 4.5% to 6% | UK |
| Income & Growth | 3% to 4.5% | Global, Asia Pacific |
| Growth | below 3% | UK, Asia Pacific |
My growth holdings are now 14.95% of the portfolio compared to 7.81% in February 2021 just before I began my shift to growth. This is intended to improve the long term growth returns of the portfolio by including more growth oriented holdings including smaller companies.
| Yield % | Capital % | Income % | |
|---|---|---|---|
| High Income | 8.28 | 23.91 | 39.05 |
| Income | 4.92 | 28.29 | 27.43 |
| Income & Growth | 4.32 | 32.08 | 27.31 |
| Growth | 2.05 | 14.95 | 6.05 |
| Cash | 1.05 | 0.77 | 0.16 |
| 5.07 | 100.00 | 100.00 |
Cash
My annual drawdown spending is now around 3.51% of my portfolio value, based on the last two years spending and the opening and closing values for that period. My cash holdings are now sufficient to cover about three months of spending. In addition, dividends being paid out in cash each year from my dealing account are sufficient to cover about three months of spending. I will need to sell some shares to raise cash again in the next few months.
Expenditure
Draw down spending was 63.49% of my portfolio income in the last twelve months which is almost identical with the figure of 63.55% for the previous twelve months. Portfolio income (+0.02%) and expenditure (-0.08%) was essentially unchanged.
RPI and CPI inflation reached annual rates of 11.84% and 9.43% at the end of June. This impacts us in higher energy bills and grocery bills that are beginning to rise.
Conclusion
I am pleased to see capital values rising again. That is helpful in that I will need to raise cash to spend by selling some shares soon. My portfolio income continues to rise, albeit slowly, and my shift towards growth is progressing, also slowly.