Monday, 4 July 2011

June 2011: Mid year Portfolio Update

So the sun came out during the last week of June and saw markets (and portfolios), bounce back from near 2011 lows. 
At one point the Virtual Portfolio was approaching a loss of 4% in the month until the probability increased that a European sticking plaster will be applied to the Greek economy. Now they only have to implement those measures and execute their proposed privatisation plan.
Not out of the woods yet then!

Its still touch and go for me whether Greece can achieve the plan but good luck to them. One of the issues for me is that, under normal circumstances, this would have resulted in Greece lowering interest rates to boost its economy and make exports (and Greece as a tourist destination) more attractive, but it can't do that whilst it is shackled to the Euro! 
I suppose that this is the thin end of the wedge having taken the benefit from subsidies etc.

Back to the portfolio then.
Quite a few shares seem to have experienced a pullback in the month but, thankfully, the biggest holding, Rolls-Royce, recovered some of its poise following its recent furrowing below 600p. This was despite the usual raft of orders from the recent Paris Air Show (see earlier post - Paris Air Show: Update on Rolls-Royce.) as markets were more focused on any fallout should Greece default.
Further gains in the month came from William Hill, Apple, Microsoft, Aviva, Scot & Southern, and Centrica. William Hill just pipping Microsoft for the biggest gain in the month (or recovery depending on which way you look at paper profits).

Dividends also contributed nicely with half a dozen companies sharing their profits with the portfolio.
All told June boosted the portfolio by 0.99% (-0.76% in May ), giving a total year to date gain of 5.02% including dividends of course. 
When you consider that, with all of its gyrations, the FTSE 100 is down 0.42% year to date (excluding dividends), then the portfolio seems to be holding its own nicely as we pass the mid year point.

Forecast 1 month YTD 18 Months

% holding Div. yield % gain % gain % gain
R-R 29.41% 2.68% 2.30% 3.53% 33.40%
National Grid 18.59% 6.39% -1.13% 10.76% 12.85%
Invesco Perp. High Inc. *** 7.05% 0.00% -1.75% 5.78% 18.53%
Aviva 5.14% 6.15% 1.90% 11.70% 16.92%
BP 4.63% 3.84% -0.22% -1.48% 5.37%
Apple ** 3.68% 0.00% 2.11% 1.19% 72.71%
IG Group 3.19% 4.42% -4.30% -14.43% 45.05%
William Hill 2.94% 4.01% 7.99% 33.80% 33.58%
BG Group 2.85% 1.05% 0.25% 9.10% 29.72%
Centrica 2.80% 4.70% 2.02% -2.50% 2.37%
Scottish and Southern 2.65% 5.64% 2.05% 13.80% 21.12%
Morrisons 2.59% 3.60% -0.93% 11.25% 17.65%
Microsoft ** 2.30% 2.05% 7.78% -9.45% 5.03%
Tesco 2.22% 3.88% -3.50% 0.77% 0.78%
BAE Systems 2.19% 5.80% -3.69% -3.48% -0.24%
Cisco ** 1.62% 0.30% -2.66% -24.97% -26.37%
Cash 6.16% 0.00% 6.51% 11.72%

100.00% 3.40%

1 Month YTD 18 Months
Virtual Portfolio gain (incl. Dividends)
0.99% 5.02% 32.77%
FTSE gain (excl. Dividends)
0.12% -0.42% 9.84%
- 1 month gain   5938.87 - 5945.71

- YTD gain         5971.01 - 5945.71

- 18 month gain 5412.88 - 5945.71


01/06/2011 Dividends BAE @ 10.5p per share

09/06/2011 Dividends William Hill @ 5.8p per share

14/06/2011 Dividends Microsoft @ 16.31p per share *

15/06/2011 Dividends Centrica @ 10.46p per share

15/06/2011 Dividends Morrisons @ 8.37p per share

28/06/2011 Dividends BP @ 4.28p per share


*     US Dividends are adjusted for exchange rate and 15% withholding tax)

**   Sterling : Dollar exchange rate = £1: $1.60385 as at 30/06/11

*** Invesco Perpetual Accumulation units (i.e. Dividends re-invested)

Looking at the chart of performance relative to the FTSE100:

Double click on chart to expand. Click back to return.

As mentioned earlier, I'm not just sure that we are out of the woods yet though, as there will no doubt be more of the same concerns come the next tranche of bail-out funding as well as the usual speculative finger pointing at Spain, Italy, Portugal et al. 
Hopefully, others will take on board the need to re-align their budgets and spending accordingly - but I doubt it.

That also doesn't exclude something else coming out of the woodwork to test the markets resolve either particularly with inflation, government belt tightening and slowing growth/jobs all around us.
The US has also signaled the end of its Quantitative Easing program which will no doubt be brought up as "the decisive factor" by anyone wanting to call time on the US's recovery. 
But, at least China continues to play a long game. By recognising that its continued prosperity is dependent upon customer markets it looks to have a better understanding of Capitalism than the Western majority with their short term myopia only allowing them to focus on profits today at the expense of long term value and sufficiency.

Still looking to add to the portfolio but a couple of maybe's didn't quite drop into the right territory.
But, summers not over yet and we are still in those mid year doldrums, so you just never know when one of your likely candidates will come along at the right price. You just need to keep an eye out, be confident in your determination of value, and filter out the inevitable noise from the market place.

Related / Earlier posts:
- Paris Air Show: Review

Links to previous Portfolio updates: 
- May 2011: Portfolio Update
- April 2011: Portfolio Update

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