Monday, 4 June 2012

May 2012: "following Woodford" update.

OK so how is my fledgling "following Woodford" strategy going?
Well given the turmoil of the present it is already looking quite interesting with the riskier (low diversification), portfolio of 3 picks doing a good job at holding their line and the 2 better diversified managed investments continuing to fall back in spite of their "perceived" defensiveness.

Click to enlarge, close to return.

Shares 31.05.12 £ Total % Perf.
Inv. Perp. High Income 1110.14 5.15 5721.24 -4.65%
Residue 0
Total 5721.24 -4.65%
Edinburgh Investment Trust 1182.00 4.69 5537.67 -7.71%
Residue 0.43 0.00%
Dividends 59.10
Total 5597.20 -6.71%
3 Picks
BAT 61.00 30.59 1865.69 -6.72%
Glaxo 138.00 14.38 1984.44 -0.78%
Vodafone 1191.00 1.73 2060.43 3.02%
Residue 3.68 0.00%
Total 5914.24 -1.43%

A quick once-over of the Invesco Perpetual High Income Fund's latest fact sheet from May (covering April 2012: confirms that my  picks continue to be in the top 10, with the top 10 (out of 109) accounting for 54.22% of the funds total valuation.
And having picked one from each of the fund's top 3 sectors: pharmaceuticals; tobacco; and telecoms, each pick is currently the largest holding of each sector which wasn't the case when I picked them. 
So, thankfully, there is no need to review/change any of the 3 picks at this stage then.

Top 10 holdings¹                     %
GlaxoSmithKline                  8.08
AstraZeneca                         7.50
British American Tobacco  5.80
Reynolds American             5.64
Roche                                   4.85
Vodafone                             4.84
BT                                         4.74
Reckitt Benckiser                4.49
BG                                         4.47
BAE Systems                      3.81
Total                                     54.22
Total number of holdings:    109

As you would expect from such similar strategies, I see that the Edinburgh Investment Trust has continued to fall in a similar fashion to the High Income Fund despite publishing its annual report ( Edinburgh Investment grows NAV despite market turmoil), which revealed a 10.2% increase in the Trust's NAV over the last 12 months. 
The Trust also declared a 5p per share dividend on the 3 May which was payable on the 23 May and has been added to the experimental portfolio's holding as a cash inflow of £59.10.

Not much to say about the 3 picks this month except for Vodafone which published its results (Investment update: Vodafone results y/e 31 March 2012). These came in much as expected but did reveal the growing influence that the company's Verizon Wireless investment could have on future earnings.
"Following Woodford" is an experimental strategy but is intended as a low cost, low maintenance strategy, built on the high yield philosophy deployed by Neil Woodford in his management of Invesco Perpetual's High Income Fund and the Edinburgh Investment Trust.
There is an apparent technical risk with only having 3 holdings but should be simple to execute and manage and it has made a promising start.

Earlier posts:
Following Woodford!

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