Unfortunately, with Apple proving unable to defy gravity (for the moment!), the Merchant Adventurer's Index has not followed the same accelerated upward trajectory of the FTSE, managing a lesser 3.63% in the month, even with 2 healthy dividends from Rolls-Royce and National Grid.
A one month "tax free" gain of 3.63% is not to be sniffed at but with these things being relative the FTSE's 6.43% is quite a comprehensive beating.
Seems that with Washington doing "just" enough to put off diving over its own fiscal cliff, commentators around the world can now see an end in sight to the credit crunching dominoes.
Not sure about you but this "expert" opinion does little to convince me that the issues have been resolved as yet.
However, this additional appetite for risk seems to have been enough for investors and fund managers to push up market prices fairly rapidly in a relatively short space of time despite the continuing downgrades in forecasts.
Some suggest that January has started to see a flow of funds out of bonds, as bond yields fall, into equities.
Could be that markets have/are getting a little ahead of themselves though and patience might just be required now if markets decide to take a breather.
But looking at my portfolio, Apple's fall did most of the damage with a 1 month fall of -12.70%, and Morrison's was the next worst performer at -4.56%.
Both were held back by disappointing trading figures that seem to confirm a loss of market share.
It remains to be seen if Morrison's can turn things around quickly or if management's lack of ideas see them snatch at analyst's advice to push on with convenience store formats and online groceries.
More importantly (to me at least), is that management don't lose sight of core skills/products and don't burn cash on strategies that are not properly thought through or value enhancing to the Morrison brand.
The company's finances have always been managed quite conservatively and served as a strength. It would be terrible to see Morrison's become another example of new management spending all the family silver because it seemed the easiest option.
As for Apple, well the company is currently on a downer at the moment with all the negative perception of its "stalled" growth prospects and loss of innovation.
Analysts/Commentators are looking for the next "killer" product from the company, even though they probably won't recognise it if it does come.
Most seemed to dismiss Apple's attempt at the smartphone v. Nokia's dominance and, even following that success, couldn't understand what an iPad would be useful for, never mind categorise it as a new market.
On the positive side there were two dividends received and double digit gains from BG, and Vodafone, which all seemed to bounce from recent lows.
William Hill was another double digit gainer as it continues to benefit from positive speculation over its planned acquisition, and results (its own and Playtech's), which points to momentum from its online operations.
A slightly more recent boost might also be coming from Jersey state comments that suggest a softening in online gaming restrictions in the US.
Aerospace also continued to do me proud with Rolls-Royce and GE both delivering solid gains.
Rolls- Royce's gain came in addition to the aforementioned dividend and has been strong following recent shaming headlines regarding agents and contract sweeteners.
GE has recently increased its dividend payout.
National Grid continues to be under some moderate pressure with a question mark over its future dividend policy given the current disagreement with the regulator. This has fed some analysts suggestions of more moderate dividend growth or even (heaven forbid), a rebasing, which is technical lingo for a cut.
Elsewhere, Aviva has paused for breath following recent gains with analysts also uncertain as to the next direction in the dividend.
My hope is that the improved capital position and strategic sales have done enough to hold the dividend at current levels going forward, at least until economic conditions improve and bring some sales growth along with an improved profile of risk given the company's exposure to sovereign debt in its operating regions.
Tesco is also starting to build some recovery momentum, in contrast to Morrison's, as the company's strategy starts to show some traction in UK sales.
Worth noting is that Sainsbury's decline from the top spot took many, many years to reverse, so if Tesco has managed to recognise, and possibly stem, the outflow inside 12 months, it is a significant achievement.
And all against the backdrop of extreme competition from strongly improving rivals.
| Merchant Adventurer's Index | ||||||||
| Forecast | 1 month | YTD | 25 mth | |||||
| Price | % holding | Div. yield | % gain | % gain | % gain | |||
| R-R | 946.00p | 33.60% | 2.07% | 8.30% | 8.30% | 51.85% | ||
| National Grid | 691.50p | 16.35% | 5.91% | -1.64% | -1.64% | 25.05% | ||
| Aviva | 366.70p | 11.57% | 7.09% | -1.69% | -1.69% | 8.53% | ||
| BP | 466.75p | 5.48% | 4.55% | 9.88% | 9.88% | 1.97% | ||
| Apple ** | $456.21 | 5.42% | 1.71% | -12.70% | -12.70% | 18.13% | ||
| IG Group | 446.00p | 4.31% | 5.04% | -0.89% | -0.89% | -6.54% | ||
| William Hill | 384.10p | 3.85% | 2.92% | 10.34% | 10.34% | 125.01% | ||
| General Electric ** | $22.29 | 2.46% | 2.61% | 8.31% | 8.31% | 43.74% | ||
| Centrica | 350.20p | 2.36% | 4.66% | 4.98% | 4.98% | 5.61% | ||
| SSE | 1419.00p | 2.10% | 5.93% | 0.07% | 0.07% | 15.84% | ||
| Microsoft ** | $27.47 | 1.92% | 2.78% | 4.82% | 4.82% | -3.22% | ||
| BAE Systems | 339.60p | 1.82% | 5.73% | 0.80% | 0.80% | 2.91% | ||
| Vodafone | 172.10p | 1.79% | 6.25% | 11.43% | 11.43% | 6.80% | ||
| BG Group | 1120.00p | 1.76% | 1.43% | 10.62% | 10.62% | -13.58% | ||
| Morrisons | 251.00p | 1.70% | 4.70% | -4.56% | -4.56% | -6.20% | ||
| Tesco | 356.30p | 1.53% | 4.17% | 6.04% | 6.04% | -10.68% | ||
| Cash | 1.98% | 0.00% | ||||||
| 100.00% | 3.89% | |||||||
| 1 Month | YTD | 25 mth | ||||||
| Virtual Portfolio gain (incl. Dividends) | ||||||||
| - 1 month gain 1644.62 - | 1704.36 | 3.63% | ||||||
| - YTD gain 1644.62 - | 1704.36 | 3.63% | ||||||
| - 25 month gain 1264.20 - | 1704.36 | 34.82% | ||||||
| - 37 month gain 1000.00 - | 1704.36 | 70.44% | ||||||
| FTSE gain (excl. Dividends) | ||||||||
| - 1 month gain 5897.81 - | 6276.88 | 6.43% | ||||||
| - YTD gain 5897.87 - | 6276.88 | 6.43% | ||||||
| - 25 month gain 5971.01 - | 6276.88 | 5.12% | ||||||
| - 37 month gain 5412.88 - | 6276.88 | 15.96% | ||||||
| Transactions: | ||||||||
| 05/01/2012 | Div | Rolls-Royce @ 6.9p per share | ||||||
| 19/01/2012 | Div | National Grid @ 13.93p per share | ||||||
| Notes: | ||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | ||||||||
| ** Sterling : Dollar exchange rate = £1: $1.5855 as at 31/01/13 | ||||||||
Thankfully, stretching over 2 years the chart illustrates a better picture of relative performance than January in isolation, with a 34.82% portfolio gain v. the FTSE 100's 5.12%.
Over 3 years the comparable figures are now 70.44% v 15.96% as shown in the table above.
 |
| Click to enlarge, close to return. |
But with Mining and Financial sectors leading the charge in January, it will be interesting to see if this will continue through 2013. And, if there is a genuine recovery building then we should see other cyclical sectors rerating, such as housebuilding.
None of which I am invested in!
However, I will continue to focus on dividend paying companies believing that these can continue to form a solid foundation for my portfolio, with an expected level of return that can be re-invested.
February is already shaping up to be an interesting month with Europe once again looking to undo previous good work, with internal squabbles over the unified currency, and political concerns in Spain, Italy, France, and Germany.
And all this despite analysts and senior banking figures suggesting that the worst is over.
There's also anticipation of the incoming Governor of the Bank of England, amidst a growing debate over whether inflation should be the primary target for the BoE.
A debate that seems long overdue given Mervyn King's failure to maintain the current inflation target with his unspoken mantra that debt and profligacy is good and savings bad.
So, all in all, an interesting start to the year.
Previous posts:
- December 2012: Portfolio Update (2012 Year-end).
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