February 2013: "following Woodford" update.

Well the Invesco Perpetual High Income Fund has continued to move forward strongly and leads the way in this virtual experiment with a gain of 11.91% since inception.

The similarly run Edinburgh Investment Trust, which is also managed by Neil Woodford, trails despite a strong 8.74% showing.

Alas, the experiment of 3 picks continues to lag albeit with a positive 3.58% gain. 

Bizarre that the 3 picks has been negatively affected by Woodford's decision to exit Vodafone completely, his second such exit of  a FTSE 100 holding in the space of 14 months (Tesco being the last). 

Both decisions still seem strange to me given the long term value that I thought Woodford sought despite short term concerns. Similarly negative cashflow aspects continue to affect his largest holding, Astrazeneca, and the more recently topical holding in BAE.

The fact that Tesco is now closing in on its pre profit warning trading range and Vodafone has bounced since his exit with renewed prospects of some form of deal on its Verizon Wireless assets makes the decision to offload even more difficult to understand. After all it has been speculated this year.

You would think that with the funds size and shareholding influence and access to management that the prospects of a Verizon deal would have been discussed as a potential game changer.

Mystifying though and for me personally having to switch from Vodafone to BT makes the 3 picks much less attractive. 

But as debated last month (January 2013: "following Woodford" update.), I have kept faith to the experiments criteria and followed suit The main priority being a easy maintenance portfolio with not too much to think about other than to keep tabs on the High Income Funds top 10.

But where is the High Income Fund's outperformance, well there lies a tail.

I did also mention last month that if I was to widen my criteria to sector weightings in the whole portfolio I would have picked up industrials and ended up with BAE rather than BT and it is another industrial holding that has made the tops 10 this month and now sits at no 10 just behind BAE, and what is that holding?

Well at 3.74% that holding is now Rolls-Royce which is currently the largest holding in my personal portfolio.

Slightly galling to think that if I had delayed the decision to trade (which would have meant taking a tangent from the High Income Fund's top 10), then this month would have confirmed Industrials as the 3rd largest sector in the Top 10 and I would have had my pick of Rolls-Royce or BAE, both of which sit in my personal portfolio.

So Woodford's High Income Fund is wining this experiment with one of my own shares. I would suggest that it is a conspiracy on his behalf but that would be paranoid, or would it!

				Shares	Price	£Value	%Gain
	Inv. Perp. High Income			1110.14	6.05	6714.71	11.91%
		Residue				0.00
		Dividends
		Total		6000		6714.71	11.91%
	Edinburgh Investment Trust			1182.00	5.52	6524.64	8.74%
		Residue				0.43
		Dividends				260.04
		Total		6000		6785.11	13.09%
	3 Picks
	BAT			61.00	34.35	2095.05	4.75%
	Glaxo			138.00	14.56	2009.28	0.46%
	Vodafone			1191.00		0.00
	BT			788.00	2.68	2109.48	-3.80%
		Residue				0.00
		Dividends				1.05
		Total		6000		6214.86	3.58%
Transactions in the month:
	Invesco Perp. High Income			N/A
	Edinburgh Inv. Trust
				22/02/2013	Div	59.1
	3 Picks
		Vodafone		06/02/2013	Div	38.95
				15/02/2013	Sell	1976.56
		BT		15/02/2013	Buy	-2192.7
					Res	3.68

So chartwise a flat performance from the 3 picks and more dealing charges than foreseen when considering Neil Woodfords fund as a benchmark.

Click to enlarge, close to return.

Related post links:
- January 2013: "following Woodford" update.
- February 2013: Portfolio update.
- http://www.invescoperpetual.co.uk: Invesco Perpetual High Income Fund