Average Index?

Still a little strange to think of my portfolio as an index, but that is what it has become.

It seemed a timely reminder yesterday when I posted my most recent update, that with the forecast yield being at 3.68%, it struck a little chord that that is close to what I think of as the long running average for the FTSE100.

And, this is despite my starting with a higher yield, over 4%, and actively looking to buy above average yield investments.

In much the same way as the FTSE, some have outperformed, other less so, and in doing so settled into a similar long running pattern of averages.

I guess portfolio's do follow a similar path of hope and promise, but with the intent to hold long term, much of that early stage, widespread promise of opportunity and growth, peters out to a steadier (hoped for anyway), year on year growth more akin to the average.

That would go some way to understanding the performance over the last year or so.

And whilst my portfolio is only 19 holdings, the top 3 holdings comprise 50.72% of the whole.

For the FTSE 100, the top 9 comprises 48.78%, and the top 10 comprises 51.63%.

So I am marginally to the safer side of that, 10 companies being 10% of the FTSE100 (when there are 100), and my 3/19 being 15% of my holdings (just 2 companies would have been on a par).

I am also finding that 20 companies is probably my limit in terms of keeping a watchful eye on them all, as even at this level, I do sometimes lose track of how some are performing, and of course any under-performance is lost in the average.

So a different way of thinking about my portfolio, and one to be aware of. It was always the expectation but the hoped for outcome is a continuing year on year gain at an acceptable risk adjusted level.

Its also a little reminder about goals (How to make a Million (by the time you are 65)!), and the ongoing risk of portfolio imbalances as reader comments have pointed out for me.

And whilst, performance wise, I am on plan, I'm not sure if I have a firm hand on either the goal or the risk yet. 

Referenced Post:

- How to make a Million (by the time you are 65)!

Ousted Morrisons boss is handed £3m pay-off

Ousted Morrisons boss is handed £3m pay-off: Profits slump and dividend to be cut, but Dalton Philips will get bonus (http://www.thisismoney.co.uk)

Rewarded for failure? And a strategy based upon analysts suggestions.
If he had hung on a little longer perhaps he could have succeeded his predecessor who is currently hanging on at M & S, and started the process of spending the family silver.

"The company has also agreed to pay more than £25,000 in legal and advisory fees that Philips incurred during his severance negotiations."

Really?

Back to basics Morrisons: product availability (including opening hrs), quality, and price, all wrapped up in an appealing environment with presentable staff, good access, and parking.

Article Link:

- http://www.thisismoney.co.uk: Ousted Morrisons boss is handed £3m pay-off: Profits slump and dividend to be cut, but Dalton Philips will get bonus

Earlier Posts:
- Expecting the unexpected as Morrisons FD announces intention to step down.
- Weekend rumours: Morrisons to raid Iceland!
- What "Next" for Marks and Spencers?
- Supermarket Sweep: Tesco; Morrisons; or Sainsburys?

February 2015: Portfolio Update.

New all time highs in February, for both myself and the FTSE100, with both indexes managing 2.92% gains in the month.
A reasonable month for dividends with payments received from Vodafone, Banco Santander, Verizon, Apple, Imperial Tobacco, and IG.
However, it was disappointing to see a significant fall of 17% in a significant utility, Centrica, which as the old British Gas has around 50% of the UK market.
And, despite their use as a cheap political shot across the bows, aren't utilities supposed to be safe?

It has been a long term holding, but I have to say that, even accounting for dividends, Centrica has been hugely disappointing as an investment, and it will need to significantly improve its prospects following this dividend cut.
Curious to see 2 elements of the old British Gas: BG Group; and Centrica, now in the dog house of my portfolio, and in danger of being culled.

Merchant Adventurer's Index
			Forecast	1 month	YTD	50 mth
	Price	% holding	Div. yield	% gain	% gain	% gain
R-R	949.00p	23.75%	2.51%	6.51%	9.08%	44.56%
Aviva	539.00p	13.49%	3.85%	2.08%	11.25%	48.98%
National Grid	887.00p	13.48%	5.04%	-5.24%	-3.39%	60.40%
BP	448.00p	9.64%	5.78%	5.66%	9.00%	5.87%
Apple **	$128.46	8.99%	1.32%	6.99%	17.50%	128.55%
IG Group	731.00p	4.54%	4.34%	0.69%	1.67%	53.18%
Imperial Tobacco	3193.00p	3.10%	4.47%	2.21%	12.59%	41.34%
William Hill	378.00p	2.97%	3.40%	0.27%	4.28%	105.24%
BAT	3782.00p	2.48%	4.04%	0.80%	8.06%	12.75%
Vodafone	224.00p	2.12%	5.25%	-4.68%	0.61%	-11.22%
Microsoft **	$43.85	2.02%	4.24%	5.91%	-4.69%	58.66%
Banco Santander	475.00p	1.92%	2.83%	5.56%	-12.76%	-12.96%
General Electric **	$25.99	1.89%	3.02%	6.15%	3.84%	72.13%
BAE Systems	533.00p	1.84%	3.92%	4.92%	12.92%	61.52%
Barrat Dev.	516.00p	1.59%	4.39%	12.66%	9.55%	44.35%
SSE	1573.00p	1.50%	5.85%	-2.24%	-3.02%	28.41%
Verizon **	3204.43p	1.45%	3.78%	5.60%	6.76%	15.46%
Centrica	244.00p	1.06%	5.80%	-17.01%	-12.54%	-26.42%
BG Group	958.00p	0.97%	2.05%	8.00%	10.75%	-26.08%
Cash		1.22%	0.00%
		100.00%	3.68%
				1 month	YTD	50 mth
Virtual Portfolio gain (incl. Dividends)
- 1 month gain  2161.51 -	2235.05			2.92%
- YTD gain        1644.62 -	2235.05				6.93%
- 50 month gain 1264.20 -	2235.05					76.79%
- 62 month gain 1000.00 -	2235.05					123.50%
FTSE gain (excl. Dividends)
- 1 month gain  6749.40 -	6946.66			2.92%
- YTD gain        5897.81 -	6946.66				5.80%
- 50 month gain 5971.01 -	6946.66					16.34%
- 62 month gain 5412.88 -	6946.66					28.34%
Transactions:
04/02/2015	Div	Vodaphone @ 3.60p per share
06/02/2015	Div	Banco Santander @ 8.70p per share
06/02/2015	Div	Verizon @ 30.98p per share
16/02/2015	Div	Apple @ 25.53p per share
17/02/2015	Div	Imp.Tobacco @ 89.30p per share
27/02/2015	Div	IG Group @ 5.75p per share
Notes:
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.5438 as at 28/02/15
***  Banco Dividends are adjusted for exchange rate and 21% withholding tax
**** Sterling : Euro exchange rate = £1: $1.37889 as at 28/02/15

So, new all time highs make for a satisfying chart! 
Fingers crossed I will be extending the height of the scales again soon.

Click to enlarge, close to return.

OK so 2015 has started well, which seems a little curious given the unknown future for Greece within Europe, and for different reasons, Britain's future in Europe. A Grexit and a Brexit?
More imminently, the dangers of a hung parliament or Labour majority in the upcoming General Election will, I'm sure, create turbulence across the UK economy, until the unknowns become answered.

Either way, I've never been one to guess or try to reposition my portfolio one way or another. Individual opportunities but not the whole. And inevitably, once the dust has settled, we might be asking ourselves what the fuss was all about?

Previous Posts:
- January 2015: Portfolio Update.
- December 2014: Portfolio Update.

When is a Rolls-Royce not a Rolls-Royce?

A little frustrating to see my information sources making the same basic error year on year.
In this case Digital Look, and its inability to filter out news stories and reporting between Rolls-Royce Holdings, the Aerospace, Defence and Energy company, and Rolls-Royce Motor Cars Ltd, a subsidiary owned of BMW.

The offending news story this time being a possible future Rolls-Royce SUV model but it appears under the Rolls-Royce Holdings section, the Aerospace, Defence and Energy company.

At a guess, as its an ongoing thing, and as with most things these days, I would assume it to be an error by computer given a restriction in its word search for news stories.

Its not a recent thing either, stretching back to the original sale of Rolls-Royce Motor Cars to Volkswagen in 1998, by its then owner Vickers.

Unfortunately for VW, this change of ownership triggered a reversion of the recognisable elements of Rolls-Royce cars to Rolls-Royce PLC, namely the Spirit of Ecstacy, the Radiator Grill, and the usage rights to the R-R brand logo.
Rolls-Royce PLC, already in a joint venture with BMW to produce small aero-engines proceeded to sell the rights to usage to its then partner, BMW.
Not necessarily part of the deal but the RR-BMW joint venture subsequently became a wholly owned subsidiary of R-R PLC.

The following year, 1999, actually saw the remaining elements of Vickers being bought by R-R PLC, so there was almost a return of the Motor Company to the Aerospace Company.

Anyway, 2003 saw the first Rolls-Royce cars, as we recognise them today, rolling off the purpose built BMW facility in Goodwood.
The original factory and workforce in Crewe (and to my mind the spiritual home), is still owned by VW, and producing cars under the other luxury and heritage brand, Bentley

Digital Look aren't on the their own though, and I have in the past written to such as Shares magazine highlighting the same confusing references in their reviews and recommendations.

So if you are interested in investing into the growing luxury car brand market and specifically Rolls-Royce Motors, its BMW AG you need to be looking at, not Rolls-Royce Holdings.

BMW AG is quoted in Euros on the DAX Index of the Frankfurt Stock Exchange.