Saltydog fund portfolio rides wave of optimism
24th January 2013 08:30
by Richard Webb from ii contributor
A Santa Claus rally, also known as the "December Effect", is a rise in stock prices in the month of December, generally seen over the final week of trading prior to the New Year.
In 2012 the FTSE 100 (UKX) went up a relatively modest 0.5% during December, and actually dropped in the week after Christmas. In contrast our portfolio went up steadily throughout the month, gaining 2.3%.
In the first week of 2013 markets around the world rallied, and our portfolio continued to grow. By the end of the second week our investment had grown by 5.2% since I last reported.
Just over two years ago we invested £40,000 of our own money in a selection of funds to show how our up to date fund and sector performance data can help fellow DIY investors manage their ISAs, SIPPs and other investments. This portfolio is designed to be relatively cautious, or as we would say - a "tugboat" rather than a "speedboat".
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Saltydog Investor is an on and offline newsletter providing the most up-to-date performance data on unit trusts, OEICs, investment trusts and exchange traded funds on a weekly basis. Our aim is simply "to provide you with the information you need to enable you to make the most of your savings".
Every week we review and update our portfolio based on the latest data. We offer a two-month free trial and you can cancel at anytime with no on-going commitment.
In the first two years we've successfully demonstrated how it's possible to avoid the worst of the market falls; during the last couple of months we have shown that we can also take advantage when markets recover.
We have recently invested another £37,500 into a more adventurous "speedboat" portfolio investing in exchange traded funds. We're not quite ready to go public, but the early signs look encouraging.
Our star performers
Although we promote being active, we have not made that many changes in the last couple of months.
The Invesco Perpetual European High Yield fund accounts for over 28% of our portfolio and we first started buying it in September. In the four months that we've held it, this fund has gone up by nearly 14%. Another fund that we've held for almost as long is the Invesco Perpetual Strategic Bond which is up a more restrained, but perfectly acceptable, 5%.
In October we bought the Chelverton UK Equity Income fund which has also fared well - rising over 10% in three months.
In the more volatile UK All Companies sector we are currently holding the Standard Life UK Equity Recovery fund which is now 8% higher than when we bought it on 17 December.
Recent changes
The "Slow Ahead" Group continues to account for the majority of the portfolio, and we are still holding funds in the £ High Yield, £ Strategic Bond, and Corporate Bond sectors. When I last wrote we had a small exposure to the UK Index Linked Gilt sector, the Henderson Index Linked Bond, which we held for seven weeks and have now sold for a profit of more than 6%.
In the "Steady as She Goes" Group we have added the JO Hambro UK Equity Income and the Baillie Gifford Global Discovery fund, which have both started well.
Just before Christmas elections were held in Japan, and there are hopes that the new conservative Liberal Democratic Party may be able to revive the county's faltering economy. The new Prime Minister, Shinzo Abe, has already pushed through a new stimulus spending bill, and taken aggressive steps to drive down the value of the yen and help boost exports. At the beginning of the year we invested 4% of the portfolio in the Neptune Japan Opportunities fund.
Current mix in the Saltydog portfolio
- 65% in the "Slow Ahead" group - split between funds in the following sectors: £ high yield, £ strategic bond, and £ Corporate Bonds.
- 24% in the "Steady as She Goes" group - in two UK Equity Income funds and a Global fund.
- 11% in the "Full Steam Ahead" group - shared between a UK All Companies fund and the Japanese fund.