A key part of the UK Value Investor newsletter is a virtual – but extremely realistic – model portfolio, managed according to a defensive value investing strategy.
Historic performance
The portfolio was launched in March 2011 with a starting value of £50,000. All dividends are reinvested and all trading costs such as broker commissions and stamp duty are taken into account.
| Performance to 01/07/17 | Model Portfolio (A) | FTSE All-Share Benchmark (B) | Difference (A - B) |
|---|---|---|---|
| Value at inception (01/03/2011) | £50,000 | £50,000 | £0 |
| Current value | £94,213 | £82,318 | £11,895 |
| Dividend yield | 4.1% | 3.2% | 0.9% |
| 5-Year total return | 88.3% | 64.8% | 23.5% |
| 5-Year annualised return | 13.5% | 10.5% | 3.0% |
| 5-Year maximum decline | - 3.9% | - 11.4% | 7.5% |
| Total return from inception | 88.8% | 64.6% | 24.2% |
| Annualised return from inception | 10.6% | 8.2% | 2.4% |
| Maximum decline from inception | - 8.1% | - 13.5% | 5.5% |
For more detailed performance data, here’s a spreadsheet (Google Sheet) containing monthly values for the model portfolio and its index-tracker benchmark.
Quarterly performance reviews
Detailed reviews of the portfolio and its performance are published on a regular basis. You can read through the most recent reviews on the Portfolio Reviews page.
Case studies of past investments
In order to continuously improve the portfolio, the least attractive holding is sold every other month and replaced with a new investment the following month. This is an effective way to take profits on successful investments and weed out unsuccessful ones.
Each buy or sell decision is accompanied by a full review in the newsletter, explaining why that particular decision was made. In the case of sell decisions the review details how the investment performed and whether there were any useful lessons to be learned. The post-sale reviews (or autopsies) are published on the blog as well as in the newsletter, and you can see them all in the table below.
| Company (click to read review) | Date sold | Holding period | Total return |
|---|---|---|---|
| Wm Morrison | July 2017 | 4 years 2 months | - 2% |
| BAE Systems | May 2017 | 5 years 10 months | 142% |
| Standard Chartered | March 2017 | 2 years 8 months | - 33% |
| TP ICAP | January 2017 | 5 years 4 months | 57% |
| Homeserve | November 2016 | 3 years 3 months | 134% |
| Chemring Group | September 2016 | 5 years 5 months | - 73% |
| Reckitt Benckiser | July 2016 | 2 years 5 months | 63% |
| Tesco | May 2016 | 2 years 11 months | - 38% |
| Hill & Smith | March 2016 | 2 years 9 months | 83% |
| Amlin | February 2016 | 3 years | 85% |
| JD Sports | December 2015 | 4 years 9 months | 234% |
| Cranswick | October 2015 | 2 years 11 months | 135% |
| RSA Insurance Group | August 2015 | 3 years 6 months | 19% |
| Serco | June 2015 | 1 year 1 month | - 50% |
| Balfour Beatty | April 2015 | 3 years 8 months | 9% |
| ICAP | February 2015 | 2 years 10 months | 42% |
| Imperial Tobacco | December 2014 | 1 year 9 months | 28% |
| Greggs | October 2014 | 1 year 10 months | 30% |
| Royal Dutch Shell | August 2014 | 8 months | 18% |
| AstraZeneca | June 2014 | 3 years | 55% |
| Mears | April 2014 | 3 years | 89% |
| Aviva | January 2014 | 1 year 9 months | 32% |
| Go-Ahead | October 2013 | 1 year 8 months | 36% |
| Interserve | July 2013 | 2 years 4 months | 117% |
| Reckitt Benckiser | April 2013 | 2 years | 47% |
| N Brown | January 2013 | 8 months | 50% |
| UK Mail | October 2012 | 1 year | 34% |
| UTV Media | July 2012 | 7 months | 45% |
| Robert Wiseman Dairies | January 2012 | 9 months | 25% |
Multi-dimensional diversity
In order to reduce risk, the model portfolio is invested in a diverse range of around 30 companies operating in many different sectors and countries. The charts below should give you a good idea of how diverse this portfolio is.
Model Income Portfolio
In addition to the model portfolio, which reinvests all dividends, the newsletter also tracks a model income portfolio. This income portfolio also had a start date of March 2011, but rather than a starting value of £50,000 it had a starting value of £500,000. The idea is to represent the portfolio of an investor who is switching from accumulation to income draw-down, but who wishes to remain fully invested in dividend paying stocks.
All dividends are withdrawn from the portfolio as income and all trading costs are taken into account. It holds exactly the same companies in roughly the same proportions as the standard model portfolio.
Please note that unlike the standard model portfolio, the model income portfolio is benchmarked against a portfolio of progressive dividend-paying investment trusts, rather than a FTSE All-Share tracker. The investment trusts in the benchmark portfolio are Temple Bar, City of London, Merchants Trust, Alliance Trust and Foreign & Colonial. The model income portfolio is also benchmarked against an imaginary inflation-linked bond paying 4% interest.
Important notice: These portfolios, their holdings and any related buy or sell decisions are not recommendations to invest or not to invest. The portfolios should be seen as a source of information only. You must always do your own research, make your own investment decisions or seek a regulated financial adviser. Please see the full disclaimer.