Financial Year End
At the end of each financial year, I carry out a number of administrative tasks on my investment portfolio. They include all the usual bits and pieces such as a final check on the CGT position to ensure the maximum allowance has been gained for the financial year. In truth, this FY the CGT was sorted a couple of months back.
Another task I carry out is having a look at the performance of my overall portfolio over the FY, not so much to gloat or kick myself but just to see how things are progressing. What have I learned during the year, what could I with ease have done better etc.
I measure my performance against the traditional FTSE All Share Total Return FTSE ASX.TR and then throw in two or three more challenging benchmarks in the form of two funds, Fundsmith & Marlborough Special Situations along with the well respected Henderson Small companies trust. My desire is to beat as many of my benchmarks as I can; If I can’t then there is a reasonable argument that I may as well just hand over my money to one of the above mentioned and spend a bit more time doing other things. A fine argument possibly but in truth, I do enjoy investing. So how do the figures stack up for the financial year 2015/16:
Stock Whittler portfolio: +11.9%
FTSE All Share TR: -6.1%
Fundsmith Equity T Ac +18.9%
Marlborough Spc Sit: +13.5%
Henderson Sm Co’s IT -0.5%
So overall not too bad although yet again a massive congratulatory applause to Terry Smith for the excellent performance of his Fundsmith T Acc which had a superb performance during the second half of the FY at a time when many investors portfolios, including my own, stuttered as worries over angry bears and a Chinese slowdown gripped the market.
The major work for the portfolio was done by the likes of Dart, Cambria Auto, Dixon Carphone, Berkeley, Tristel, Topps Tiles and Bioventix. Of course, some investments which on paper looked decent at the time of purchase did not do so well but happily I remained unemotional forming no attachment with the shares and stop losses were actioned.
Moving Forward Into 2016/17
Well, I will not be greedy in the sense that I will not chase jam tomorrow shares: I will continue to work within my universe of stocks that generate lots of cash, have either no debt or at least acceptable levels of debt and make a good return on capital employed.
What will I try to do better in 2016/17? Well that’s fairly easy to answer in that I must really add to winners more than I have done in the past. I do top up on the better ones but there is always some reluctance or mental hurdle that I have to overcome in paying substantially more for a stock that a purchased a few months before for much less: strange but that’s my little battle. Conversely, I will continue to dispose of any stock that hits my stop-loss trigger.
I do suspect that the first three months of 2016/17 will be somewhat difficult and I feel the markets will be twitchy ahead of the Brexit referendum on June the 23rd but I rather suspect that whatever the result of the referendum, we may see a rally for a little while at the end of June and hopefully continuing over the summer.
Changes in taxation, of course come into effect during 2016/17. These changes include the taxation on interest on bank/building society accounts which will enable me to receive £500 tax-free but get clobbered with 40% tax on the remainder. Also, we have the introduction of the £5,000 per year allowance for tax-free dividends on shares held outside of a tax-fee wrapper. This appears nice but does have the sting in the tails of 32.5% taxation on all dividends above this amount.
To help marginally mitigate these tax concerns I have already today used my 2016/17 ISA allowance with my broker and I look forward to next year when the ISA contribution increases to £20,000.
In terms of success this year, I would be happy with any appreciation over 5% but we will have to wait and see as the FTSE has been on a slow grind downwards since April 2015 but has at least stabilised a touch in March and April 2016
As ever, happy investing.
Welcome to my Blog Page - I hope you find my whittling on to be of some interest. I am a private investor who is happy to share thoughts on the market and individual stocks. Please remember that I am definitely not offering tips or investment advice.