Saturday, 30 December 2017

Personal Portfolio Review - End 2017

Well time marches on relentlessly and this is now my 5th end of year review. Over this period, some things have changed - at the start, I did not hold Vanguard Lifestrategy - today it is by far my largest holding. Some other things remain the same - I still hold many of the original investment trusts - Aberforth Smaller Companies, City of London trust, Temple Bar and Edinburgh.

As ever, an interesting year on the markets and even more so politically.

The decision to go ahead with Brexit was triggered in March and, as it stands, we are on course to leave the EU in 15 months time. In June we had a snap general election designed to strengthen the PMs negotiating position but which backfired leaving the Government without a majority in the Commons and needing the support of the DUP. Thankfully we managed to get past phase 1 and can now start negotiations on a transition period and trade deal...I have a feeling this will be very tricky but remain hopeful that we get a good outcome in readiness for leaving the EU next March.

Meanwhile, President Trump is coming up to celebrating his first year in charge and hardly a day has passed without him hitting the headlines...'fake news' entered the OED!

Despite the political uncertainties, the markets seem to have sailed through all these events without missing a beat, which I did not expect at the start of 2017 and which just reminds me how difficult (and unwise) it is to try and second-guess the markets.

By the way, did anyone invest in Bitcoins at the start of the year? If so, I believe you will have done well as the price has gone up from $1,000 to currently $14,000... it was $19,000 just before Xmas. To be honest, I really do not understand this whole area of finance but I will be looking to learn more about this blockchain revolution over the coming year as I suspect it may become a significant advance to the way our financial systems operate. It will be interesting to see how the various cryptocurrencies - Bitcoin, Litecoin, Ethereum, Ripple, Dash etc. evolve and become more established as alternatives to the way we have traditionally done business.

Recently, Vanguard announced it will looking at using blockchain to simplify and automate the process of sharing index data. They said its blockchain will enable index data to move instantly between index providers and market participants and should result in a cost saving which they can pass on to their customers.

On a personal level I experienced my own WTF episode in March when my computer hard drive crashed. I thought I had a back up disc but turned out I had not done the backup procedure correctly so lost all my files! It has taken some time to reconstruct documents and spreadsheets on my replacement laptop but some of my research material is locked away on my old HD.

Also, in January, I published my books in paperback format. It seems to have been a popular addition and sales of the paperbacks are roughly double that of the ebooks, which in turn have seen an increase in sales. As the books were already written, all that was required was a little updating and then an upload to Kindle's paperback version. On the downside, Amazon take 40% of the sales (30% for ebook) and also there are print costs deducted so the cover price has to be higher to provide a similar net income. The most popular book is 'DIY Pensions' which accounts for over 60% of's encouraging to know there are lots of people out there getting to grips with personal finance and saving for the future.


So, moving on to investments. In 2015 I decided to review my whole investing strategy. The outcome was to begin to simplify and diversify - wind down my individual shares portfolio and reduce some of my managed funds. The proceeds were diverted towards an increasingly passive strategy - in particular, using the Vanguard LifeStrategy index funds.

Over the past year, I have completed the sale of all individual share holdings and a couple of investment trusts which did not seem to be contributing much to the basket.

I have also started to operate a more flexible approach to taking income from my investments which involves the 
sale of capital units from my VLS funds.

Portfolio Returns

Turning to my portfolios and following on from my half-year review at the end of June, I have just completed a review of my actual investment portfolios - sipp flexi drawdown and ISAs - for the full year to the end of December.

The FTSE 100 started 2017 at 7,142 - and has steadily progressed to finish the year up 546 points closing at an all time high of 7,688 or 7.6% - if we add on say a further 3.8% for dividends paid, this will give a ballpark total return figure of 11.4% for the full year. The second line FTSE 250 has done better and the FTSE All Share index is up 13.0% for the year.

My Vanguard Lifestrategy funds are a diverse mix of global equities and bonds and provide a good benchmark for a balanced global portfolio. The 60 & 40 funds are up 8.6% and 6.5% over the past year.

So far as cash deposits go, returns must surely be the lowest in a generation however there is a little ray of hope for savers. In October the Bank rate increased for the first time in a decade from a record low of 0.25% back to 0.50% with the prospect of a couple more increases in the new year. The savings rate on my instant access account with the Coventry BS has increased by 0.25% to 1.40%. This may not seem much but the interest I will receive increases by over 20%. However, inflation is creeping up - currently 3.1% so it's still really tough for cash savers to keep ahead of the game!


As mentioned last year, my individual shares portfolio has been the main area of change following my review of strategy and I have recently completed the sale of all remaining shares - Unilever, Amec Foster, Legal & General, IG Group, Berkeley Homes, IMI and Next.

The total return including income on my individual shares has been just over 20% which makes up for the disappointing returns of just 1.5% in 2016.

Some of the proceeds have been recycled into Capital Gearing and AJ Bell Passive with a view to preserving gains made in recent years. The rest of the proceeds remain in cash awaiting better opportunities down the line.

Investment Trusts

Over the 12 month period, I purchased a holding in Scottish Mortgage for my SIPP from the sale of Invesco Income Growth. I have also added HICL Infrastructure. In my ISA, I disposed of Dunedin Income Trust which was replaced with the more defensive Capital Gearing.

The better returns came from Finsbury Growth & Income (again) up 22%, new addition TR Property up 36%, Scottish Mortgage +31% and smaller companies specialist Aberforth up 24%.  The only trusts that has struggled for me this past year have been Blackrock Commodities Income -9% and new addition HICL Infrastructure which I hold in both ISA and SIPP.

The total return for my basket of trusts over the year was a respectable 10.8%.

Income yield from the trusts portfolio has been steady at 3.6%.

Index Funds

Over the past year I have added VLS 40 to my SIPP flexi-drawdown, also iShares Corp. Bond fund (replacing Law Debenture) and AJ Bell Passive fund and most recently, Kames Diversified Income to my ISA.

Finally, a significant percentage of my redistribution of shares and active funds have been invested in the two Vanguard LS index funds - 60 and now 40 added. The intention is to sell down units each year to provide ‘income’ and I have also set aside a cash buffer reserve representing 10% of the funds value from which I can draw upon for income in bear market years when returns on the index fund are negative.

Last year, the LS 60 fund advanced by 18.6% so I took the opportunity to draw the equivalent of 2 yrs income by selling 8% of my units.

My Vanguard UK Income fund provided a nice uplift in dividend this year - up 82p or 10.5% compared to 2016 which is probably due to the fall in sterling and is not likely to be repeated next year.

The contribution from my index collectives has therefore been positive over the year with a total return of 8.4%.

Fixed Interest

As ever, the fixed interest sector has provided a steady and predictable income of 5.8% plus capital appreciation of  6.5% providing a total return of 12.25% for the year. 

The better returns came from my two investment trust holdings - New City +12.5% and City Merchants +10% and also my Lloyds Bank Pref Shares chipped in a nice 29%.

My last remaining PIBS with the Skipton BS were redeemed in April 2017 and I have used the proceeds to add HICL Infrastructure Trust and also iShares Corp Bond (ex financials) ETF (ISXF) to my income portfolio.

The Complete Basket

As a whole, the portfolio has delivered a total return of 11.3% over the past  year and almost the same as 2016. Here's my portfolio returns in previous years 

2011  -3.0%
2012 15.5%
2013 13.3%, 
2014   5.4%, 
2015   2.7%  
2016 11.4%

A sum of £1,000 at the start of 2011 has now grown to £1,700 and an average annualised return over 7 years of 7.9%. This has enabled me to take my 4% annual income leaving some held back to build reserves.

I am hopeful of continuing to withdraw this level of income for the foreseeable future but as my state pension will be due this coming year I will not be so reliant upon the investment income.

Most Popular Posts

As the shares are sold down there seems less to report on and therefore the number of posts has reduced.

The most popular this year have been:

1. Work Out Your Retirement Figure (link)
2. Vanguard LS 60 - Year 2 Update (link)
3. A Logical Investment Strategy Revisited (link)


In these times of low interest rates and corresponding low returns from cash deposits, for just a little more risk, an average annualised return of almost 8% over the past few years is for me very acceptable. Return on my investments have been positive in 7 of the past 8 years and I am thinking the wheel may be about to turn! However, I have no special insight and I would not be surprised to see the bull keep running. Over the past year I have lost out by reducing my equities and moving to cash and defensives.

However, it's difficult to put a price on peace of mind and I am starting to feel more comfortable with my revised strategy - removing the individual shares means less monitoring of dividend receipts, annual reports etc. The move to index funds provides more global diversity and in particular the equity/bond balance provided by the LS funds provides less volatility and more stability.

One bonus from the changes means it easier to leave the portfolios alone and therefore avoid tinkering. I am reducing equities and gravitating towards an allocation which I hope will continue to provide a reasonable level of return which keeps ahead of inflation without too much volatility. I remain mindful of the words of Ben Graham 'The investors chief problem...even his worst likely to be himself'.

I subscribe to the philosophy - it seems to me the easiest way to grow wealthier is learning to live with less, because living with less has a higher success rate than attempting to make a fortune, and fortunes tend to push aspirations and desires higher anyway.

Be patient, stay in the game and keep it simple....

Finally, thanks to all for dropping by during the past year and wishing everyone all good things for 2018.

As always, if you keep track of portfolio returns, feel free to leave a comment and share with others how you have fared over the past year.


  1. Thank you for all your very useful information.
    Just out of interest my return for 2015 was 9.13%, 2016 was 7.44% and this year 2017 was 17.76%. These figures include share accounts, Isa's and Sipp's for my wife and I

    1. Well done with your investment returns...17% for this year is excellent...I was just wondering about your allocation. Is it mainly equities?

  2. HI DIY

    It is always interesting to read how others have done. Of course, each person should have their own strategy of how they want to achieve what they want to achieve, and for each the strategy can lead to different investment approaches and returns. As always at this stage of life it is a balance between risk profile, Income, capital preservation and sustainability of the portfolio. The days of chasing the Rainbow are long gone, but providing a growing sustainable income, a balance between capital growth and income, is what we all aim to achieve. Where we all differ is how we approach to achieve that and therefore the outcome for our portfolios is all different.

    This might all sound as an excuse for a lacklustre performance for 2017, but my portfolio of SIPPs/ISAs/Stockbroker accounts turned in 11.69% with little dividend re-investment as it is mainly withdrawn as income. Since the begining of 2013, the portfolio is up circa 50% including dividends withdrawn. I have a strategy and so far I continue to stick with it as it does what I need it to do. As always I will continue to review the approach and if I find a better one I will change to it, but so far I'm not convinced of any arguments to change it, but if the facts change I will change my conclusion.


    1. Gareth,

      Good to hear from you and thanks for posting your approach and returns which seem to be very much in line with mine. I would not regard 11.7% as 'lacklustre' but maybe you had your sights on a much better figure.

      I believe it is important for everyone to settle on a strategy they feel comfortable with and it sounds like you have found one so I would be interested to learn a bit more on your strategy if you have the time.

      Good luck for the coming year.

  3. You have done a lot better than me! I have been averaging in and remain at around 50:50 equities:bonds. The equity bit is mostly VWRL and the bond bit all short dated gilts and corporate bonds or cash. The latter returned next to nothing which probably explains quite a lot of the difference. Overall it's up 7%, dividends reinvested.

    1. Thanks Ruby,

      I think the global equities have been held back a little by the recovery of sterling in recent months and yes, not much return for me from my corp. bonds, cash and gilts but these may well do a good job over the next year or two. Good luck for the coming year.

  4. ps - I'm a bit of a disciple of William Bernstein and Lars Kroijer which effectively means I take my risk in stocks and keep the bond element as secure as possible (which effectively means short). Long hand way of saying I try not to chase yield. I've been tempted by prefs and HICL and so on but have thus far resisted.

  5. Congratulations on a very good year DIY. A very solid set of returns over the past 8 years, and with ever increasing peace of mind and less fuss. Congratulations also on the increased book sales - a neat source of second (third?) income and great avenue to get your ideas out.

    As for me, 2017 provided a return of 25.97% including dividends. Mainly smaller Australian companies, and just the first year of my portfolio since coming back to investing. My retirement portfolio is up 14.12% for the year, which is also most satisfactory.

    All the best for 2018 DIY!

    1. Likewise congratulations WfT. I read somewhere that the Oz markets had not done so well this year but obviously the smaller companies are doing the business. I hope your blog is doing well - best wishes for the coming year (and beyond!).

  6. Hi John,

    I must admit I like the idea of those Vanguard LifeStrategy funds. Dull, but very sensible for most people. If I ever get fed up with investing directly in shares I'll probably switch to LifeStrategy or something similar.

    And well done with the paperbacks; I'm glad to hear they're selling well. I might jump on that particular bandwagon and create a paperback of all my blog posts from 2017. Not sure if anybody would buy it though!

    Best of luck for 2018


    1. Good to hear from you John.

      Yes, slow and steady seems to be the way to go for me and the VLS funds seem to hit the spot so I will stick with the 40 & 60 for the greater core of my portfolio and retain a few ITs etc. as satellites.

      Best wishes for the coming year!

  7. Happy New Year, DIY!

    Thanks for the round-up and great work on your returns. My own total return in 2017 wasn't quite as good as yours at 10.2% but since I tend to use a notional 5% return in my plans, then I'm happy to take that!

    1. Thanks weenie and likewise best wishes for the coming year.

      I guess you have to be happy with 10% when your plans are for 5% but I think its a good idea to maintain a cautious expectation and then be happy when it's surpassed.

      Looking forward to following your journey on 'Quietly Saving' as things unfold over 2018...good luck!

  8. Thanks for sharing DIY Investor. Particularly interesting for me as early 2017 after several strong years of gains I decided to make some changes
    a. change my allocation to 60 30 10 (equity, bonds, cash) and
    b. migrate most of my active funds and shares to Lifestrategy 60 aiming to reduce forward volatility, increase diversification, accept a market return, and reduce the level of attention/interaction needed.
    I was partially out of the market during the change between Jan and Mar also anticipating a riskier 2017 which was totally wrong and meant I missed out on some gains.
    I retained direct holdings in MSFT and APPL and MKL who have performed very well, this may prove a mistake as I have no defined exit criteria but I understand the formers industry as I worked in it for two decades and want to let them run further. I also retain holdings in Lindsell Train Global Equity and recent Woodford Patient Capital.
    I believe Lifestrategy will be a good and long term move but acknowledge it has benefited from favourable tail winds in recent years (strong equity, falling interest rates, currency) that may become head winds therefore slowing returns near term. Cash is earning between 2% and 1.3%. Total portfolio return for calendar 2017 wad 8.4%. Best wishes

    1. Robin,

      Interesting to see the changes you have made and thanks for providing a comprehensive summary. I hope the move to VLS works as certainly has for me since moving over in 2015. This year I think it is restrained a little by the recovery in sterling.

      I must take a closer look at the Lindsell Train global fund - 88% gain over past 3 yrs is excellent, also I have been very impressed with my holding in Finsbury. I am not so interested in the Woodford fund and I suspect many investors will have been underwhelmed these past couple of years.

      Best wishes with your new strategy for the coming year.

  9. Ciao John,
    Great review, I am starting to study Vanguard products more and more, not so much for my bit of investments but for my father, who doesn't need the hustle and bustle of managing single shares. All in all the results that you are getting are simply great, and I see that they are consistent with the plan that you had, in my view this is the best outcome!

    Keep at it and have a great 2018!

    1. Good to hear from you Stal and hope the Vanguard funds work out for your father.

      Likewise best wishes for the coming year and hope married life is suiting you!