Wednesday, 23 May 2018

HICL Infrastructure - Full Year Results

This large infrastructure trust was added to my ISA portfolio in December 2016. HICL is the largest trust in the infrastructure sector with current assets approaching £2.8bn.

HICL raises money from investors and then buys up infrastructure assets such as hospitals, schools and police stations around the world. The majority of the portfolio is focused in the UK and HICL receives management fees for the maintenance of these buildings, and, in some cases, for providing extra services such as catering and cleaning.

Since purchase, the trust’s shares reacted badly to Labour’s talk of nationalisation at the their Conference last September, when John McDonnell, the shadow chancellor who says his aim is to overthrow capitalism, suggested that a future Labour government would bring existing private finance initiative contracts back under direct public-sector control. McDonnell has also vowed to nationalise rail, water, energy and Royal Mail, with compensation likely to be paid in government bonds. He subsequently said some PFI investors might not be receive full compensation.

The share price took a further hit following the collapse of Carillion, with which it had more links than other infrastructure trusts.

The share price has retreated from a high of 170p when it traded at a premium to underlying assets and now trades at a discount to net assets but offers a higher yield. The managers aim to raise annual dividends from 7.85p this year to 8.05p next year and 8.25p for the year to March 2020. 


They have today announced results for the full year to end March 2018. Total net asset return for the period is 5.7% and  the portfolio of assets has increased 16% from £2.4bn to £2.8bn.

The company have suffered a £60m hit from the collapse of Carillion and as a result profits are down to £122m compared to £177 last year.

Likewise, earnings per share are reduced to 6.9p (2017 12.4p) which does not cover full year dividend of 7.85p. The proposed increase for the coming year is 8.05p which gives a fwd yield of 5.5% based on the current share price.

12m Share Price   (click to enlarge)

Commenting on the results, Chair Ian Russell said:
"The delivery of long-term, stable income from a diversified portfolio of infrastructure investments has been at the heart of HICL's investment proposition since its inception. As in previous years, the Company has focused on executing its business model and I am pleased to present a resilient set of results for the year.

However, the financial year to 31 March 2018 witnessed a combination of external factors that adversely impacted the wider sector, together with some challenges specifically within the HICL portfolio. As a consequence, the Company's share price fell materially in the second half of the year, and the Company's shares traded at a discount to Net Asset Value ("NAV") per share from January 2018 through the final quarter, rather than at a premium as the market has become accustomed.

From IPO in March 2006 to 31 March 2018, the Company has delivered a TR of 9.3% p.a. based on dividends paid and the growth in NAV per share. This compares favourably to the Company's long-term target of 7-8% per annum. Further guidance was given in the Company's February 2017 prospectus, being a target long-term return of 5.6% p.a. based on an issue price of 159p per share."

Sum Up

The share price is obviously sensitive to the threats of an incoming Corbyn government. I believe this is unlikely but it remains a possibility so until that cloud evaporates, I am not expecting the shares to recover much of the ground lost over the past few months. In the present climate I would not be looking to add to my current holding, however I will continue to hold and collect my income. Hopefully down the line the political threats will diminish and the share price rebound to a premium.

The shares are down 10% on my purchase price of 162p however the dividends have gone some way to mitigate losses...fingers crossed there will be no more surprises like Carillion over the coming year.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Friday, 18 May 2018

Vanguard Lifestrategy 60 - Year 3 Update

It is now three years on since my initial purchase of this all-in-one fund in May 2015 so time for another annual update.

I believe the average investor could do well from adopting a very simple, no-frills low cost diy strategy which makes sense, which can be tailored to fit in with a variety of attitudes to risk/market volatility and has every chance of providing a decent outcome.

Investing is all about the long term for the best probability of a good result. Investors therefore need a sound strategy which will provide them with every chance of lasting the course or ‘staying in the game’.

A One-Stop Solution

The Vanguard LifeStrategy funds offer a balanced portfolio of globally diversified equities combined with some gilts and corporate bonds. You are invested in 11 industrial sectors and 12 different types of investment, 17 specialist funds, spread across 25 countries and some 18,000 individual shares and bonds.

They were introduced in June 2011 and provide investors with a neat solution to match their asset allocation between equities and bonds -  from 20 to 100. The number represents the level of equities held in each fund, therefore the LS40 will have 40% equities and 60% bonds; the LS80 will have 80% equities and 20% bonds.

The single funds LS20, 40, 60 & 80 will hold a blend of around 17 or so of the Vanguard stand-alone equity and bond funds. Each of these will hold many hundreds of individual stocks or bonds - for example, just 1 of the 17 constituents is the FTSE Developed World (ex UK) fund which alone holds ~2,000 stocks & shares.

Therefore, by holding just a single LifeStrategy fund, your portfolio is widely diverse with over 18,000 stocks/bonds from all around the world. The bond element (assuming you do not want the 100% equity) will comprise a combination of UK gilts, global bonds, corporate bonds and inflation-linked gilts. The equities element includes their UK all share tracker, global funds and some exposure to emerging markets.

The big advantage for me is the auto rebalance to ensure the fund always remains at the risk level selected at the start - in my case with VLS60, 60% equities. The fund is frequently rebalanced - possibly daily.

I had a look at annualised returns for each fund from inception to end April (just short of 7 yrs):

LS20   5.86% p.a.

LS40    7.24% p.a.

LS60    8.54% p.a.

LS80    9.76% p.a.

LS100 10.9% p.a.

Vanguard LifeStrategy 60 Mix

The VLS60 is the most popular with UK investors and has £3.8bn of assets. Just looking under the bonnet of the fund -

60% equity comprised of Developed World (ex UK) 19.3%, FTSE UK All Share 15.3%, US Equity 13.5%, Emerging Markets 4.9%, Europe (ex UK) 4.0%, Japan 2.3% and Pacific (ex Japan) 1.1%

40% bonds comprised of Global 19.1%, UK Gilts 5.8%, UK Corp. Bonds 3.6%, UK Inflation-linked Gilts 3.7%, Others 7.5%

The ongoing charges are 0.22% (worth noting its US equivalent has charges 0.13%)


So, how has the fund performed? I made my initial purchase in my ISA with Halifax Share Dealing in May 2015. My average purchase price was £136.50.

The current price is £178.67 which is a gain of 5.4% over the past year and three years on is up by 30.9%. This is an average annualised increase of 9.4% p.a.

By comparison, the total return for the FTSE All Share over the same period is around 20% so the combination of 40% bonds and a wider exposure to global equities in the VLS fund is working very well so far.

Of course, the bonds provide a much less volatile ride compared to a fund with just equities which makes it easier to remain invested. As I am not the type of person who can handle too much volatility, this fund (and my recent addition of the VLS 40) help me to stay invested and this is why they represent the core of my portfolio.

The total return for the LS60 for each of the last 6 full years has been all positive :

2012   9.29%,
2013 11.13%
2014   9.36%.
2015   2.53%
2016 18.27%
2017   8.67%


The natural yield on the fund is ~1.4% however I really need an income from my investments of around 4%. I have purchased the accumulation version of the fund with the intention of selling off units each year to provide the 'income' I require. In 2016 I actually sold 8% of my holding due to the one-off boost from the fall in sterling post June 23rd and this has provided my income for the past two years. This year I will sell off a further 4% from the 8.6% rise in 2017 - so far I have not needed to dip into the cash buffer.

The appeal of the VLS strategy is its simplicity combined with good performance compared to other strategies. It seems to me that putting together a DIY investment portfolio does not come much simpler than this. You decide on your asset allocation, select your broker, invest your lump sum and/or set up your automated monthly direct debit - job done, get on with your life!

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Leave a comment below if you hold VLS or have any thoughts generally.

Monday, 14 May 2018

Scottish Mortgage - Full Year Results

Scottish Mortgage is an actively managed, low cost investment trust, investing in a high conviction, global portfolio of companies. The managers aim to achieve a greater return than the FTSE All World Index (in sterling terms) over a five year rolling period.

This investment trust was added to my SIPP portfolio at the start of 2017 at the initial purchase at 338p. A year later, following a little turbulence in the share price, I added SMT to my ISA portfolio at 415p. The share price has advanced to currently 505p.


The trust has today issued results for the full year to end March 2018 (link via Investegate). Share price total return for the past year is up 21.6% compared to just 2.9% for the benchmark FTSE All-World index.    

Scottish Mortgage has increased total net assets to more than £6bn making it one of the UK's largest investment trusts. In 2017 it was promoted to become the only investment trust to be listed in the FTSE 100.

The managers, James Anderson and Tom Slater run a conviction portfolio of around 70 to 80 shares. The result is a portfolio dominated by big holdings in some of the companies involved in the world of social media, the internet, healthcare, eco-friendly energy and gene therapy.

The top ten holdings account for 53% of the portfolio and include Amazon 9.9%, Tencent 7.5%, Baidu 4.0% (China's equivalent of Google), Alibaba 7.5%,  Tesla Motors 4.9% and Illumina 6.5%. Some 10% of the portfolio is invested in unquoted companies - Dropbox, peer-to-peer lender Funding Circle and airbnb to name three I am familiar with.


Slater is convinced that Amazon, its single biggest position in the portfolio, remains an ‘absolutely massive’ opportunity despite a five-year share price rise of  370%. He points out that the $100 bn retail sales it generated in the US last year was under 2% of the market and less than a third of retailing colossus Wal-Mart. Yet it was catching up with huge investment in deliveries leaving its traditional rivals in the dust.

Slater highlighted four areas where Amazon had demonstrated its huge growth potential in 2017: US fashion, food, India and web services.

In fashion the e-commerce giant forced Nike to cut a deal and start selling its trainers and clothes through Amazon, wiping $1 bn off the shares of sports retailers when the tie-up was announced in June. That was nothing to the $20 bn knocked off grocery stocks with Amazon’s unexpected acquisition of Whole Foods in the same month.

In India, Amazon had showed it had learned from its difficult experience in China and quickly established market leadership, much to the discomfort of its local rival, Flipkart, one of the smaller unlisted positions that Scottish Mortgage has established in the past three years.

Meanwhile, the potential scale of Amazon Web Services was growing all the time as companies moved their computing operations to the Cloud. ‘This is more of a winner-takes-all market than we previously assumed’ said Slater.

One of the questions investment legend and hedge fund manager Seth Klarman would ask of any fund manager is 'did you hold your nerve during the market turmoil of 2008/09'?

 Although the trust suffered heavy falls during these dark months, Anderson says that enduring this period was key to all the success of the next decade. Apple was purchased on just 3x earnings and they held on to Amazon at the price of $40...currently $1,600...that's a 40 fold increase in just under a decade! The manager says there is nothing he is more proud of in his entire career


Some 22% of the trust's portfolio are allocated to China. China's economy is growing at a rapid pace as it becomes increasingly consumer-led. It is now the second largest economy in the world behind USA and has been the largest contributor to global growth since the meltdown of 2008. Annual growth is averaging 7% each year and over just the past 10 years, real terms household income has increased by 120% and more and more of the huge population of 1.3bn continue spending (and also saving).

Tencent, the Chinese internet giant behind the WeChat messaging app (over 1bn users), has surpassed Facebook in value after it became the first company in China to be worth more than $500bn.
In addition it is a major shareholder in the US social media group Snap.
It has now become the world's fifth-most valuable listed company, disrupting the hegemony of the US tech giants.

Tencent is little known as a consumer name in the West but its WeChat app dominates in China, where Facebook, Twitter and Google are banned.

Baidu is China's leading search engine and has recently started selling 'smart home' products similar to Amazon's Echo/Alexa as well as a personal robot marketed as 'Raven'. They are also looking at more ambitious technology such as driverless cars..

Scottish Mortgage offers a clear, consistent and simple proposition: a portfolio of long term investments in what the managers believe to be the best growth businesses, operating in any industry and anywhere around the world.

Many of the companies held in the trust's portfolio are disrupting the traditional ways of doing business. They create new markets or impact significant changes on old markets in a wide range of industries such as auto, health, advertising, retail and manufacturing which are transformed by advances in the technological revolution.

Over the past ten years, the trust has delivered a return of 334%. Although this is essentially a global growth trust, it is worth noting it has increased its dividend every year for the past 34 years. Income from the underlying holdings no longer covers the dividend so the board have agreed to provide the difference from capital to continue the progressive pay out. The increase this year will be 2% making a total of 3.07p. However, due to the significant share price appreciation, the current yield is 0.7%.

Further, the ongoing charges have been reduced and have fallen from 0.44% to 0.37% which makes it one of the most competitive trusts on offer.

Obviously I am pleased with progress since my purchases - 50% SIPP and 22% ISA.... I am just sorry I did not purchase earlier. This actively managed investment is one of the satellites which complement my core passive index holdings comprising mainly Vanguard Lifestrategy 60 & 40.

I have also recently started an investment savings plan for my grandchildren using this trust via Baillie Gifford. The opening lump sum has gained 15% in the past month so we are off to a good start.

For now the current holdings can return to the bottom drawer.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Friday, 20 April 2018

Investing for the Grandchildren

Many parents and grandparents like the idea of saving for children/grandchildren. A couple of years back I earmarked an investment into the Vanguard Lifestrategy 80 fund for (then) three grandchildren. 

However since then the number has grown to five and as I will soon become a pensioner, I have been considering siphoning off some of the state pension via a monthly drip-feed into a long term savings plan via one of the global investment trusts. 

I have been doing a little research in recent months looking at the various options. The traditional options include Aberdeen who recently merged with Standard Life and offer a plan with a min. £30/month regular and £150 lump sum however, their flagship option of Murray International has not been performing so well in recent years and therefore I decided to pass. There is also F&C with a min. £25/month but £250 initial lump sum and then the annual charge of £30 and also dealing fees which would not work for me. I also looked at Baillie Gifford which runs my Scottish Mortgage holding.

The 5 grandchildren aged between 9 months and 6 yrs and I want to put aside a regular monthly amount with the option of adding the odd lump sum amount from time to time. I am fairly traditional 'old school' when it comes to money and remember what I was like at the age of 17 or 18 yrs and what I may well have done with a large sum of money at a young age. I therefore want some control over the account as I would like them to have the money a little later, maybe at the age of 21 yrs (earliest) rather than 16 or 18. This rules out a few options such as junior ISAs and bare trusts set up in the children's own name.

In the end I decided to open a children's savings plan with Baillie Gifford as I believe the Scottish Mortgage trust probably offers the best long term growth prospects combined with the lowest costs.

The plan is in my name with the grandchildren all named as designated beneficiaries. The plan offers a low cost way of saving via a range of investment trusts.

There are 4 global trusts :

Scottish Mortgage
Scottish American
Edinburgh Worldwide

and 3 trusts which focus on the Far East:

Baillie Gifford Japan
Baillie Gifford Shin Nippon
Pacific Horizon


The plan will run for the next 20 years or so and over this time-frame I am obviously looking at global growth.

Although I am starting with the one investment trust, I do have the option to split my monthly contributions between two or more trusts. The minimum is £25 for each trust and there is the option for a lump sum addition into any trust - min £100.

The Trust Choice

To start off I have selected the Scottish Mortgage trust as this is the largest global trust with the lowest ongoing charges. I am obviously familiar with SMT as I hold it in my own SIPP and ISA. 

The managers have a good reputation for consistent performance in areas which I believe will provide a good chance of out-performance over the coming years. It has turned £1,000 into £4,350 over the past 10 years which equates to an average of over 15% per year. At this rate, an annual contribution of £1,000 over 20 years would grow to just over £100,000. If it can deliver anything near this over the coming 15 to 20 years my grandchildren will have a tidy sum in the region of £20,000 each - fingers crossed.


For the best long-term returns, it is important to ensure the costs of the investment are low. This is one of the reasons the low cost index funds generally out perform the more expensive managed funds. The big advantage of the savings plan is there are no platform charges from Baillie Gifford and also no transaction charges for the purchase of shares which is important when a monthly drip-feed plan is operating. 

Therefore the only charges will be the ongoing charges for the Scottish Mortgage trust of 0.44%. This puts it on a par with the likes of holding Vanguard Lifestrategy with ongoing charges of 0.22% combined with platform charges of 0.15% (Vanguard Investor) or 0.25% (AJ Bell Youinvest).

There is however a charge of £22 for each withdrawal but as I am not planning on this for many years it should not be a problem.

For anyone interested in exploring the investment options in more detail here is a link to their savings plan (pdf).

Feel free to comment if you are currently saving for children or grandchildren and share your experience with others.

Monday, 9 April 2018

Mid Wynd Trust - New Purchase

This global investment trust has been on my watchlist for some time as it offers exposure to some areas of potential such as robotics and immunology which I hope will provide some good prospects for growth over the coming decade. 

The recent pull-back in the markets has provided an opportunity to add the trust to my portfolio to sit alongside Scottish Mortgage as a long term growth play. However, at the current price of 474p, the market value of the trust is only £165m compared to £6.5bn for SMT.

Mid Wynd International is a theme-based global investment trust. Artemis took over the management of from rival investment house Baillie Gifford in spring 2014 after long standing manager Michael MacPhee retired. During this period the share price has increased from 275p to 475p - up 72% and the dividend is up 34% from 3.8p to currently 5.1p.

The management team led by Simon Edelsten have built a portfolio of high-quality holdings which focus on a number of trends which offer the prospect of long term growth. This approach is combined with the strategy of value investing which means a disciplined assessment of price to maximise value for money. Obviously there are many options to choose from in any particular theme. The management select from companies with a good record on profitability, good cash generation, a strong balance sheet and identify those which offer a significant barrier to entry for competitors.

The strategy is to hold around 60 - 70 holdings between 8 to 10 themes. Each individual holding is limited to a maximum of 3% of the total portfolio.

Last year the managers decided to offload their shares in Amazon after a very good run and switched the proceeds into Japans tech stocks Nabtesco, Daifuku and Yaskawa. Here's an article on AIC which gives more background.

3 year comparison v Scottish Mortgage
(click to enlarge)

Current themes include Automation/Robots 21%, Emerging Market Consumer 14%, Tourism 13%, Healthcare & Immunology 10%, Online Services 10% and Scientific Equipment 9%.

The main areas for global investments are USA 42%, Europe 21%, Japan 17% and Emerging Markets 14%.

The trust has management charges of 0.5% and ongoing charges are 0.67%. Over the past year the company have paid total dividends of 5.1p which gives a current yield of just over 1.0%.

The manager Edelsten and chairman Malcolm Scott QC both have a significant personal holding in the trust which I always attach importance to when considering a purchase as the interests of management and investors are aligned. Interesting that the largest shareholding is held by Alliance Trust from the same global growth sector.

The disciplined investment process and portfolio construction has provided a decent return averaging around 14% p.a. since the team took over from Baillie Gifford...fingers crossed this can continue for me.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Monday, 2 April 2018

Collectives Portfolio - Easter 2018 Update

It's a wet and unseasonably cool Easter Monday so a perfect opportunity to stay home and catch up on the blog. There have been a couple of changes to the portfolio since my update last October so I will take this opportunity to bring things up to date.

Although this is demonstration portfolio, it largely mirrors my own holdings.

Portfolio Changes

The markets have seen a little more volatility in recent weeks which feels more familiar compared to the month-on-month rises throughout the whole of 2017. There was a significant pull back towards the end of February and a similar downturn in March - we are back to the rollercoaster for a while it seems. The FTSE 100 is down -8.2% over the past 3 months.

As this period saw a strengthening pound, rising above $1.40, I took the opportunity to reinvest some of the cash which has been sitting on the sidelines over the past 12 months or so.

In addition, at the start of the year I sold some of my Vanguard UK income fund as I am looking to reduce equities a little generally and UK in particular and also adjust the allocation towards a more globally diverse mix and introduce a wider variety of assets. The proceeds from the UK income fund have therefore been divided between HSBC Global Strategy Balanced fund and also Royal London Sustainable Managed Growth.

I have taken some of the cash to purchase a new holding in Vanguard Lifestrategy 40 with the Vanguard Investor platform. I have also added Kames Diversified Income and, most recently Scottish Mortgage (which I also acquired for my SIPP last year).

My demonstration portfolio has now been running for over 5 years. There have been a few more changes than I would ideally like and, looking at the portfolio, there are probably a few too many holdings and I will be looking to reduce and simplify at some point.


Many of my holdings have lost ground in recent weeks. My investment trusts have retreated by an average of 5.0% over the year to-date and my largest holding with Vanguard Lifestrategy 60 faring a little better, down 3.5%.

Since the start of 2018, the FTSE All Share index is down 6.9% (total return) and the global markets are down 4.4% adjusted for sterling exchange.

There has therefore been little progress over the past few months with the portfolio treading water. The value of the combined portfolios at the time of the last update in October 2017 was £93,679 compared to the current value of £92,493 taking account of income withdrawn.


Last year the portfolio generated a natural income of £1,899 and also I took £1,200 from cash on the sidelines to save selling units from my VLS 60 fund. This makes a drawdown of 3.6% of the current value or 4.8% of the original starting value in 2013.

Here is the combined portfolio

(click to enlarge)

Last October there was over £21,000 in cash however much of this has recently been reinvested. The Lifestrategy funds (60 & 40) now account for 36% of the total, UK income funds a further 21%, Corporate Bonds around 10%, Property/Infrastucture 8%, Mixed Asset funds are around 21% and global growth in the form of Scottish Mortgage 4%.

There remains just over £5,000 in cash awaiting reinvestment plus my Vanguard cash buffer of £3,400.

My aim with the portfolio is to generate an average return which is significantly better than the return from my building society and also ahead of inflation - currently the rates are 1.25% from the Coventry (reduced from 1.4% grrrr) and 3.0% respectively.

The average annualised return for this demonstration portfolio after 5.3 years is ~8.0% - down a little on last year partly due to cash on the sidelines delivering no return for the portfolio. However, it continues to deliver the income I require of around 4% each year plus a little capital appreciation on top - so far, so good...

If you have any thoughts on the portfolio, feel free to leave a comment below.

Wednesday, 28 March 2018

City Merchants Trust - Full Year Results

The stock market essentially deals in two kinds of asset; shares and bonds. These investments have very different characteristics; shares make you a part-owner whilst bonds, being debt instruments, turn you into a lender.

They say shares are for optimists, bonds are for pessimists. I have become a little less optimistic on equities over the past year which is why I have reduced the mix to 50:50 (from 60:40 previously).

Similar to my other holding in this sector, City Merchants investment objective is to seek to obtain both high income and capital growth from investment, predominantly in fixed-interest securities.

It is almost three years since I purchased this IT for my ISA as a replacement for a few sales from my shares portfolio.

The overall portfolio is fairly defensive with a significant proportion of higher quality companies which the management consider to be ‘default-remote’.


They have this week announced results for the 12 months to 31st December 2017 (link via Investegate).

Net assets have steadily increased over the year and taking the full year dividend of 10p per share into account, the total return was 9.9% (2016 11.6%). Over the past 5 years, the return has been 49.7%.

CMHY 3 Year Share Price (click to enlarge)


The dividend target for the trust is 10p per share paid quarterly. This amount was paid in each of the previous four years and remains the target for the coming 12 months. At the current price of 177p the shares offer a yield of 5.6% which is obviously attractive compared to the rates on offer from our banks and building societies. The average cash ISA rates are starting to increase but only offer a miserly 1.2% according to latest figures from Moneyfacts. In 2007, the average rate was 5.0%.

Of course, the share price will move around as can be seen from the chart. In recent weeks there has been some weakness and the share price has moved from a 2% premium to an 6% discount which has resulted in the yield becoming more attractive.

Regardless of the share price fluctuation, the trust provides some diversity to equities and a steady and predictable quarterly income stream for my portfolio.

Finally, this article is a record of my personal investment thoughts/decisions and is not a recommendation - as always, please DYOR.

Sunday, 18 March 2018

RL Sustainable Managed Growth - An Ethical Option

Last year I was helping a friend to construct a diversified multi-asset portfolio. She wanted a low volatility, low cost, diversified asset mix and decided on a blend of Vanguard Lifestrategy (20 & 40) as a core of the portfolio with a smaller allocation between Personal Assets Trust, HSBC Global Strategy Cautious and Royal London Sustainable Managed Growth.

I have followed the fortunes of this portfolio. I already hold the Lifestrategy funds - 40 & 60, however I have been impressed with the RL fund in particular and decided to add it to my own portfolio earlier this month. The decision was prompted by the Coventry BS cutting my savings rate this month...just two months after they increased it.

This is another 'Steady Eddie' fund which is listed in the IA Mixed Investments 0 - 35% Equity category. The breakdown of asset mix is :

Fixed Investments 71%
UK Equities    12%
US Equities      5%
Euro Equities   4%
Cash & Other   8%

Top 10 holdings include Amazon, Microsoft and Alphabet (Google) which have probably helped to boost returns over the past few years.


The fund has delivered a return of 8.3% in 2017 and 35% over the past 5 years which works out at an annualised average of  6.4% p.a. The fund is ranked top out of 39 funds in the sector over this period. By comparison, the Vanguard Lifestrategy 20 fund has returned 25% over the past 5 years and is ranked 10th/39.

5 Yr Comparison v VLS20
(click to enlarge)

The fund has paid out 3.6p in dividends over the past year which at the current price translates to a yield of 2.6% paid quarterly and has ongoing charges of 0.69%.


This fund is part of a range of ethical options which were previously managed by the Co-operative Asset Management Group and which were taken over by RL in 2013.

The sustainable range of funds may be attractive to the more ethical-minded investor as the investment process involves screening for environmental, social and governance issues.

The funds will try to avoid holdings involved in animal testing, arms trade, pornography, tobacco and nuclear power for example and there will be many investors who share these ethical considerations and who do not want to be a part of exploitative industries.

All funds in the range have a good track record for investor returns. For example in 2017, returns were :
RL Sustainable World    18.0%  (40 - 85% shares sector)
RL Sustainable Diversified  12.9%  (20 - 60% shares sector)
RL Sustainable Managed Growth  8.3%  (0 - 35% shares sector)

So, I can get a reasonable return and invest with a clear conscience with these funds.

If you have views or dilemas about ethical investing feel free to share them and leave a comment below.

Finally, this article is a record of my personal investment thoughts/decisions and is not a recommendation - as always, please DYOR.