Analysis & Comment  > Model Portfolio

Share |
Back to 2011

Model Portfolio: 28 October 2011

Model Portfolio valuation drifts lower....................

    

October has been a rather mixed month for the Model Portfolio. The gilt market has drifted away from its highs, and so we have lost the "rising tide" effect that has propelled corporate bonds higher over the first half of the year.

The equity market has rallied strongly, and this represents an increase in investors’ willingness to take on risk. Lower grade credits have rallied, accordingly. However, this has not been an across-the-board effect. Our long-dated Lloyds TSB bond is up around seven points from last month , but other bonds such as GKN and Enterprise Inns have drifted. Our purchase of Italy is down some 10% from our entry level, although with a "half sized" position of £5,000, the damage is not too great.

At the time of last month’s valuation we were heavily overweight cash, and this money is gradually being put to work with the purchase of £10,000 long-dated BT bonds and £10,000 of the new ten-year index linked deal from National Grid. I am expecting more retail-targeted new issues between now and Christmas, so will keep £10,000 aside for these.

On balance, the portfolio is down 0.6% on a total return basis, but our asset allocation is roughly where we want it to be. We stay put and enjoy the income as it continues to roll in.

 

Date of Purchase

Issue

Life (yrs) 

Nominal

Purchase Price

Current Price

Value  

Accrued

16 Aug 2009 RBS "Royal Bond 5.3% 2015 4 100  £100  95.4*  9,540 /
24 March 2011 Provident Financial 7.5% 2016 5 6,000  100.15  107  6,420 33
21 June 2011 Places For People 5% 2016  5 10,000  100  104  10,400  174

7 Mar 2007

Segro 5.5% 20 June 2018

7

5,000

  97.35

 103

 5,150

101

16 Aug 2010 Enterprise Inns 6.5% Dec 2018 7 6,000

  83.5

 71  4,260

185

04 Feb 2010 GKN 6.75% 2019 8 10,000  97.56  101  10,100  6
28 July 2010 RBS Royal Bond  5.1% 2020 9 5,000  96.03  85.4  4,270  191

13 Oct 2011

National Grid PLC 1.25 2021 10 10,000  100  101.25  10,125 9
06 May/19 Nov 2010 Goldman Sachs 5.5% Oct 2021 10 10,000  87.9  84  8,400  31
04 Nov 2010 RBS Inflation-Linked (3.9% min) 2022  11 5,000 100  94*  4,700 /
20 Sept 2010 Yorkshire Building Society 13.5% 2025 CoCo 14 5,000  116  114  5,700  59
08 Mar 2011 Italy 6% 2028 17 5,000  100.44  89  4,450 73
27 Sept 2011 British Telecom 5.75% July 2028 17 10,000 103.5  102.6  10,260 519
16 Sept/01 Dec 2010 Lloyds 6.5% Sept 2040 29 10,000  96.35  95  9,500  81
08 March Nationwide 6.875% U/D 5,000    88  97  4,350  107
12 Dec 2010 Ecclesiastical 8.625% prefs U/D 5,000   1.02  1.09*  5,450  /

 

Category Sum            Notes
Securities

£113,075

Valuation of current holdings
Accrued

£1,569

Interest accrual on above 
Cash

£10,641

Including interest & coupons received. 
     
Total

£125,285

 

 

Price shown is "dirty" price, i.e. including accrued interest