Some readers may be interested in my experience with a fantasy Stockopedia portfolio that invests in the 10 largest conventional investment trusts.

I set up this fantasy portfolio on 28/11/2018 with a notional initial investment of £100,000. The purpose was to provide a benchmark of a “no thought” investment trust portfolio with minimal trading costs, for comparison against more complicated strategies for creating and trading portfolios, and also for comparison with the performance of my actual portfolio.

This fantasy portfolio comprises an initially equally weighted portfolio of the ten largest conventional investment trusts available on the UK stock market. They were selected by ordering ITs by decreasing market capitalisation based on their share prices, and ignoring any ITs that are not conventional ones which invest in quoted stocks. So ITs investing in private equity, venture capital, property, infrastructure, etc, are ignored as they are not conventional ITs.

On 28/11/2018, a notional £10,000 was invested in each of the following ten ITs: Scottish Mortgage, F&C, RIT Capital Partners, Alliance Trust, Witan, Templeton Emerging Markets, Monks, Polar Capital Technology, Caledonia, and Mercantile. So this fantasy portfolio had an initial total value of £100,000. On that day, the FTSE All Share Index had a value of 3,845 and the MSCI World Index had a value of 2,030.

The rules are to leave the portfolio unchanged until such time as the market capitalisation of one of the ITs in the portfolio is significantly below that of another conventional IT that is not currently in the portfolio, in which case that holding may be sold and the proceeds would then be used to purchase that other IT. No account is taken in these rules of the previous past performance histories of ITs, nor of their discounts or premiums to their Net Asset Values. So it really is a “no thought” portfolio.

These rules keep transaction costs very low, but they do allow occasional discretionary changes at the margin to allow for the replacement of any ITs with poor performance / momentum in the portfolio.

Dividends are ignored in Stockopedia portfolio, so its total value only measures the capital performance of the share prices of its constituents, not their total return.

On 29/6/2020, Caledonia was sold from this portfolio and the proceeds were reinvested in Worldwide Healthcare.


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