Beating the market by 14% year to date

Wednesday, Oct 14 2015 by

My defensive value model portfolio is ahead of the market by just under 14% so far this year. The reasons are 1) a sensible strategy and 2) some luck.

To be honest, the FTSE 100 and FTSE All-Share are not providing much in the way of competition at the moment because both of them have fallen in value this year.

However, I can’t be blamed for that; all I can do is focus on the model portfolio’s goals which are:

  • High yield – A higher dividend yield than the FTSE All-Share at all times
  • High growth – Higher total return that the FTSE All-Share over any 5-year period
  • Low risk – Lower risk than the FTSE All-Share over any 5-year period

The chart below shows the performance from inception of the model portfolio and its FTSE All-Share benchmark, the Aberdeen UK Tracker Trust.

Investment newsletter performance chart

Both the model portfolio and the All-Share tracker are virtual portfolios which started with £50,000 in March 2011. They both reinvest all dividends and take account of broker fees and bid/ask spreads.

I have basically all of my family’s long-term savings invested in the same stocks as the model portfolio.

Ahead on a total return basis

Clearly, the All-Share portfolio has not done well lately. At the start of October it was down 3.7% relative to its value in January. In contrast, the model portfolio gained 10% in the same period, producing a relative outperformance of 13.7% year to date.

The gap between the two portfolios is now £13,370, which is 27% of their original value.

In annualised terms the All-Share portfolio has generated a return of 5.9% per year (including dividends) while the model portfolio has returned 10.3%.

One of my goals for the model portfolio is to beat the market’s total return by 3% per year, and that goal is still firmly on track.

Ahead on dividend yield and (probably) dividend growth

Another of the model portfolio’s goals is to have a high dividend yield at all times. This goal has always been met since 2011 and the portfolio’s current yield is 4.2%, which compares well with the All-Share tracker’s yield of 3.7%.

Dividend growth has also been relatively good too.

The All-Share tracker has paid out the full 2015 dividend already (of £2,384), while the model portfolio’s cumulative dividend is ahead so far (at £2,650) and still has three months of dividends to go.

I fully expect its total…

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This article is for information and discussion purposes only and nothing in it should be construed as a recommendation to invest or otherwise. The value of an investment may fall and an investor may lose all their money. Any investments referred to in this article may not be suitable for all investors.  Investors should always seek advice from a qualified investment adviser.

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Cranswick plc is a United Kingdom-based supplier of food products. The Company operates through Foods segment, which is engaged in the manufacture and supply of food products to the United Kingdom grocery retailers, the food service sector and other food producers. The Company provides a range of pork, gourmet sausages, cooked meats, cooked poultry, charcuterie, hand-cured and air-dried bacon and gourmet pastry products through retail, food servicing and manufacturing channels. The Company's brands include Bodega, Woodall's, Simply Sausages and Yorkshire Baker. The Company operates from 16 production facilities in the United Kingdom. The Company also owns its own pig breeding and rearing operations. It also owns chicken supply chain, including a feed mill, hatchery and broiler farms. From its Bury, the Company manufactures and distributes foods from Europe, using packaging formats and flavor combinations. more »

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About UK Value Investor

UK Value Investor

My name is John Kingham and I'm the editor of UK Value Investor, a blog and investment newsletter for defensive and income-focused value investors. I'm also the author of The Defensive Value Investor.I invest mostly in large and mid-cap dividend-paying stocks. My investment goal is to build and maintain a high yield, high growth, low risk portfolio. more »


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