It’s been a tough six months for UK investors. While the FTSE 100 has been propped up by a handful of its largest members, the majority of the UK market has fallen sharply.
My rules-based SIF portfolio hasn’t escaped this sell off, but a hefty cash balance has provided some padding. In this quarterly report, I’ll look at SIF’s performance so far this year and review the trades that took place in the portfolio during the second quarter.
SIF folio performance
SIF’s performance during the first half of 2022 has left it slightly behind the FTSE All-Share index (grey line), which I use as the portfolio’s benchmark.
The decline we’ve seen over the last six months has taken the value of the portfolio back to where it was one year ago.
I’m not too concerned about this; such reversals are a normal part of investing life. The drawdown on the portfolio this year has been pretty limited, so far.
Taking a longer-term view, SIF has held on to most of its outperformance versus the FTSE All-Share index. The portfolio is up by 64% since April 2016, or 8.5% annualised (excluding dividends):
Cash weighting: A shortage of new buying opportunities has left SIF with a stubbornly high cash weighting this year.
Holding lots of cash in a falling market dilutes the impact of falling share prices, reducing portfolio drawdown. This hefty cash balance has probably had a positive impact on performance so far this year.
SIF’s big (virtual) cash pile also means that I have plenty of dry powder to deploy when my screen starts to provide a greater number of new buying opportunities. Hopefully this will coincide with a wider market recovery.
SIF trades in Q2
I sold three shares from SIF during the second quarter and added three new companies. This one-to-one matching isn’t part of my system. It’s just the way things turned out.
Here’s a brief review of each of these changes.
New stocks
Regular readers will know that I select stocks for the SIF folio from the results of my buying screen. This has been through something of a dry spell recently. Very often I would have added more than three shares in three months.
The three shares I…
