SIF Folio Q1 25 Update: A Tough Start To The Year

31st Mar by Roland Head

15 comments 2145 reads

It’s been a tough start to the year for my rules-based Stock in Focus model portfolio, which has lagged the market so far in 2025.

The UK market as a whole has been lifted by big gains for some of the largest constituents of the FTSE 100, which is a market-cap weighted index:

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However, these strong performances haven’t been echoed in all parts of the market and the evenly-weighted all-cap SIF portfolio has underperformed the market so far this year.

SIF Q1 25 performance review

The value of the portfolio fell by 4.5% during the first quarter, compared to a 3.5% rise for the FTSE All Share index:

The portfolio’s performance since inception remains well above the market average, although the gap has narrowed a little this year::

My sums suggest the portfolio has generated an annualised return of 7.3% in the nine years since its inception in 2016, excluding dividends.

SIF Folio - Income focus: in my 2024 review at the start of January I discussed a change in the portfolio’s remit to focus more heavily on income.

Only a handful of portfolio stocks went ex-dividend during the first quarter, so the income generated so far under this new regime has been minimal (about £6.5k, or 0.3% of the portfolio’s opening value).

However, the shares in the portfolio now have an average dividend yield of 5.3% and I expect dividend income to have a much greater impact over time.

In my half-year update at the start of July, I will explain how I’ll report income performance and discuss whether I’ve decided to extend the portfolio’s default holding period to better reflect its focus on income (and avoid too many missed dividends).

SIF portfolio changes in Q1

I added six new stocks to SIF and sold four during the first quarter of 2025.

This left me with 18 positions, up from 16 at the end of 2024. This is slightly above my target of 16 holdings, but so far the portfolio’s cash position has proved sufficient to maintain this size portfolio.

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Given the new focus on income, I’m happy to let the portfolio expand…

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Dulpesh

1st Apr

Great article Roland, as always.

Brucie5

Thanks Roland, very interesting to read. When you say "The value of the portfolio fell by 4.5% during the third quarter, compared to a 3.5% rise for the FTSE All Share index" what was your comparative performance over this first quarter? Apologies if I've missed that figure.

Threepeat

Hi Roland

Regarding your new tool

. Can you give us an example of how you calculate the averages

Roland Head

Hi Brucie5,

I'm afraid this was a typo - thanks for highlighting it. I've now corrected it to read first quarter.

Roland

Hi,

These averages are just a simple average of all the values for the portfolio. So for example, summing all the forecast dividend yields and then dividing by the number of positions.

As each position is equally-weighted when added I think it should be a reasonably accurate estimate.

Hope this helps,

GloucesterBob

Hi Roland,

You say you hold for a minimum of 9 months then re-evaluate. If a share hit -25% or issues a profit warning, do you still hold for the 9 months, or is it gone on the day of the event.

ACounsell

2nd Apr

Am following the SIF portfolio with interest though as it is a 'fantasy' portfolio with no money at stake (!) I just follow the rules with minimum further research (yours is always excellent). My version of your portfolio has 11 stocks out of the 18 you hold plus another 9 to give a full allocation of 20. One question though - you still hold Cairn Homes (LON:CRN) in the SIF portfolio but at the last monthly review it does not appear on your Sell screen. It has been in the portfolio way longer than 9 months so on this basis should it have been sold?

Hi ACounsell,

Re. Cairn Homes (LON:CRN) - one characteristic of using screens is that shares sometimes slip in and out repeatedly by the narrowest of margins. When I checked Cairn on 25/3 (Tuesdays are when I make changes to SIF) my notes tell me it did appear in my sell screen results and also qualified for the buy screen.

I suspect it may drop out at the end of this month - as you say it no longer qualifies due to the recent share price falls.

Hi GloucesterBob,

If a share issues a profit warning or suffers a drawdown of more than 25% from my cost price, I'll normally sell at my next weekly review of the portfolio.

Monty Carlo

Hi Roland - I'll be intrigued to observe how you report performance going forward here - especially as you tilt more towards income.

Stocko offers no total return functionality - they don't even offer the total return versions of the main indices.

Using average yields is full of pitfalls - dividends don't get paid evenly throughout the year and there are large differences between interim and final dividends, whilst the aggregate fwd yield estimates on Stocko often struggle with the stocks that regularly pay special divis. Adding a stock and assuming you earn the annual yield on a pro-rata basis isn't going to work.

It is not just the amount of dividends that matter but also when they are paid, and then how you re-invest the proceeds on the payment date. Clearly a large divi reinvested during a market dip has a bigger impact on subsequent performance.

You could unitise the portfolio to track performance at the aggregate cashflow level, but that won't help you attribute performance to the component stocks, nor will it help you with the benchmark.

The alternative is of course to track the actual dividends received together with their payment dates and do the performance calculation properly, but you will need to maintain a notional cash balance and deal with the reinvestment transactions. It is an awful lot of work if you don't actually hold some of the stocks and have a historic cash transaction record to remind you.

So that I can maintain accurate performance records at the single stock level I currently maintain dividend payment histories for about 200 stocks (because some of my portfolios were constructed from higher-yielding equities/trusts/ETFs as proxies for fixed income during the zero rate years). I can't deny it is a lot of work, but you end up having to do most of it for tax return purposes anyway - once you get into the delights of foreign income, double taxation agreements, excess reportable income, PIDs and acquired/disposed accrued income on gilts you are pretty much there whether you like it or not.

Any clever solution that doesn't involve paying up for Sharesight (or similar, I'm aware of sharescope's functionality here) is something I'd love to hear about.

jjis

There is another service that is not Sharesight that can track the dividend for you in your portfolio , but you have to pay for that too, which it seems you don't want to do.

I did mention sharescope at the end....?

It is not an aversion to paying - it is simply that I've not found anything that reduces the workload sufficiently, in that you end up having to go through your income items line by line again for tax purposes anyway (so just getting the dividend payment amounts & dates is just the start). Anything I pay for has to be much, much better than sucking up the CSV files direct from the platforms.

I hold quite a few overseas stocks in tax-exposed vehicles so I am recording local currency, the FX rates for each dividend payment date (which have to match the platform for ISAs), any fees that apply to ADR/GDRs, the tax jursidiction for double-taxation relief, the withholding tax rate applied (differs for SIPPs in some cases, dependent on the jurisdiction) etc etc.

It all ends up in a very big PowerQuery database that holds my full transaction records for several decades, so I can calculate the IRR of any holding, including divis, over any period in any portfolio (or multiple portfolios given the utility of bed & spouse!). I import pricefeeds from multiple providers & i track my CGT/dividend tax exposure as the year progresses.

Like yourself, probably, I had full access to a Bloomberg & various risk & performance attribution platforms for much of my career so I am aware of what is possible, but the retail platform APIs do not yet have the data granularity that is needed (or at least mine don't - I've not looked at interactive brokers too closely as they don't do SIPPs).

Ah sorry I missed that bit. I feel your pain, although personally I have avoided all the hassle of FX & withholding tax etc. by using funds for overseas exposure. You could always have a look at the following, although it would still require manual inputs and I guess would take quite a bit of effort to import all your things into it. Portfolio Performance

Thanks Roland,

I had forgotten about the equal weighting

3rd Apr

I will look into that link - very interesting & hadn't come across it before.

The advantage of single stocks over funds is that you have much greater
control over your CGT exposure - strategically crystallising loss
positions can be very useful.

SIF Folio Q1 25 update: a tough start to the year

SIF Q1 25 performance review

SIF portfolio changes in Q1

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Roland Head

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