The main feature of April was the continued rally in commodity prices, which saw crude oil and iron ore prices up over 20%. It was enough to spark a sharp recovery in BHP Billiton and South32, which rose 23% and 13% over the month. This emphasises how important it is to stand firm when negative sentiment latches onto a stock, as BHP has now risen 46% since its January low, while South32 has almost doubled. This means that the 30% gain from South32 since its purchase in November now more than offsets the 20% fall in BHP since it was bought in July.
Origin Energy also recovered 8% in April, although that leaves it down more than 50%since our purchase in April 2013. It’s one of the happy truisms of investing, though, that your successes get bigger while your headaches get smaller, and Origin now accounts for only 1.5% of the portfolio. We haven’t topped this up yet, but with its retail business performing strongly and management responding sensibly to the crisis, it remains under active consideration.
Other positive performances came from Ansell, which gained 15% in the month and is now up 28% since we purchased the stock in February, and Virtus Health, which added 7%.
Only a handful of stocks fell over the month, with the biggest declines coming from fund managers, including Perpetual – down 2% – and Macquarie Group, which dropped 4%.
The banking sector began the month on the back foot and we were able to add to our holdings in Commonwealth Bank and Westpac, taking our combined exposure to the big four from about 3.2% to about 5.2%. That’s still a long way short of our recommended maximum weighting for the sector of 20%, so it allows plenty of room for top-ups if they fall further. By the end of the month, however, CBA had risen 4%and Westpac had risen 7%, taking them away from our Buy price for the time being.
Overall, the portfolio managed to sneak ahead of the market for the month, with a return of 4.1% compared to 3.2% for the All Ordinaries total return index. Since 1 July 2015, when the portfolio began accepting money for investment, it has returned 13.9%compared to 1.3% for the All Ords. Since inception in July 2001, the portfolio has returned 13.5% a year compared to 7.7% a year for the All Ords.
The investment objective is to achieve an income return of 5% from a portfolio of high yielding shares selected from the All Ordinaries Index per annum.
GROWTH OF $10,000
PEFORMANCE SUMMARY TO 30 APRIL 2016
Source: Praemium, RBA. Returns are before expenses and fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 1 July 2015.
|PERFORMANCE TO 30 APRIL 2016||1 MONTH||3 MONTH||6 MONTH||SI* (P.A.)|
|Intelligent Investor Equity Income Portfolio||3.96%||7.73%||7.78%||12.91%|
|ASX All Ordinaries Accumulation Index||3.24%||6.54%||2.76%||1.26%|
|Excess to Benchmark||0.73%||1.20%||5.02%||11.56%|
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