Model portfolios: Australian Shares and Property back on target

It’s time to shuffle our holdings of Australian Shares and Property and Infrastructure. Richard Livingston and Greg Hoffman explain the latest moves.

Key Points

  • Actual allocations to ‘risk assets’ have drifted above targets
  • Changes being made will bring allocations into line with target levels
  • New individual stocks being introduced      

Changes to the asset classes of Australian Shares and Property and Infrastructure were highlighted in our recent Exchange-Traded Funds and only partially replacing it with our new direct ASX-listed investments.

In the Property and Infrastructure asset class we’ve been slightly under our target. An investment in Hotel Property Investments (ASX Code: HPI) gives us the chance to get closer to (but not over) the target.

Table 2 shows the transactions we’ve made in each of our model portfolios.

  Conservative Moderate Aggressive
Table 2: Summary of model portfolio changes
  Buy Sell Buy Sell Buy Sell
Australian Shares            
SPDR S&P/ASX 200 ETF (STW)    8,573    15,129    25,215
Washington H Soul Patts (SOL)  4,500    5,250      
The Reject Shop (TRS)      3,521    5,030  
Vision Eye Institute (VEI)          3,025  
Net move in Australian Shares  4,073    6,358    17,160  
Net move (as % of portfolio value) 0.76%   1.16%   3.05%  
             
Property and Infrastructure            
Hotel Property Investments (HPI)  4,060    3,045    4,060  
Net move in Property and Infra (as %) of portfolio value 0.75%   0.55%   0.72%  
             
Notes: (1) Based on closing prices 14 April (as set out in Quarterly Report March 2014).    

Let’s now turn to the individual opportunities.

Washington H Soul Pattinson (ASX Code: SOL)

This old-fashioned conglomerate has some similarities to our existing holding in Amalgamated Holdings. ‘Soul Patts’, as it’s affectionately known around the traps, has a long track record, is conservatively run and financed (with no net debt). We don’t expect supercharged returns from this stock but nor will we lose a wink of sleep owning it.

The Reject Shop (ASX Code: TRS)

This former darling has fallen from grace recently. As a smaller retail business, it’s a higher-risk prospect than Soul Patts but it also offers higher potential rewards. The astute team at Intelligent Investor Share Advisor made the case in Bargain hunting at The Reject Shop and it appeals to us.

Vision Eye Institute (ASX Code: VEI)

Even smaller and riskier than The Reject Shop, Vision Eye Institute owns the largest network of eye clinics in the land. Share Advisor has covered it extensively in research pieces such as Vision upgraded to Speculative Buy and All eyes on Vision. If all goes well we could triple our money from today’s price but the risks are such that we’re only including a small weighting.

Hotel Property Investments (ASX Code: HPI)

This company is the Wesfarmers (or, rather, Coles) cousin to Woolworths-backed ALE (ASX Code: LEP), which already resides in our portfolios. Hotel Property Investments owns a portfolio of 48 pubs (95% in Queensland and 5% in South Australia). It’s higher risk than ALE, which is why we’re giving it a lower weighting, but offers an attractive income return. Members of Share Advisor can read the full research in HPI: beer we go again.

After these transactions, our asset allocations are back to their target levels. In our next article, we’ll focus on changes which bring our Cash and Fixed Interest allocations back into line.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Join the Conversation...

There are comments posted so far.

If you'd like to join this conversation, please login or sign up here

Related Articles