For the last 25 years I have been reporting on how my stock market investment portfolios have performed in the last year. This is my report for the calendar year 2024.
I am not very consistent as regards performance measured in total return. The year 2021 was a very good year but all the profits were wiped out in 2022. The year 2023 didn’t manage to beat the FTSE All-Share which is my benchmark objective. But 2024 showed a good recovery with a total return (capital and dividends) of 11.2% versus the FTSE All-Share of 5.5% (capital only – the dividend yield is about 4%).
It’s worth bearing in mind that my portfolio is very diversified across FTSE-100, FTSE-250 and smaller company (e.g. AIM) shares listed in the UK. I also hold a number of UK investment trusts which gives me exposure to overseas markets, and some Venture Capital Trusts (VCTs). Although I have some emphasis on AIM shares, they are not the very speculative ones. With 74 holdings altogether I am never going to significantly outperform benchmarks but at age 78 I feel no need to take an aggressive stance on investments.
The reason for my annual analysis is to pick out my investment mistakes of which there are always a few, which I will highlight in this note. Learning from one’s mistakes is an essential investment discipline.
I lost money last year on my holdings in BP, Rio Tinto, Safestore, Bango, Bioventix, DotDigital, Judges and Tracsis. The last 5 are all AIM shares and I sold Tracsis at the year-end but I see no reason to sell the others. I also sold some BP but held on to Shell. I consider oil/gas companies to be irrationally undervalued, mainly by institutions who have been bitten by the ESG bug. AIM company shares still seem to be out of fashion and it was difficult to make money on small cap shares last year. I bought several but they proceeded to go nowhere.
Big wins last year were Diploma, Paypoint, Polar Capital Technology Trust, Unilever, GB Group, Polar Capital Holdings and Intercede (the last one issued a positive trading statement today but it’s already highly rated).
In the property sector the Schroder REIT turned a profit but losses on TR Property Trust offset the gains. The property sector is still in the doldrums it seems with no recovery in capital values.
Our VCT shares continued to lose capital value but the tax-free dividends have held up so I will continue to hold. They continue to be negatively affected by the malaise in small cap shares.
Our large holdings in the Fundsmith Equity fund and Scottish Mortgage Trust did well again last year so I will continue to hold.
I have decided to sell one of our NS&I Index-Linked Savings Certificates – held since 2007 – I invested £15,000 then and it’s now worth £29,720, mostly as a result of inflation. But likely return on these is now much less so I do not consider them worth renewing. Savings rates for instant access deposits are now much better than in 2007 and more comparable to inflation. Returns on the stock market are likely better.
What are the investment prospects for 2025? I have no idea. I just like to buy shares in well managed companies with good prospects. That has worked well in the past and ensured decent long-term returns. My compounded total return over the last 25 years is about 10 times which has meant my wife has been kept busy on her expensive hobbies. It also means that unlike most people I have got richer in retirement, not poorer. But our offspring are looking for some financial assistance so they will soak up some of the profits. I will also be reviewing my usual charity donations near the end of the tax year and look at what we can gift out of surplus income which I track carefully.
It’s important to use all the potential IHT reliefs now that avoidance has become more difficult.
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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