Growth and Core Funds Asset Allocation

These funds currently account for 24.4% of my investment accounts.

I’m using 18th June 2019 valuations as a starting point.

The largest holding is Smithson Investment Trust 30.03% at 1229p. Second is Findlay Park American 24.22% at USD 124.33 ( straightforward fund – not currency hedged). Third is Vanguard Dividend Appreciation ETF (VIG) 20.52% at USD 114.46. Fourth is Castlefield Buffettology Fund Institutional Income Class 15.92% at 325.73p. Fifth and last is Schwab US Dividend Equity ETF (SCHD) 9.31% at USD 53.06.

I should add that the two US Exchange Traded Funds are held in tax free accounts such as U.K. SIPPs and ISAs to avoid any unfavourable tax consequences which could occur on personal or trust accounts. As I am not prepared to research tax on these it is just easier to park the holdings in the tax free zones rather than argue the toss with HMRC (who will usually win because of technicalities like distributor status, etc.)

My non core fund holdings are gradually being liquidated, so it is most likely that additional core holdings will be added from time to time. Five is fine, and I do not think that I would want to hold more than eight.


I’ll start by telling you my trades. I was a bit overweight in UK Equity Income Funds and selected two for reduction using five year total returns on U.K. funds as a benchmark. The two which I reduced were Threadneedle Equity Income and JO Hambro UK Equity Income – good records when purchased but not in a particularly good place today, with total returns of 24 and 25%. Trojan did better at 32%, Lazard Global 28%, and an Aberdeen Standard (formerly Standard Life) European Equity Income surprised at 52%.

But the Castlefield UK Buffettology fund put on 100%. As this fund has been taking in net new money for the past few months I thought it would be best to catch the wave before any visits from the ghost of Gerald (Gerry) Tsai – who attracted too much money after he left Fidelity to set up his own shop.

Happy to buy another fund with a Buffett like approach, as Findlay Park American has done extremely well over time and the two leading lights – Messrs Findlay and Park – were early Buffettologists going back to 1998 when their fund started as FP American Smaller Companies Fund. Also hearing that value driven Quant funds are not doing so well recently, as humans have been doing better than the algorithms. That makes sense to me, as there are too many value traps around for my liking.

Anyway the price I paid for the Castlefield fund – institutional income class – was 327.54p. The annual charges are an eye watering 1.23%, so they had better prove their value within 18 months or they will face the order of the boot.

Purchase and thoughts going into June

I did in the end add to my Premier Oil, buying back the remaining 40% at around 75. Some interesting statistics about oil and oil product theft in Mexico came to light. It appears that only refined products like petrol/gasoline are stolen on a regular basis from pipelines and trucks, then like abracadabra the same products are sold to filling stations by criminal gangs. Sometimes this is with the collusion of Pemex employees, who are most probably placemen – those are the guys who get a job through political connections, can seldom be found anywhere near their offices, and only answer their private cellphones.

Because products we have bought that were made in Mexico have failed or been well below acceptable standards this got me thinking. Many years ago somebody gave me a Calvin Klein watch bought in Maceys New York for about $100. After a while the battery movement seized up – and I gave it to a specialist watch guy I knew to have a look at. He said the problem was that the manufacturers put in a 50 cent movement, and the watch worked well for a number of years with the $2 movement he replaced it with for me. So I wonder if components are replaced with sub standard copies at Mexican factories, as the criminal gangs could be setting up spares businesses stocked with stolen parts. So far I have had a Samsung Smart TV where the screen failed, a Black and Decker food processor that would not chop anything much, a large Frigidaire upright fridge/freezer that ceased to work, and a Whirlpool washing machine where the tub started to damage the structure of the machine. All Made in Mexico

I assume that Trump knows that the Mexicans will tighten up on immigrants if they are threatened with tariffs. This is because a huge amount of laundered money was used to set up many of the manufacturing facilities in Mexico, now rented to the gringos. As for corporate ownership of property in Mexico, it’s a nightmare – ask anyone who was around at Allied Breweries in the U.K. after they bought Domecq.

I was also a bit surprised to see how quickly Neil Woodford had to suspend redemptions of his fund. I sold out earlier mainly because of concerns that very small U.K. companies could be caught like rabbits in the headlights by Brexit. I need to review funds in greater depth this month, and look at a Buffetology fund – yes there is one and it now has billion in assets.

End May Review

May was notable for an escalation in the trade war between the US and China, and the month ended with the beginning of another spat between the US and Mexico.

So prices of tech stocks were pretty weak, the worst being Nvidia at 135.46 and Alibaba at 149.26, and the best Roku at 90.40 and Microsoft at 123.68. As regards transactions I added to Microsoft, made small averaging purchases of Nvidia and Alibaba, and sold 10% of my Roku holding at 94.10 after a big mark up.

U.K. stocks had a horrible month too, with BAT back to 2760, Prudential at 1577 ( they do have a big Far East life and pensions business amongst other things), Superdry at 462 after >500 (did look to see if they manufactured in China or Mexico, but according to their website they do not – but do sell a bit of merch in Mexico). Premier Oil came back to 78.74 after I bought back 60% of the shares I sold at 97 at about 83. They don’t produce in Mexico yet, so down to the oil price – questions are whether I buy any more, and if so go back to my original position or go to 120%.

There was no news on the smaller holdings, so Bango followed tech down, while S4 was firm for no discernible reasons.

The US dividend indices based ETFs held up reasonably well and there is a case for adding more on further market weakness.

On the political front Theresa May is finally quitting and hopefully there could be a harder line “No deal on Brexit” PM – at least they could gain a bit of respect after May’s appeasement, as the Eurotrash seem to have made it their business to belittle Britain, and it would be good to see Barnier, Junker et al shot down in flames over the Channel.

Donald Trump announced his re-election campaign, AOC did a bit of bartending while campaigning for a minimum wage – a good idea for the US as there should be some attempt to rebalance wealth and income before social problems proliferate.

US Dividend Income ETFs – many long names !

As you know, I already have a holding of Schwab US Dividend Equity ETF in my ISA account, and recently did a bit of research on some similar ETFs that have added focus on dividend appreciation over time.

I looked at NOBL – Pro Shares S&P 500 Dividend Aristocrats ETF – and VIG – Vanguard Dividend Appreciation ETF. Both of these funds suited my intention of diversifying into a fund which might produce less income but more growth.

In the end I decided to buy the Vanguard fund for now, as the index which it tracks – NASDAQ US Dividend Achievers Select Index – has more interesting characteristics and also provides a slightly longer barbell.

In my case all US ETFs need to go into tax free funds such as SIPPs and ISAs. This is because the U.K. tax treatment in an ordinary investment account will most probably be detrimental, and the double tax agreement applies to SIPPs and ISAs too.

Part Way through May

May has been a strange month so far, and U.S.shares have held up better than U.K. shares. Among my tech sector choices Microsoft has come back to 125.74 – filling the gap created by upside earnings surprise last month. Nvidia has retreated to 160.36, which looks weird in relation to the strength in the Bitcoin price. Alibaba came back below 170 on fears about new trade tariffs, but promptly rallied to 177.50 after better than expected earnings. If this was the buying opportunity which my Smart Person was looking for she’d have needed to be very quick !

Roku has been a star, rising from 63.59 to 84.80. This was on earnings and subscriber numbers. One thing I noticed this month is that articles written by Motley Fool have been appearing on Yahoo Finance. Apparently they now recommend the stock, although I would have hoped that the recommendation came in the 60s if I was one of their customers. But Motley Fool is a tiered service so the people paying thousands of dollars at the top end would have been told to buy first ! Not good.

Zayo attracted a buyout at about 35, but as this is unlikely to go through till next year I have taken the advice of Travis Johnson at Stock Gumshoe (also a holder) and exited at 32.95.

Not very enamoured of the U.K. market where BAT weakened further to 2904, Prudential lost traction at 1623, and Vodafone produced a mega loss and cut the dividend. However I did buy a new holding in Superdry just the other day at 452.76, primarily because I believe that the chain can be turned around sufficiently to show me a reasonable profit. My old friend John Sier – who managed the BAT pension fund – said never to trust apparel companies, so will await progress on the revamp.

Also just sold LondonMetric Property in my ISA account, as a bit ahead of events I think although continuing to like the management. Staying within my ISA added to Schwab US Dividend Equity ETF at about 52.76 – now a bit easier on trade spat with China – and may take this holding a bit further up in size as it started fairly small and I think it should be large !

And congratulations to Harry Dalmeny if he is reading – for conducting the auction sale of the Monet for $97 million – that’s $110.7million inclusive of buyers premium.

Bringing stuff to Barbados

Let’s start with cars. These are very expensive and attract a lot of duty unless you have a returnee concession. Petrol/Gas is also very expensive on the island, but road tax has been suspended for most cars. What you definitely should not bring is a low on the road car like an Aston – roads are nowhere near European or North American standards and you will scrape the bottom of a sports car. Bearing in mind steep hills engine sizes of between 1 and 2 litres – or electric equivalents – will work best.

If you want provenance on a used car you are best to bring your own. Geest are quite cheap from Portsmouth in England, and there is no need to put the car in a container on their ship. Containers are often used to bring crashed cars and parts – to give local employment – best to avoid. Suspicious of cars pre owned in Japan as you are taking pot luck – might be good or a crashed vehicle stitched together by the Yasuda.

Local people prefer lower powered SUVs like Qashqais, Suzukis, Toyotas. They sometimes also make a show of wealth by buying very expensive cars like Range Rovers or Jags as haven’t a clue what to do with money after building a huge house.

There are also plenty of cheaper cars on the island, but nothing here is cheap !Next I am going to talk about electrical appliances, which are generally expensive in Barbados. The electricity is 50hz 110v but it is easy to install British electrics at 50hz 220v, that’s just 10v lower than the U.K., if you are remodelling or building. American appliances are 60hz 110v, so if it is something big like a fridge/freezer you will need a transformer, but not for low power things like ceiling fans, televisions.

If you have British electric sockets alongside local sockets in the kitchen this enables use of a lot of appliances. For example, you could bring a few things that you cannot buy here like a Magimix.

A long British extension cable on a reel is also helpful if bringing your power tools.

Best to buy ceiling fans and TVs locally, unless bringing from North America. More expensive in Barbados, but warranties are useful.

Standard lamps and table lamps from the U.K. are fine with local power. Just change plugs and light bulbs, as wiring is designed for stronger current. Do not bring ceiling LEDs from the U.K., as local slightly larger ones are sold out here with bright white light – or yellow if you prefer the 1920s Bakerloo Line retro look. Think about 7w and 12w will cover most areas.

And definitely bring a powerful vacuum cleaner, as breezes bring dust, shoes bring sand, and pets shed fur.

Locally bought furniture is expensive, and bear in mind that very cheap outside plastic stuff will not last very long in this climate. Needs to be reasonable quality – that’s all.

Property in Barbados Part 2

I have covered the reasons for buying on the West Coast in my previous article. Looking at all the options the Porters/Mount Standfast postal area is one of the best locations.

Starting at the North end of the Coast Road and working down you first come to Heywoods – an OK area near Speightstown. Problem here is lack of access to the sea – Port St Charles (a walled yacht marina) is across the road and Sandals are planning to build a huge new resort just to the South. Although there is supposed to be public access to the beach you can be sure that Sandals will find some way of restricting access, so forget this area.

Moving down from Speightstown, you come to Mullen’s. The beach here has not only been eroded, but also the restaurant and beach bar has been acquired by Royal Westmorland as part of their beach club complex. This has devalued Mullens as a location.

A bit further South you come to Lone Star – a restaurant and small hotel on Alleynes Beach. There is beach access at two points nearby, two extra beach bars, and plenty of space to put up your own chairs if you live nearby. Just up from Footprints – a remodelled beachside House once owned by Bob Monkhouse – there are properties and plots just a short walk from the beach and this is my preferred location on the West Coast.

A bit further South you have Holetown with its modernised Massy supermarket – selling some Waitrose stuff too. Nearby is Sunset Crest and Sandy Lane, both popular places to own property. Sunset Crest is broadly OK, but the development was built a long time ago on a coastal swamp, and heavy rainfall results in flooding of parts of the development. Not much of a beach either. Sandy Lane starts behind Sunset Crest and spreads to the South and East. Some of our friends have rented there, and say the housing area is deserted – so not ideal unless you have a large dog (like our friends).

Not sure about Sandy Lane fees, but golf club membership is an enormous expense.

Noticed Royal Westmorland have also been building up In the Porters Road area. Walking to the beach from here might look OK on the map, but expect to sweat pints of water on the way back. A neighbour looked into their fees and thought they were exorbitant, and apparently you need to join their beach club at Mullen’s and use their cleaners, etc. Recent sales have mostly been off plan, which adds large commissions into the pricing.

Just South of the Sandy Lane hotel complex is One Sandy Lane, best beachside address on the island with Rihanna as a neighbour. Billionaires only.

Moving South there are many nice expensive houses with beach access. Two strikes against these are road noise and storms – tropical storms can remove beaches and with sea levels generally expected to rise over time it is best to leave these houses as expensive holiday rentals.

Batts Rock to the South offers some elevation and a pleasant beach with a beach restaurant – La Cabane. Not far from the Carlton supermarket which is large and sells some Tesco products.

As an aside, avoid cheap pasta as it sticks together. The Waitrose and Tesco products are a bit more expensive, but made in Italy as opposed to Costa Rica. Italian is a very clear winner, and packaging is also less likely to let in weevils while unopened.

The April 2019 Update

My big tech names have not changed price much in April – except for Microsoft up from 117.97 to 130.60. Alibaba 185.57 vs 183.60, Nvidia 181 vs 179.56, Roku 63.59 vs 64.48 were flat. The reason behind Microsoft’s rise was bumper earnings, partly fuelled by Cloud growth, and the realisation by Wall Street that the Pentagon contract has narrowed to a shortlist of two, so either Amazon or Microsoft will be the winner.

Premier Oil improved from 93.55 to 99.78 after low 100s. I remain optimistic but took a partial profit during April at about 97. BAT eased from 3194 to 2990 – still a buy according to Smart Chartist. Prudential improved to 1735 – the spin off of M&G is scheduled for later this year. Bought some a while ago at 1800, averaged at 1600, so not much here yet. Despite severe reservations about useless management I retained Vodafone in my ISA at 139 having taken a tax loss in the real world.

Smaller holdings in Bango – 113 vs 110, and S4 – Sir Martin Sorrell’s new digital media agency- improved a bit, and Smithson Investment Trust – my Woodford replacement – moved up from 1146 to 1216.

Also noted that quality dividend stocks on Wall Street improved as my mega cheap expense ratio SCHD was up a bit at 53.96. Not as big a holding as Smithson, but I do also have quite a large holding in Findlay Park American – probably a closed shop to most investors.

As far as 5G goes, I was out of the sector and bought a few Nokia ADRs at 5.38 the other day – closed the month a few cents cheaper.

Also hold a number of funds that need thorough reviews and changes, so will have plenty to think about in May.

Overall investment account cash seems to hover in the 20 – 30 % range – there is no particular reason for me to be fully invested – much easier to operate using cash, creating cash.

A few thoughts about political legacies

I was wondering what kind of political legacy Donald Trump will leave. The Great Wall of Trump does not look too good at present, and foreign affairs look a bit messed up in the Middle East and Far East. Maybe Venezuela and Cuba will offer easier pickings, but he is missing out on a superb opportunity to create a political legacy at home. Adding a new star – Puerto Rico – would not only connect with the millennials but also get him a place in the history books. I can’t think of any other places that might qualify for statehood. There are only a few little islands left, and these could be incorporated into other states over time if they want this. Remember that the Euro Bloc has been increasing in size for some time now, whereas the United States has been stagnant in terms of adding new states since 1959 – part of Eisenhower’s pretty much unbeatable legacy.

Putin is trying to annex bits of the old Soviet Empire, so this will be his political legacy. There are similarities with German expansion in the 1930s – bunch of Commie gangsters – bunch of Nazi gangsters – not much difference as far as territorial ambitions go.

In China Xi Jinping has been quietly building a lasting political legacy, and I doubt that China will upset the applecart by taking back Vladivostok or challenging the American Pacific Fleet too seriously. In fact the only embassy that is seen to do good here in Barbados is the Chinese – Americans should be ashamed of the tat that their people sell in embassy yard sales – cargo cult mentality.

Macron has been handed his political legacy on a gold plate – the President who mobilised the country to rebuild Notre Dame.

Angela Merkel will mostly be remembered as the chancellor who encouraged immigration by displaced people from the Middle East. Risky as this could all backfire.

Theresa May – failure at the Home Office – on a par with Neville Chamberlain as she seems to be willing to commit the country to huge “reparations “ to avoid conflict

And as for the “unelected” Europeans, Barnier is trying to get away from the popinjay images, but still finds it difficult not to gaze into his own reflection, Junker is well known for his drinking, and Donald Tusk is a cheekie chappie who asks for all sorts of state benefits from others – as long as the Poles aren’t paying.

Out of the up and coming, the best political legacy prospect is AOC. She is a great example to people wanting to overturn “jobs for the boys” politics. Nigel Farage is another, but I am not sure that his party will gain much support – except in MEP elections. If you can get it, there is a very good film on Netflix – Knock Down the House – which examines challenges to the established political order.