May 13, 2011 5:27 pm

Concentrate on a balancing act

Adecent month’s performance for my equity holdings has seen Hansard Global rise comfortably above my purchase price last month, and National Grid well above £6. Along with Avarae Global Coins and Merchants Trust, National Grid is showing me a four-figure profit. In percentage terms, I have a gain of 30 per cent on Avarae, 24 per cent on National Grid and 15 per cent on Merchants Trust.

All these holdings are in the portfolio for the long term. If another candidate emerges, I will fund a purchase by selling either my holding in the Gulf Countries iShare or (perhaps more reluctantly) by selling Ecclesiastical Insurance preference stock.

For now, I am focusing on whether or not I have the right balance in my holdings prior to deciding on 2011/12 individual savings account (Isa) investments. In recent years, I have looked at these investments in conjunction with my exposure to tangible assets and property, and my pension fund. All in all, fixed income, tangible assets, property and cash represent about 60 per cent of the total with the remainder split between various genres of equity investment. These include index trackers, high yielders, recovery stocks and gold shares.

While common sense dictates that I should run down the equity content of my portfolio as I get older, for now I am content with the exposure I have, and any adjustments can be done by tweaks around the edges.

One such tweak is whether or not to cash my gains in Blackrock Gold & General, on which I am showing a 63 per cent profit, even after banking other profits some time back.

There could still be some mileage in the gold price, although I am wary about recent central bank buying. Recent history shows that central banks can be contrary indicators on price when it comes to setting policy on gold reserves. The price of gold shares also seems recently to have become disconnected from the gold price, and I am wary of such divergence. But gold only represents 3 per cent of my portfolio, so worrying about it may not be productive.

As for Isa investment, I will probably opt for the relative safety of a balanced fund. Fidelity Moneybuilder Balanced, in which I invested half of last year’s Isa allowance, has shown a total return of 14 per cent since. Putting all of this year’s Isa allowance into it would bring it up roughly to the size of my other fund holdings and represent a conservative tilt to the portfolio, but one that still retained an element of equity exposure.

The fund invests mainly in large capitalisation higher-yielding equities as well as having sizeable exposure to government and corporate bonds and other fixed-income securities. I am, however, waiting a little longer to make this investment, in case the equity market gets the summer blues.

I have also been adding further to my rare coin collection. Recent evidence shows that coins in “extremely fine” condition or higher are scoring well in terms of year-on-year price increases, even over scarcer coins in worse condition.

I recently conducted a revaluation of my holdings, which showed an average gain of about 28 per cent. My Isle of Man collection appears to have done very well, as have my purchases of Anglo Saxon pennies some years ago, and the Georgian gold coins I bought in 2004.

Peter Temple is an active private investor, writing about his own investments.

Next month, he will begin a new column focusing on investments in tangible and alternative asset classes.

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