July 2020 portfolio update

I find watching the virus headlines come and go a bit dizzying after a while. But hearing Google pronounce that they don't expect to get people back into the office for another 12 months got my attention. 12 months...?

Over the last month US stocks have been pushed up by the trillion dollar tech companies, elsewhere they have been down. Europe saw spread of the virus start to pick up after it's lock-down, and the US saw it's cases explode. Probably a useful experiment as to the effects of not implementing adequate social distancing. This, plus an increasingly creaky relationship with China, and an election in a few months has seen the Dollar weaken. Trumpy went particularly strange at the end of the month deciding that the November election (the one that hasn't happened yet) won't be legit thanks to voter fraud...

There has been a bit of movement in share prices as businesses have delivered trading updates, which has resulted in some of those on my shopping list getting back to more inviting prices. A few companies have demonstrated a great deal of resilience. Good companies temporarily having a bad time could be a great investment, providing those tough times reverse before any long term damage is caused. Those companies showing resilience - these are the businesses I really want to own, but their prices are high... For this month, nothing too exciting I've topped up the Asian investment trust I bought into in June.

Portfolio performance
The portfolio was up +1.3% in July, ahead of my chosen benchmark (Vanguard FTSE All Share Accumulation) which was down -3.6% over the same period.

Best performers this month:
Dignity +31%

Computacenter +21%

Somero Enterprises +10%

Worst performers this month:
Fulcrum Utilities -12%

National Grid -9%

Glaxosmithkline -7%

July share purchase: HFEL

A top up of Henderson Far East Income Investment Trust (HFEL) was the only activity for the portfolio this month. I bought into this last month - there a few details on HFEL in my June update.

The Trust increased it's quarterly dividend by around 1.5%. In "normal" times this wouldn't get much attention but given the current environment it did cause one of my eyebrows to raise. The argument from the Trust is that most Asian economies went into the COVID-19 crisis healthy, and has managed it's response relatively well, so they expect them to come out in better shape than most other areas. And the specific companies in which they are invested have decent cash flow so should see relatively limited damage to dividend payments. There are around 9 months of reserves that the Trust can use to cover any shortfall and smooth out the dividend payments. I would have preferred them to err further towards caution and not increase the dividend, instead building up the reserves, which could then contribute to more aggressive increases on the other side of COVID-19 if they weren't needed.

However, the confidence of the Trust's Board and managers that they could at least continue the current dividend payments were enough to encourage a top up. I do wonder if this is a little bit of marketing, trying to pinch a few customers of other income based Trusts that may have a tougher time with dividends, time will tell.