Wednesday 4 June 2014

Under and Out (Portfolio Sale)

Sometimes low is good. Low cost, low fat - that sort of thing. And limbo dancing, of course.

But when the yield on one of your investments gets too low - that's another matter. Particularly if the reason is that the price has risen.

A low current yield means - if you are a DIY Income Investor - that your money is not working hard, but is figuratively messing about on the beach. Time for action.

My own yield threshold is pretty high. I like new investments to improve on the portfolio average (currently running at 5.6%) and I get very nervous when any of them falls below 4%.

So, to paraphrase the Holy Hand Grenade of Antioch sketch, 3% is right out.

Believe it or not, I don't spend all day checking my investments, but when I looked at the yield on my holding of iShares EURO STOXX Select Dividend 30 ETF (which I bought in January 2013) was shocked to see that the yield on this Sterling version of the ETF has fallen to just over 3% (according to Bloomberg). The weakening Euro has contributed to this price trend.

Much as I am committed to dividends, ETFs and diversified investing, this is just not good enough and I have sold, netting a modest 23% capital gain.

I still plan to remain invested in worldwide dividend ETFs, using yield as an indicator of potentially unpopular locations.

Limbo, limbo...

[Sale price: £16.34]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

1 comment:

  1. I really respect your sell discipline and patience DIY! Seeing you journal down your buys and sells help me not be too emotional with my own portfolio!