Hotel model portfolio - balanced income, medium risk

Income: Balanced
Risk: Medium
Last updated: April 13, 2018

Who is it for

Investors looking for a good income from their capital, with the potential for some growth in their income and capital.
However, investors must be able to afford for their income to fall and to lose some of their capital under a worst case scenario.
May be suitable for retired investors looking for a balance between income and capital growth.
May also appeal to investors approaching retirement who can opt to reinvest their dividends until required.

Portfolio breakdown

Artemis Global Income

Invests in strong companies globally for income, has low UK content.

Baillie Gifford Strategic Bond

Invests in different types of corporate bonds to generate a high monthly income.

City of London

Invests mainly in well-known blue chip UK-listed companies and has been increasing its annual income for nearly 50 years.

Man GLG UK Income

Adds more potential exposure to income shares.

Sarasin Global Higher Dividend

Despite manager changes it has maintained a good track record.

Kames Diversified Monthly Income

Fund increases the portfolio's exposure to property and other income-yielding assets.

Threadneedle UK Equity Income

A stalwart UK equity income fund.

Why these funds were selected

In order to provide investors with a regular basic monthly income as well as some capital security, this portfolio has a fixed income and a multi asset holding – Baillie Gifford Corporate Bond and Kames Diversified Monthly Income. The later fund has lower ongoing charges than the Premier Multi Asset fund it replaces.

As its core equity holdings, the portfolio holds three middle-of-the-road UK income stalwarts. There is City of London, an investment trust with a history of increasing its annual dividends for nearly 50 years, plus Man GLG UK Income and Threadneedle UK Equity Income, both steady past performers. To give investors exposure to overseas markets, there are also two global equity income funds with good track records – Artemis Global Income and Sarasin Global Higher Dividend.

Model Portfolio Hotel performance 30 Sept 2018

  Total return (%) over:          
  1 mth 6 mths 1 year 3 yrs 5 yrs Inception  
  % % % % % %
Hotel 0.0 7.8 5.3 32.5 43.6 85.5
FTSE All Share 0.7 8.3 5.9 38.5 43.5 84.6
FTSE UK Private Investor Income -0.1 5.3 5.3 29.8 43.1 65.4

Timeline

2018

  • Sell
    PREMIER MULTI ASSET MONTHLY INCOME
    January 2018

    Has served portfolio well but has underperformed slightly.

  • Buy
    KAMES DIVERSIFIED MONTHLY INCOME
    January 2018

    A better multi-asset vehicle with lower ongoing charges.

  • Sell
    NEWTON GLOBAL INCOME
    January 2018

    Disappointed over past year. Its thematic approach isn't working.

  • Buy
    SARASIN GLOBAL HIGH DIVIDEND
    January 2018

    Also takes a thematic approach. Delivered good track record and decent income.

  • Sell
    INVESCO PERPETUAL INCOME
    January 2018

    Fallen badly since Mark Barnett replaced Neil Woodford.

  • Buy
    MAN GLG UK INCOME
    January 2018

    Has performed well since Henry Dixon took it over in October 2013.

2016

  • Sell
    FIDELITY STRATEGIC BOND
    January 2016

    Potentially rising interest rates make bonds less attractive.

  • Buy
    PREMIER MULTI ASSET MONTHLY INCOME
    January 2016

    More scope for growing income across a range of asset classes.

2015

  • Sell
    FIDELITY MONEYBUILDER INCOME
    April 2015

    Falling yields making this area less attractive.

  • Buy
    FIDELITY STRATEGIC BOND
    April 2015

    Provides greater flexibility to invest in different types of bonds.

  • Sell
    SELL M&G OPTIMAL INCOME
    April 2015

    Falling yield has made fund less attractive for income seekers.

  • Buy
    BAILLIE GIFFORD CORPORATE BOND
    April 2015

    High yielding, strategic, go-anywhere fund with greater scope to adjust to changing circumstances.

  • Sell
    LIONTRUST INCOME
    January 2015

    Change of objective from UK to global income and disappointing returns.

  • Buy
    NEWTON GLOBAL INCOME
    January 2015

    Provides international diversification and benefits from solid past performance record.

2014

  • Sell
    SCHRODER GLOBAL EQUITY INCOME
    January 2014

    Change of manager.

  • Buy
    ARTEMIS GLOBAL INCOME
    January 2014

    Good international diversification with low exposure to the UK.

2013

  • Sell
    TROJAN INCOME
    April 2013

    Soft closed to new investors.

  • Buy
    LIONTRUST INCOME
    April 2013

    Appears well suited to benefit from rising equity markets.

  • Sell
    M&G CORPORATE BOND
    January 2013

    With outlook for equities improving, this fund sold to reduce bond exposure.

  • Buy
    THREADNEEDLE UK EQUITY INCOME
    January 2013

    Provides better income growth potential than bonds, and prospect of capital gains.

  • Sell
    MURRAY INTERNATIONAL
    January 2013

    Premium to net asset value too high making it unattractive to new investors.

  • Buy
    SCHRODER GLOBAL EQUITY INCOME
    January 2013

    Invests internationally in solid companies with stable business models.

2012

  • Buy
    FIDELITY MONEYBUILDER INCOME
    January 2012

    Provides exposure to high-quality investment-grade bonds for security of income and capital.

  • Buy
    INVESCO PERPETUAL INCOME
    January 2012

    Solid UK equity income performer.

  • Buy
    M&G CORPORATE BOND
    January 2012

    Provides exposure to high-quality investment-grade bonds for security of income and capital.

  • Buy
    M&G OPTIMAL INCOME
    January 2012

    Strategic, go-anywhere bond fund.

  • Buy
    MURRAY INTERNATIONAL
    January 2012

    Provides global diversification with significant exposure to Asian and emerging market equities.

  • Buy
    TEMPLE BAR
    January 2012

    Invests mainly in large blue chip companies and has long record of growing its income.

  • Buy
    TROJAN INCOME
    January 2012

    Aims to provide steady growth and income by investing in reliable companies.