Lima model portfolio - growing income, higher risk

Income: Growing
Risk: Higher
Last updated: December 4, 2018

Who is it for

Adventurous investors looking for a growing income from their capital over the long term, plus capital growth.
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 newly retired investors with other secure sources of income who are prepared to take additional risks for the prospect of a rising income and capital gains over the long term.
May also appeal to younger investors who can opt to reinvest their dividends as part of a long-term growth strategy.

Portfolio breakdown

Artemis Global Income

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

Utilico Emerging Markets

Invests predominantly in listed companies involved in infrastructure, transport and similar sectors operating in emerging markets.

Lowland

Invests in UK companies of all sizes to achieve increasing income and capital growth.

MI Chelverton UK Equity Income

Invests in higher yielding small and medium sized UK companies.

Schroder Oriental Income

Focuses on quality companies in Asia Pacific Region.

Scottish Mortgage

A high conviction global growth trust.

JP Morgan European Trust Income Pool

Looks for sustainable dividends from larger companies.

Why these funds were selected

This portfolio invests purely in equity funds in order to provide the best prospects for income growth and capital gains over the long term. It includes four UK focused funds. The core holding is JPMorgan European Trust (income shares). It focuses on large companies but also targets growing, medium-sized companies in the region and has returned over 40 per cent in the past year. Two further UK equity holdings in the portfolio are Lowland and PFS Chelverton UK Equity Income which provide more exposure to medium and smaller sized companies and should give the portfolio greater income and capital growth potential.

Diversified international exposure comes from the portfolio’s holdings in Artemis Global Income and Scottish Mortgage. They are invested in different ways. The Artemis fund is a classic global equity income fund while Scottish Mortgage is more growth oriented and can be used as a source of capital withdrawals to supplement income. Utilico Emerging Markets gives the portfolio exposure to emerging markets. This trust invests for total return but has a yield of over 3 per cent and pays a quarterly income. Finally, the portfolio includes Schroder Oriental Income which provides exposure to the Asia Pacific region and has good potential to provide an increasing income and capital gains over the long term from this faster growing economic area.

Model Portfolio Lima performance 4 Dec 2018

  Total returns (%) over:
  1 mo 6 mo 1 yr 3 yrs Since inception
Lima 0.2 -5.7 -2.3 31.1 134.6
FTSE All-Share index -1.6 -7.6 -1.4 22.6 72.1
FTSE UK Private Investor
Income index
0.3 -0.5 2.0 23.0 61.8

Timeline

2017

  • Buy
    SCHRODER ORIENTAL INCOME
    July 2017

    Added to Schroder Oriental Income with part of the proceeds from reducing Scottish Mortgage holding.

  • Buy
    LOWLAND
    July 2017

    Used proceeds from reducing Scottish Mortgage holding by 8 per cent to 17 per cent to add to Lowland and Schroder Oriental Income

  • Buy
    JPMORGAN EUROPEAN TRUST
    July 2017

    Increased exposure to European equities

  • Reduce
    SCOTTISH MORTGAGE
    July 2017

    Reduced holding by 8 per cent to 17 per cent.

  • Sell
    TROY INCOME & GROWTH
    July 2017

    Sold Troy Income & Growth to reduce exposure to UK.