Monthly Archives: August 2016

The Standard Life Investments Property Income Trust Limited

The Standard Life Investments Property Income Trust Limited is a London Listed £300m property investment trust.

Its top then holdings are:-

White Bear Yard London, worth £18 -20m
Elstree Tower Borehamwood, worth  £16 -18m
Denby 242 Preston, worth  £16 -18m
Currys PC World Denby, worth  £16 -18m
Symphony Rotherham, worth  £14 -16m
Chester House Farnborough, worth  £14 -16m
Charter Court Slough, worth  £12 -14m
Bong UK Milton Keynes, worth  £10 -12m
Ocean Trade Centre Aberdeen, worth  £10 -12m
Bourne House Staines Upon Thames, worth  £10 -12m

A dividend yield of over 5%.

The Foreign and Colonial Commercial Property Trust

The Foreign and Colonial Commercial Property Trust is a London listed investment trust investing in real estate.

A member of the FTSE-250 and is worth nearly £1,000 million.

Some salient facts.

A yield of nearly 5%.

Since launch in 2005, The F&C Commercial Property Trust Limited has turned a £1,000 investment, with dividends reinvested, into £2,503. It’s has a clever borrowing strategy. The F&C Commercial Property Trust, entered into a £260 million ten year loan agreement with Legal & General Pensions Limited on 31 December 2014, refinancing its previous £230 million bonds and a £30 million bank loan. The L&G loan carries a fixed interest rate of 3.32 per cent per annum. The Company also has a £50 million bank loan with a term to 28 June 2017 on which the interest rate is fixed, through an interest rate swap of the same notional value and duration, at 4.88 per cent per annum. The Group’s total borrowings amount in aggregate to £310 million.

Its cash flow is so strong it is able to pay dividends monthly. Its total rental income from its property was £62.613 Million.

It’s two largest shareholders are:

Aviva Group 22.7%
Investec Wealth & Investment Limited  9.8%

Potential Default on Bonds from The Manchester Building Society.

The Manchester Building Society is struggling in the 0.25% Base Rate climate.

Apart from using deposits to fund mortgages, The Manchester Building Society, has issued Permanent Income Bearings Shares to raise cash, (PIBS). These are debt instruments.

In October 1999 the Society issued £5 million of PIBS. 5,000 individual shares were issued and each one had a nominal value of £1,000. In April 2005, a further £10 million of PIBS was issued. 10,000 individual shares were issued and each one had a nominal value of £1,000

So it pays 6.75%

Look at the chart. A dramatic collapse is price.

This one pays 8% to investors.

But it looks like they may miss the next payment. A default.

The Polar Capital Global Financials Trust

The Polar Capital Global Financials Trust is a FTSE Small Cap investment trust listed on the London Stock Exchange.

A £175m fund

Top 15 Holdings:-

JPMorgan 3.6% of the fund
Chubb 3.4% of the fund
Wells Fargo 3.0% of the fund
ING Groep 2.6% of the fund
Marsh & McLennan 2.3% of the fund
Fortune Real Estate Investment 2.2% of the fund
Swedbank 2.2% of the fund
Bank of America 2.1% of the fund
Sampo 2.0% of the fund
Toronto-Dominion 2.0% of the fund
Sumitomo Mitsui Financial 2.0% of the fund
First Republic Bank 2.0% of the fund
Citigroup 1.9% of the fund
BNP Paribas 1.9% of the fund
Discover Financial Services 1.8% of the fund

15 holdings make up 35.0 % of the fund

What is interesting is that the fund is at a discount.
Discount -13.91% to be precise.

Meaning you are buying £1 worth of assets for 86.09p.

A yield of over 3%

The Power of Index Funds

A great quote from the father of index funds, and the founder of Vanguard.

Don’t look for the needle in the haystack. Just buy the haystack!

Just an amazing quote, referring to the fact, that do not look for an individual share/stock (Company) but instead buy the entire index.

Over $3 TRILLION under management

One of the best insightful investment videos ever.

CPI. Consumer Price Inflation: July 2016

The Office on National Statistics on Tue 16th Aug 2016, published the latest view on consumer price inflation.

CPI, Consumer Price Inflation is defined as the rate at which the prices of goods and services bought by households rise or fall. It is estimated by using price indices. A way to understand this is to think of a very large shopping basket containing all the goods and services bought by households

These figures are post Brexit and thus the devaluation of Sterling.

The Consumer Prices Index (CPI) rose by 0.6% in the year to July 2016, compared with a 0.5% rise in the year to June.

The CPI 12-month rate (the amount prices change over a year) between July 2015 and July 2016 stood at 0.6%. This means that a basket of goods and services that cost £100.00 in July 2015 would have cost £100.60 in July 2016

The ONS and I quote “The main contributors to the increase in the rate were rising prices for motor fuels, alcoholic beverages and accommodation services, and a smaller fall in food prices than a year ago.

Now we know oil (prices for motor fuel) is priced in US$. So now more pounds are needed to buy the oil.

The ONS are quoted to say “…previous trends with a particular focus on how movements in the sterling exchange rate may have influenced these data

Evidence of Brexit affecting the price of goods.

BHP Billiton Results for the Year Ended 30 June 2016

BHP Billiton one of the world’s largest natural resources company, published its end of year results on Tue 16th August.

The figures make interesting reading.

Capital and exploration expenditure declined by 42% to US$6.4 billion and is expected to decrease further to US$5.0 billion in the 2017 financial year

Net debt is higher now at US$26,102 million

Liquidity of US$16 billion

Net finance costs increased by US$410 million to US$1.0 billion

The outlook for commodity prices in the short term look weak.

The results also responded to the tragedy following the failure of the Fundão tailings dam at Samarco on 5 November 2015. 19 fatalities, of which five were members of the community and 14 were people who were working on the dams at the time of the dam failure. This dam was at a mine that BHP Billiton and Vale owned.

A provision of US$1.2 billion at 30 June 2016 in respect of BHP Billiton Brasil’s potential obligation. Note that BHP Billiton Brasil is among the defendants named in a claim brought by the Federal Public Prosecution Office on 3 May 2016, seeking R$155 billion (approximately US$48 billion) for reparation, compensation and moral damages in relation to the Samarco dam failure.

The BlackRock Income Strategies Trust

The BlackRock Income Strategies Trust is a London Listed £320million investment fund.

The yield is amazing at over 5%.

Formerly known as the British Assets Trust, founded in 1898.

Portfolio Analysis:

Equities 37.5%
Volatility Strategies 5.1%
Fixed Income 26.7%
Alternatives 12.0%
Commodities 7.4%
Cash Equivalents 11.3%

London Metric PLC

London Metric is a FTSE 250 Real Estate Investment Trust specialising in property investment and development.

£1.4 billion is the total portfolio value

A yield of over 4%.

Some incredible properties:-

Yes, prime real estate in the IP5 district of Ipswich, Martlesham Heath.

The Bank of England Aug 4th 2016 Decision

On Thursday 4th August 2016, the Bank of England, made some historic decisions.


[Courtesy of The Bank of England]

It cut the base rate from the 0.5% rate that we have enjoyed since March 2009, cut it down to 0.25%

It then increased the quantative easing programme from £375 Billion by a further £60 Billion to take the UK Government Bond Purchase Programme (Asset Purchase Facility) to £435 Billion.

What they also announced is that they will start a £10 Billion Corporate Bond Purchase Programme. What does that actually mean ?

Large listed companies, fund themselves apart from business operations of selling products and services, by selling bonds. They are known are Corporate Bonds. They are bought by professional investors like pension funds, insurance companies and banks. They pay a regular income provided the company does not default. If the owners of these bonds (effectively the creditors to the companies) want to sell them, they are able to trade them on the open market. However in these uncertain economic times it is not always possible to sell them thus if a bank who owns a specific corporate bond, needs cash and tries to sell the corporate bond and is unable to, now the Bank of England will come in as a new buyer, and buys the bond and the bank gets cash from The Bank of England. Thus The Bank of England is providing more liquidity in the market place.


BT PLC the world’s leading media and telecommunications company has issued bonds:

Shell PLC the UK’s largest company has issued bonds:

If these bonds are now owned (creditors to BT and Shell) by banks, and the banks need to raise cash, they now can sell these bonds in BT and Shell to The Bank of England.

So effectively The Bank of England is now buying high quality corporate bonds from financial institutions who want to raise cash by selling there bonds holdings. The end result will be that The Bank of England will become a creditor to large organisations who have issued bonds.

The August Vodafone Dividend

On Wed 3rd August 2016 Vodafone PLC paid out its summer 2016 dividend of 7.77p.

A key member of the FTSE-100

Now Vodafone’s issued share capital consists of 28,814,124,788 ordinary shares.

We can calculate how much cash left Vodafone on Wednesday morning to pay the shareholders:

28,814,124,788 x £0.0777 = £2,238,857,496

That is £2,238 Million = £2.238 Billion.

A juicy dividend.

HM Government Borrowings: July 2016

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In July 2016, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury:-

20-Jul-2016 4¼% Treasury Gilt 2039 £1,500.0000 Million
13-Jul-2016 0 1/8% Index-linked Treasury Gilt 2026 £1,250.0000 Million
07-Jul-2016 1½% Treasury Gilt 2026 £2,584.3190 Million
05-Jul-2016 1½% Treasury Gilt 2021 £2,874.9960 Million

When you add the cash raised:-

∑(1,500 Million + £1,250 Million + £2,584.319 Million + £2,874.9960 Million =  £8,209.32 Million

£8,209.32  Million = £8.209 Billion

On another way of looking at it, is in the 31 days in July, HM Government borrowed:-

£264 million each day for the 31 days.

We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2021, 2026 and 2039. All long term borrowings, we are mortgaging our futures, but at least “We are in it together…

Bonds of Shell plc

One of the worlds largest energy companies is Royal Dutch Shell

It has massive borrowings to fund its operations.

Total outstanding debt is:-

CHF 1,325  Million
EURO 13,450  Million
GB £ 500 Million
US$ 40,500 Million

Total in Sterling is £39,845 Million. That is £39.8 Billion.

What is interesting is to see when the debts are due to be repaid, the maturity profile.