2024 portfolio review - Photo by Tim Stief on Unsplash

My 2024 Portfolio Review

Here’s my portfolio review for 2024. I ended the year up 10% while global markets rose 18% and the investment trust index gained 9%.

My performance

This table summarises my returns against a range of comparators:

Portfolio/comparators202420232022Since
Jan 2018
My portfolio+10.1%+9.2%-13.0%+7.2% pa
Vanguard FTSE Global All Cap (fund)+18.3%+14.7%-8.0%+9.9% pa
Vanguard LifeStrategy 60 (fund)+9.7%+10.1%-11.2%+5.1% pa
Vanguard UK All-Share Index (fund)+9.3%+7.8%+0.3%+4.4% pa
FTSE A/S Closed-End Investments (index)+8.7%+4.9%-16.6%+5.8% pa

Notes: I use the Vanguard global tracker fund as my main comparator with the more conservative LifeStrategy 60 fund, a UK index tracking fund, and an index of UK investment trusts providing additional reference points. All returns are pre-tax and measured in sterling using a unitised method that adjusts for any money put in or withdrawn. All trading and admin costs are included in my returns but not for the fund or index returns. 

2024 was similar to 2023 in many ways. My portfolio, the 60/40 fund, the UK market, and the trust sector all produced a decent absolute return, but global markets did much better thanks to another strong performance from mega-cap US stocks. Over the last seven years, my return remains roughly halfway between global markets and the range of other comparators I monitor.

Regarding the market backdrop, we have seen some interest rate cuts but with the threat of higher inflation not yet entirely dealt with, it looks like the path downwards will be more gradual than previously expected. Valuation multiples still look stretched for US stocks with Yardeni’s earnings squiggles suggesting the S&P 500 trades on a P/E of 21.5 times for 2025 and 19 times for 2026 with forecast earnings growth of 12% for both years. So a third year of strong gains for US stocks seems unlikely but, of course, markets often tend to surprise us. Global markets are on a forward P/E of around 18.5 times according to the latest factsheet for MSCI ACWI.

Performance by holding

Here’s how my positions performed on a share price and NAV basis:

Holding (ticker)Share price
return
NAV returnPremium/
(discount)
JPMorgan Global Growth & Income (JGGI)+19.8%+21.2%+1.7%
Vanguard All-World ETF (VWRL)+19.3%+19.3%
Lindsell Train Global+13.7%+13.7%
Fundsmith Equity+8.7%+8.7%
Smithson (SSON)+4.9%+2.0%-10.2%
RIT Capital Partners (RCP)+7.9%+10.3%-25.4%
Gresham House Energy Storage (GRID)-57.9%-14.4%-59.1%
Bluefield Solar Income (BSIF)-13.7%-0.8%-26.8%
HICL Infrastructure (HICL)-8.3%+3.4%-25.0%
HgCapital Trust (HGT)+25.7%+5.4%+2.1%
Bellevue Healthcare (BBH)-6.5%-6.6%-6.8%
Worldwide Healthcare (WWH)+2.1%+6.3%-12.9%
International Biotechnology (IBT)+10.9%+14.5%-9.6%
Baronsmead Venture Trust (BVT)+7.2%+1.9%-4.8%
Henderson Smaller Companies (HSL)+1.6%+4.0%-13.5%
BlackRock Smaller Companies (BSRC)+2.2%+2.0%-11.2%
KR1 (KR1)-30.4%-29.9%-16.9%

Note: the links go to my trust profiles which were written some time ago and therefore don’t reflect recent events and results.

The average discount across all my positions was 4.2% at the end of December, compared to 4.7% at the end of June and 4.9% as of December 2023. The narrowing of the discount at HgCapital was the main factor here offsetting discounts widening at most of my other positions.

JGGI, HGT, and VWRL were my best performers in 2024. Lindsell Train did better than Fundsmith but both of them underperformed global markets again. UK smaller companies did well earlier in the year but gave back most of their gains by the end and it was a similar story for healthcare. Sizeable discounts appeared at all three of my renewables/infrastructure holdings in 2023 but they got even wider in 2024. All in all, it was very uninspiring year for my three side themes. Gresham House Energy Storage won turkey of the year by some distance although KR1’s performance in the year that Bitcoin surpassed $100,000 for the first time was disappointing.

I got rid of my entire holding in Keystone Positive Change after it published its rollover plans a few weeks ago, hence its absence from the table of returns. It was up around 10% on the year when I sold. Its discount to NAV had narrowed so, rather than waiting a few months for the cash exit/rollover, I decided to sell into the market and reinvest the proceeds across most of my other trust holdings where discounts had widened somewhat. I think the only trust I didn’t top up was HgCapital, as that is one of my largest positions already. Saba Capital has since popped up with a meeting requisition request and is looking to scupper the Keystone rollover vote. With a 29% stake, it may well succeed.

There wasn’t a great deal of news from my holdings but there are two worthy of comment…

Bellevue backtracks

Bellevue Healthcare’s annual redemption policy has caused its board a headache recently. It had to buy back 14% of its shares in November 2023 and then a whopping 36% in November 2024, reducing its market cap to £350m. Concerned that some investors were taking short-term advantage of the facility, it proposed replacing it with an annual conditional tender offer for up to 10% of its shares instead.

Although the board said it consulted shareholders about removing the redemption facility, it appears it didn’t discuss its proposed alternative. The 10% cap was reasonable I thought, but the fact performance was to be measured over the preceding three years meant the first possible tender offer would be in 2028. Within a week, the plans were withdrawn. I suspect some sort of compromise will be struck but it’s not a good look. The trust itself, with its focus on small and mid-caps, has lagged its benchmark for the last three years. I’m sticking with it for now but when healthcare small and mid-caps do find favour again it will need to start performing.

GRID sets out an ambitious three-year plan

Gresham House Energy Storage continues to dominate both my research efforts and these portfolio reviews despite being one of my smaller positions. It held a Capital Markets Day in November setting out a three-year plan to increase its EBITDA from £45m in 2025 to £150m by 2027. The projected growth comes from adding batteries to existing sites (£33m), building half a dozen new sites (£47m), and an as-yet-undisclosed new revenue stream (£25m) where negotiations have been taking place for a while now. The first two will require a lot of fresh capital and with the shares at a big discount, that rules out the now seemingly old-fashioned route of equity fundraising.

To put that projected growth into historical context, EBITDA was around £25m in 2023 and looks set to be around the same level in 2024, but it reached nearly £50m in 2022 when the portfolio was a lot smaller and frequency response revenues were much higher.

GRID plans to refinance its existing debts of around £175m and seems to think it can secure a lower rate of interest due to the greater proportion of contracted revenues it now has. Its current margin is 300 basis points over SONIA, much higher than most alternative asset trusts, although a fair chunk of its borrowing is fixed at a lower rate with an interest rate swap. GRID will then look to secure additional funds from project financing, similar to the funding models used by solar and wind power trusts. The amount to be raised and therefore the additional interest cost coming off that £150m EBITDA target is to be determined.

It all sounds very ambitious but a successful completion of the initial refinancing could provide a decent steer as to whether the further and much larger financing plans are viable. GRID is also talking with an investor about buying into its Glassenbury project at around NAV, augmenting it with additional batteries and taking it from a 50MW sub-one-hour duration asset to a four-hour asset. This might provide a useful marker as to whether its asset valuations are realistic, although the upcoming sale of Harmony Energy’s 395MW two-hour portfolio is probably even more important. I don’t think there have been any major UK battery projects changing hands so we don’t have the benefit of markers from other transactions.

Battery storage revenues jumped in December to a run-rate of £84,000 per MW per year, according to Modo Energy, up from £47,000 over the first eleven months of 2024. That’s encouraging but we’ll have to see how sustainable that proves to be. GRID has contracted half its portfolio at just below £60,000 per MW per year to Octopus so it won’t have seen all of that upside.

Finally, there have been a few director buys at GRID and Ben Guest has taken his stake above 3% again. He now owns 17.4m shares which is up from 14.4m at the end of 2022, the last disclosure I could find. GRID reckons that if its EBITDA is in the range of £45m to £55m in 2025 that will translate into cashflow per share of between 4.5 and 6.2p of which a sizeable but as yet undecided proportion will be paid out as a dividend, starting in the third quarter.

It’s messy and it’s complicated and management has been guilty of overpromising before. So while I can see the shares moving quite a bit higher from here, assuming GRID can deliver most of what it has planned, I’m hesitant to take a much larger position. I have roughly the same amount in GRID as I do in HICL Infrastructure and I have a little bit more in Bluefield Solar.

Read my fund profiles at Money Makers

I am continuing to write fund profiles at Money Makers with recent articles covering Murray Income, Baillie Gifford Shin Nippon, JPMorgan Global Growth & Income, BlackRock Latin American, Schroder Japan, Temple Bar, Manchester & London, CQS New City High Yield, Mid Wynd, Henderson Opportunities, and Edinburgh Worldwide.

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Thank you for reading!

   

Disclaimer

Please note that I may own some of the investments mentioned above -- you can see my current holdings on my portfolio page.

Nothing on this website should be regarded as a buy or sell recommendation as I'm just a random person writing a blog in his spare time and I am not authorised to give financial advice. Always do your own research and seek financial advice if necessary!

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2 Replies to “My 2024 Portfolio Review”

  1. Thanks for your transparency and happy new year!

    Respect for keeping at it with your IT portfolio.

    I’m close to throwing the tower after being mostly invested in CGT/RCP (and a few other ITs I sold last few years- BSRC, SSON, HICL, HFEL) . Sold all my CGT a month ago, and since 2 years buying only cheap ETFs a la VWRL/VWCE.

    The moment RCP closes the discount I will dump it as well, as psychologically I can’t sell it at such a discount, seems unwise.

    It was an interesting experiment but I don’t know if it’s worth all the effort in analyzing all these ITs when a dumb ETF ends up beating basically all of them.

    Let’s see how 2025 goes…

  2. And Happy New Year to you too, X. You definitely have to like doing the extra research and be prepared for the additional ups and downs the approach involves, and that certainly doesn’t suit everyone. Trusts like CGT and RCP will tend to lag in strong bull markets of course.

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