Portfolio commentary: boring blue chips, please

Why I’ve taken a position in dull but worthy City of London Investment Trust

Photo by Erik Jacobson on Unsplash

As I’ve previously mentioned, I’m going to begin building my Sipp with a few well-selected investment trusts – an instant portfolio if you like, hopefully bought at a discount to the underlying value of the assets in them.

Trusts in this report

Source: SharePad

A few readers also offered a few suggestions of trusts I could look at, among them Scottish Mortgage which at the time I wrote was trading at about 1,461p a share, an 8% premium to its net asset value (NAV). I’ve long liked Scottish Mortgage and would like to join my kids and many others in owning it, but as I said, the premium was too punchy for me given I reckon markets are looking pretty frothy.

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Tesco: Private equity bid is unlikely but the shares are attractive to income seekers

Tesco is doing a great job keeping its customers happy and this is leading to higher profits. Meaningful growth going forward will be hard to come by but the shares offer a dependable and growing dividend stream.

Photo courtesy of Tesco PLC

Tesco's half year results were very good and highlighted the strength of its customer offer. Higher profit guidance gave the shares a welcome boost but the business faces tough challenges in the years ahead. A focus on cash generation should makes its shares attractive for income seekers.

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National Express: Stagecoach deal is good for costs but does little for growth

Taking over Stagecoach brings some nice cost savings but does not change the long-term growth potential of the business. On recovered profits, the shares may attract income seekers.

Photo by Lachlan Gowen on Unsplash

The privatised UK bus companies were built on the back of many acquisitions. Former managers often bought the bus companies they worked for and then went about hoovering up as many local bus companies as they could until there were around five big players.

Many then went into privatised rail franchises and then overseas bus companies egged on by corporate financiers and shareholders who bought into the growth story. For most of them it has not been a happy story.

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