A year on: our high-income portfolio outperforms!

Co-founder of the Switzer Report
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If you have been long banks, health care and Telstra, 2012 has been a great year for equity investors! For example, the health care accumulation index (which includes the income return from dividends) is up almost 50%.

With a bias to the defensive sectors, our high income portfolio has outperformed the market in its first year with a return of 20.2%. With profit and income combined, we turned our original investment of $100,000 into $120,198 over the year, or $122,615 when tax benefits are taken into account.

This is contrary to our expectation – we expected that this portfolio should moderately underperform in a rising market (which it has been), and moderately outperform in a falling market. After all, we constructed it for tax-effective income and are underweight the typical ‘growth’ sectors.

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