Hawking Portfolio Review – 11 July, 2022

Nuremburg, Germany

The Hawking is an “Income” portfolio built from a quiver of Closed-End-Funds (CEFs) that generate distributions with high yield. The target is to generate at least 8% per year from this income stream. In addition, funds trading at a discount to Net Asset Value (NAV) are preferred and, providing these two characteristics are satisfied (high yield and discount to NAV), no adjustments are generally made to the portfolio. Occasionally I will review the portfolio and I may choose to sell an asset if one or both of the selection criteria are no longer being met and I can find an asset to replace it that might offer better performance.

June dividends are now all paid and portfolio performance looks like this:

Although the portfolio has experienced a 20% draw-down since October 2021 the portfolio is still outperforming the benchmark AOR fund.

I am a few days later than usual in writing this review because I have been reviewing the holdings and considering adjustments. I have come to the conclusion that no significant adjustments are really necessary other than the fact that I would like to cut the size of the investment quiver slightly. I have chosen to cut the maximum number of assets to hold in the portfolio to 25 from my original target of 30. This is simply to make it a little easier to manage and to cut down on trading costs.

Consequently, I sold holdings in SSSS, SCD and GAB and have added to existing positions in DHF, EXG, CIK, ACP and AVK. With a target of 25 assets this allows a nominal holding of $4,000 in each asset. Current holdings look like this:

I still have ~$4,000 in cash that I will use to purchase additional shares in some of the other funds that are short on allocations. I will do this in the next few days.

Note that the portfolio has already generated over $5,000 in “Income” from distributions over the first 6 months of the year – so we are well on the way to meeting the minimum 8% target. The current projected return is at 10.7%.

So, that’s the major clean-up at the half-year mark and we’ll check on it next month after we pick up more dividends.

David