Reply To: Carillion's effect on sector average calculation

[Stephen Bland]

It’s the 14 sectors that you now own, excluding Carillion, which should be used to determine the average sector value. That’s because original cost is not relevant for this purpose.

Adding new money for an addditional sector or topping up an existing one both use average current sector value but in slightly different ways. In the former situation that average value is the amount to be invested in the new sector. In the latter, the idea is to locate those sectors which are below the average. These then form a short list from which to choose where the top-up cash will be allocated, normally the highest yielders which are Buys at the time.

The amount by which the sector is to be topped up is the sum sufficient to bring the chosen sector up to the current average but not above it, approximately. A few pounds here or there is not important.