Every month I calculate my investment portfolio’s returns to date. I’ve been tracking the portfolio in detail since the end of 2012. With 2015 now complete I now have three years of returns to examine.
December was an extraordinary month for me because during the month I bought a house. On 1 December this wasn’t anticipated at all. By 22 December I had exchanged and stumped up a hefty six figure deposit – all paid for by liquidating my investment portfolio. During the month the UK stock market (the blue line UKX below) in particular fell 7%, which goes to show why you should never use the equity markets as a savings account.
The graph above shows the four key asset classes (UK equities UKX, UK gilts IGLT, US equities INX, and US bonds AGG) over the last six weeks. The two vertical pink lines represent Friday 11 December, when I reached verbal agreement to buy the Dream Home, and Monday 21 December when I wired my deposit over. Fortunately, between those two dates I gambled (no other word for it) that the UK stock market would rebound upwards, and almost completedly avoided liquidating UK equities. Thank goodness, given that the market did subsequently almost completely recover its December 14th losses, even if I would hardly call this a traditional Santa rally.
At the time of writing I have now liquidated about 20% of my investment portfolio. I am now pretty much through the psychological pain barrier of selling so many assets and am just focused on assembling funds in time to complete on four weeks’ time.
My returns in the month were slightly negative, down 0.7%. These returns are calculated after unitising the portfolio. This means in effect treating the portfolio as a single stock, of which I have just sold a bunch; selling doesn’t per se reduce the price of the stock. The markets I’m exposed to fell, on a weighted basis, 1.2% in the month. Bonds and equities all fell, in all my key geographies except Australia, so I don’t feel too bad that my portfolio fell by a bit.
For the year 2015 as a whole, I’m up about 4.7%. The markets that I’m in rose 2.2% for the year, so I outperformed by a small but significant margin. I’m pretty happy with this. In the UK 2015 was the year of the small-caps, which I wasn’t really in, and outside the UK the place to be was in continental Europe – which went up 11.5% and which, even at only an 11% weighting, was a significant contributor for me.
I now have 36 properly tracked months. With December down slightly, I’ve just dipped below 10% per annum. I’m still OK with 9.9% over a three year basis – this is still a gain of a third in three years, which will do me. 2015 as a year was not so good, with a return of only 4.7% – but compared to cash (even the racy versions like Zopa/Funding Circle) this isn’t too shabby either. Going forward I will continue to show the last 3 year performance as well as the returns since 1/1/2013.