My performance in Dec ’16 – Santa Rally

Phew.  The year’s over.  What an incredible twelve months. I made a big change in my portfolio in January and each month since it’s been a fascinating journey – at times nail-biting, at times frustrating and at times pinch-yourself good.

In this post I’m going to record the month’s performance before in the next post widening the view to 2016.

I didn’t notice any particularly market-relevant news this month.  The US market kept the gains it had delivered after the Trump election victory.  But the UK market decided to go on quite a tear, a so-called ‘Santa rally’ that continued throughout the month, with equities up 4.8% and reaching a record high – FTSE-100 closed up 5.8% at 7140.  Resource stocks rose sharply which provided a significant lift for the FTSE-100.  UK bonds rose slightly too, clawing back some of the Q3/Q4 falls.


Other equity markets rose too, with the European equity market up over 6% and the Australian market up 4%.  The US rise of 2% seems almost paltry by comparison.

Fixed income was essentially flat, outside the UK.

The US dollar continued its relentless rise, up 1.3% against the pound.  But the pound rose against the Ozzie.  Overall currency movements only affected my portfolio by 0.6%. By comparison the markets I’m in rose by 4.4%, weighted by my target allocation.

How did I perform compared to the averages in my markets?

My investment portfolio rose by 3.7% in the month.  This is slightly less than my market weighted average.

Why did I underperform?

One big reason is that my own UK equities didn’t increase by much at all, whereas the UK equity market rose almost 5%; I’m short mining/resource stocks and long a couple of stocks which barely moved.  Other than that I did fine.

Another reason is that I have found my allocation is significantly adrift from my target weighting.  The shift I’ve made in the private  banking discretionary portfolio has increased my US exposure and reduced my UK exposure significantly; I’m now around 6% underweight on UK equities (up 5%), 7% underweight on UK bonds (up 2.5%) and 9% overweight on US equities (up ‘only’ 2.2%).  This was the wrong month to be underweight in the UK.

Still, being up 3.7% in one month is pretty amazing.  You can’t afford to miss months like this.

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