Sep 2019/Q3 review

Well, September was fun wasn’t it.  Proroguing is now A Thing.  Impeachment is back.  The r word is in the media.  

From a markets point of view, nothing dramatic happened in September. Currency movements hit my GBP-denominated portfolio by about 1% in September, as the GBP gained a little against the other major currencies. Equities were pretty strongly up – 2.4% across my mix. Fixed income fell a little off recent highs. My portfolio tracked these market movements closely, rising 1.3% in total.

Returns by asset class/geography, Sep 2019

I have been easing off the ‘dividend reinvestment pedal’ a little recently, trying to keep some powder dry for the 31 October Brexit deadline. As a result my equity exposure is a bit underweight, and my cash and fixed income exposures are a little overweight. Nothing too alarming; even with a slightly looser fit than normal, I will try to avoid any individual cell in my allocation grid exceeding +/-2%.

My leverage/loan position remains in very safe shape, compared to fairly recent history. My loan represents less than the targeted 12% of the gross value of my portfolio, even excluding Mrs FvL’s unleveraged portfolio. Roughly speaking, for every £9k I hold, £1k of it is bought with borrowed money. Markets have never, since tracking began over 100 years ago, crashed enough that would, if it happened now, force me to liquidate holdings.

After a declining August, the September gains left my portfolio up over 3% in the quarter. As I write this, I can already tell that October is looking pretty ugly, but as at the end of Q3, my portfolio is up 19.6% since the new year.

Monthly returns since Jan 2013

For those of you not following me on Twitter (@firevlondon) and/or checking my Diary, you may not have seen that September was actually quite busy for my trading activity. I’ve been pruning the portfolio a little – topping up my smallest positions, and trying to clear some longstanding dogs like LLOY and T.

In general the size/concentration of my portfolio remains roughly as it has looked for a while: about 170 holdings, with a ‘tail’ of 60 holdings amounting to 10% of the portfolio, and a ‘head’ of 15 holdings (mostly ETFs, plus Amazon and Google) accounting for about half the value.

My expense rate hasn’t budged in Q3, and remains at 43bps (60% of which is on the 30% of my funds in private banking accounts, grumble). My effective tax rate has dropped slightly, from 29.1% (at end of Q2) to 28.8% at the end of Q3. I think this was due to a modest influx of funds into my Ltd company, which has slightly tilted the scales in the lower tax direction.

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