Jan 2021 review – spring cleaning underway

The end of 2021’s first month.

January 2021 was quite an eventful month. Vaccine wars (amidst which, the UK has managed over 9m vaccines, thank goodness). Gameshop / WallStreetBets/ DeepFuckingValue memes. Trump’s coup over, Biden’s presidency now in place. Plenty going on.

Lockdown continues relentlessly in the UK. My area of London is proving to be reasonably compliant, to boot. Local covid-19 cases have halved since the early January peak, but remain far too high for comfort. Thankfully a large number of ‘oldies’ have been vaccinated, I know from personal experience, so with luck in a few weeks we will see that impact feeding through in the hospital statistics.

The markets ramped quite impressively in January, until they didn’t. The month end numbers suggest there isn’t much to see here – the month end hiding some quite vivid action.

In the meantime, I was very busy – trying to (partially, at least) replace my portfolio with one (ish) ETF. I’ll report on my progress below.

The market movements this month are shown below. On average the markets I’m in rose by about 0.2%, with the US stock market managing to stay up, versus December, enough to counteract the small declins across the rest of the board.

Market movements in January 2021, and my target allocation to each market

After my 2020 review, I have been knee deep in a project labelled ‘radical decluttering’, as outlined in my last post. This has left me busier on my portfolio in January than I’ve been since I reorganised it to buy my Dream Home in early 2016. Ironically, it will leave me with the most complex tax reporting to do in a year’s time possibly ever.

The cleaning bills – still mounting

I estimate that in the process of streamlining my portfolio I have carried out over 100 trades, enduring the following costs:

  • £$Hundreds of pounds/dollars of broker transaction fees. Many of my trades are cheap – a good number of trades are of US equities, in Interactive Brokers, which cost me only $1 plus low bid/offer spreads. However my other trades generally cost between £5.99 and £12. Each. That’s around £20 to move something from a General account into an ISA/SIPP, for instance.
  • £Hundreds of pounds of stamp duty of 0.5%. I haven’t totted it all up yet, but I will have spent hundreds on stamp duty (a.k.a. a Financial Transaction Tax, to our EU friends, albeit one much higher than any EU apparatchik has proposed) alone, when I buy most UK securities (though not ETFs, thank goodness). These taxes are paid in ISAs and SIPPs too.
  • £Thousands of pounds of bid/offer spreads. I have a few holdings (I’m looking at you, Andrews Sykes) that carry over 10% bid/offer spreads. Rationally, I should leave these be. However, for the sake of purist clarity, I have bitten the bullet and sold a number of illiquid holdings in certain accounts to then buy them again in another account, consolidating my positions in one place.
  • Surprisingly modest capital gains. I haven’t finished logging all my trades yet, but based on plenty of logging that I have done, my realised capital gains are going to be surprisingly low. Of the >£500k of buys/sells that I have logged so far, my taxable capital gains appear to be less than £50k in total – resulting in a total tax liability of less than £10k. It is too soon to draw conclusions but this feels like an acceptable price to pay for a significantly cleaner portfolio.

The spring cleaning results so far

After this frenetic activity, I have a significantly streamlined portfolio. At my starting point, the end of December, I had 129 unique holdings. Three holdings were held in six separate accounts, 25 of them were in three accounts, and only 54 of them – less than half – were held in only one account. The average number of accounts per holding was 1.75.

By the end of January, my unique holding count has dropped ‘only’ to 109, but my average number of accounts per holding has also dropped to 1.46. Multiplying these two suggests my portfolio is now ‘28% simpler’. Only one holding – a core bond ETF – remains in six places; only 8 in total appear in more than two accounts. Now, two thirds of my holdings appear in only one account.

Even better than this is the progress I’ve made streamlining my unwrapped accounts. My unique unwrapped holdings have dropped from 93, at the end of 2020, to ‘only’ 60 holdings now.

My key complexity metrics, over last 12+ months

The bottom line

After all this activity, how did my portfolio actually do? My blog’s returns page is now updated in real time, thanks to GOOGLEFINANCE(), but for January it shows I lost about 1.4% for the month. This was all in the last two trading days; at one point I had been up 3% on December. My underperformance versus my markets is, I think, attributable mainly to my tech holdings, rather than my friction costs or me having been out of the market for any significant period of time.

I end the month, as I’ve been for some months, modestly tactically overweight on cash (/underweight on my margin loan) and underweight on equities.

Deltas versus target allocation, as of 31 January 2021

I am now firmly into diminishing returns with my spring cleaning. I will have a much quieter February than January, in terms of deliberate actions at any rate. Something tells me the markets won’t be that quiet themselves…. but I’m feeling as ready for them as I’ve ever felt.

5 thoughts on “Jan 2021 review – spring cleaning underway”

  1. Always good to see an update – they usually give me some food for thought re what I’m doing with my investments.

    I’ve also just done a long overdue declutter – I didnt start with anything like the complexity you have but it’s still good to have things neat and tidy. Getting rid of the holdings in multiple pots has been on the “to do” list for ages but I’ve not bought or sold anything for about a year as in investing terms I decided to hide under a rock and not do anything all through last year’s covid gyrations.

    Liked by 1 person

  2. This makes your prior article appear like the click-bait it was.

    “Reducing my portfolio to one ETF”

    You are down to 109 unique holdings from 129…bravo.

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  3. Dear FvL, so will you be updating your FvL investment tracking spreadsheet, to reflect this new reduced position. Always interested to see the actual holdings in detail. Thanks

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    1. JB, my investment tracking spreadsheet is all made up numbers I’m afraid. This is definitely not my actual holdings in detail, sorry! My actual tracking does use this workbook as its master source of truth for securities – so everything I hold is in this example spreadsheet – but there are many more things in the example spreadsheet than I hold.

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  4. Perhaps you could post actual holdings without values. So many purchases & sells over the years it’s hard to keep up to date!

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