One of several highlights for me in January was visiting Salisbury cathedral, which I did on an impulse while travelling back from the Coastal Folly.
My main frame of reference to the cathedral being those notorious Russian nerve agent assassins citing it as their reason for visiting England, something which to a Londoner had as much plausibility as as Putin’s claims that Ukraine’s Nazis started the war. I hadn’t taken seriously the idea that the cathedral might actually be a reason to visit England. But I would say I was wrong – it is stunning, and surprisingly moving. Photos really don’t do it justice.
Elsewhere in the world, the focus has shifted from the Ukraine war to the Gaza crisis – which has escalated to the Houthi shipping attacks off the Yemen.
It’s the start of a calendar year. Let’s take a look at what 2023 did to me financially. I’m following the same structure I’ve used for the last few years (2022, 2021, and 2020). Overall, 2023 was a good year on almost all measures – thanks in particular to Q4 which saw the US stock market drag the year into a top quartile performance.
Q1 How did markets do?
First of all, what happened out there? Well, the year felt pretty ‘meh’ for the first nine months – as illustrated by my rather depressed blog post in mid October. But almost as soon as I hit Publish, the US market in particular led a dramatic recovery – reflecting a sharply improved outlook for inflation and interest rates. You can see below firstly the performance in December.
December 2023 market returns, by geography and asset class
Then we get to the year as a whole. Bonds rose by 3-5% across the board, but equities did strikingly better – particularly in the USA where the S&P500 rose around 26%. The UK equity market looks like the runt of the litter, which given the tech-driven nature of the uptick and the lack of UK tech wouldn’t be a big surprise. However it isn’t quite that simple, because the GBP rose against most currencies.
2023 market returns, by geography and asset class
Another way to look at the benchmarks is to look at the world equities (e.g. VWRL) and world bonds (e.g. AGG/BND or the UK’s IGLT). My portfolio has often pretty closely tracked the VWRL ETF. The graph below shows VWRL and IGLT’s share prices (but not dividends) for the year, showing the world equity bundle up (in GBP) 13.4% and the UK government bond index roughly flat.
2023 performance of Vanguard World Equities, and UK Government bonds (excluding dividends)
Q2 How did I do, vs my benchmark?
Against that backdrop – bonds up a bit, equities up considerably more especially in the USA, how did my portfolio perform?
This time last year I wrote that my annual ISA update was many months late. I had delayed it until using my full annual ISA allowance(s), which took me much longer than usual last year.
This year I actually completed my ISA topups in April, within a few weeks of the start of the UK tax year. Somehow I have neglected to post an update. And despite the clamour from my blog readership (not!), I have let this year’s post slip until December.
Given this post is 8 months ‘late’, I am going to keep it snappy.
The 2022/23 tax year was pretty unpleasant for my ISA holdings. They lost over 16% of their value. One of my biggest ISA holding in April 2022 was AEWU, a high income property REIT, which lost over 25% of its value in the year. Another large holding was BHP, which sat at over £30/share (briefly!) at the start of the tax yer, and dropped 20% to £24 a year later. Another key holding, Scottish Mortgage, was already well on its way down from its £15/share peak; it started the tax year at £10/share and finished it at under £7/share. And while Facebook started and finished the tax year at $220/share, in the meantime it dropped below $100 and I ended up selling it at well below $200/share.
FIRE v London 