My goals for each quarter are as follows:
- For my net loan to shrink by £10k per quarter, without any margin calls.
- Maintain investment income of at least £Xk
- Closely track my target asset allocation
Category: Investment returns
My portfolio performance – September 2016. ‘Hard’ vs ‘soft’ Brexit emerges
September. The academic new year. The Jewish new year. The end of the press silly season. What did it hold for us? More banging on about Brexit – with the three Brexiteers all appearing to get slapped down by their boss at various points for saying we would / wouldn’t leave the single market / leave the customs union / trigger the legals by such-and-such. Amidst the heat and the light, what actually happened? Not a great deal.
The pound fell, of course, a bit further (though nothing compared to what, at the time of writing, the Tory party’s annual conference is doing to it). This meant that UK equities were up. US equities were flat, remaining at record highs on some measures. Bonds fell everywhere I track – by as much as 1.9% in the UK. Does this mark the top of the bond cycle? Time will tell, and time will also make a mockery of anybody who tries to make such calls.
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My portfolio performance – August 2016 – interest rates cut to 0.25%
Wow. August saw interest rates halve in the UK. That isn’t something many of us are ever going to see again. UK base rates are now 0.25%. Some UK corporate clients are being charged for deposits. Amazing times.
Of course UK bond prices, which inversely track interest rates (or, more precisely, expectations of interest rates) have risen. Actually they haven’t risen by a striking amount – partly because expectations had been adjusting ever since the fateful day 23 June in which the UK very narrowly voted in favour of Brexit, whatever that means (it means Brexit – Ed.). SLXX, the iShares Corporate Bond ETF that I regard as a good proxy for UK bond prices, peaked at 156 in early August, up 20% from 130 in February.
In other news, UK equities rose a bit too. Economic confidence seemed to be returning slowly to the UK, driven by a bunch of fact-free UK press reports that the economy is doing OK actually. Overseas, markets were generally flat. The pound actually rose very slightly against the three I track (USD, EUR and AUD). The average market movement, weighted by my target allocation, was up 1.3%. Not bad for a month, but relatively stable compared to recent increases.
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FIRE v London 