My goals for Q1 were as follows:
- For my net loan to shrink by £10k per quarter, without any margin calls.
- Maintain investment income of £Xk
- Closely track my target asset allocation
Category: Investment returns
My March 2016 returns
My invested portfolio posted returns of 3.3% in March. What’s not to like?
What happened in March?
- The Brexit debate rumbled on, with opinion polls still suggesting a very narrow majority to remain in but the pound remaining under pressure.
- Donald Trump looked increasingly likely to clinch the Republican nomination, and be beaten in November by the less popular Clinton.
- After a Tata Steel announcement it looks likely the UK will end volume steel manufacturing with the loss of 4000-40000 jobs.
- The UK chancellor announced he’d use the backs of the disabled to help balance the budget. Then his mind was changed by, among other things, a cabinet member’s resignation. He also reduced capital gains tax, extended entrepreneurs’ relief and invented Lifetime ISAs.
- The UK current account (the amount of money coming in/out of the country per day) reached its highest deficit ever – ie more foreign money is entering the country than ever. Apparently this is a bad thing.
What this meant was that the pound continued to be weak, albeit more against the euro than the us dollar. Equities rose quite strongly in March: UK equities rose about 2%, with US equities up over 5%. And bonds rose too – UK ones by 3%. In that environment it’s hard to lose money.
My Feb ’16 returns
So, it’s over. Both the month of February, and the process of buying the Dream Home. My portfolio is in a very different place from where it was on 1 December. It isn’t yet where I want it to be but it’s made a major transition already and hasn’t far to go to reach my new intended asset allocation.
You can see in the graph below the transition I’m trying to make. Essentially I am rebalancing away from the UK, and towards fixed income. My upweight on the USA is almost done, with the blue US exposure having increased from about 20% to about 35% of my exposure. My downweight on the UK and International has further to go. But I am struggling to switch from equities (74%, versus 66% ideally) to fixed income (~25%, versus ~33% hopefully). Thankfully in February this hasn’t affected me much, as we shall see.
FIRE v London 