Category: Investment 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.

Continue reading “My March 2016 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.

Continue reading “My Feb ’16 returns” →

Phew, what a month.

I thought December was nerve-wracking.  Check out how January compares – the UK/US equity markets fell almost 10% in the first 20 days and then clawed most of this back at the last minute.  Bonds had a much smoother ride, unlike December.

Those of us, er, trying to fund a major house purchase out of stocks/bonds must be Stark Raving Mad.  Not to mention anybody actually borrowing money backed by a portfolio of this rollercoaster.

When you look at the returns by asset class and geography, you see two things clearly:

• Bonds up, equities down.
• USA worst, UK least bad.

Where does this leave me?  Well, based on my target allocation, the market has fallen 6.8%.  In the month.  One fifteenth of its value down, in one twelve of the year.  Heavens. In fact it’s worse than that, because right now I’m not at my target allocation – I remain overweight in equities (which are down) and the UK (which is the least bad).  The market I’m actually exposed to fell by about 7.8%.  This really is down a twelfth in a month.

The truth is, I’m lucky.  My actual performance for the portfolio I manage was down only 2.2% (though I need to caveat this because unitising my portfolio has been particularly complex with the number of transactions I’ve been performing, so I may yet need to correct these figures).  I outperformed my markets by about 5%.  How did I achieve this? Mostly, because I was very fortunate with my sales – the bulk of my sales were the week either side of Jan 1st – as my graph above shows this was the right time to be selling. I was selling in one account and bulking up in my marginable account and I managed mostly to buy at lower prices than I’d been selling at.  I’ve been range trading FTSE-100 and that strategy, again, continues to broadly work.

Nonetheless, negative 2.2% isn’t helping my performance.  At least my worst drawdown remains unscathed at -7%; with my leveraged portfolio this number is particularly key to me.  I await February with some trepidation.