Investment returns – Page 49

My investment returns in June ’15

2015-07-062015-08-03 FIRE v London1 Comment

My directly invested portfolio delivered one of its worst ever monthly returns in June. With preliminary numbers now in, I’m down about 3.4%. I’ve updated my returns page here.

What happened? In a word, Greece; markets were down everywhere, FTSE-100 was down over 6%, a particularly bad performance; European equities ex UK were down 4.4% (as so often, the UK is like an inferior version of the Euro, no matter what the ‘kippers will tell you); Australian equities were down about 4.6% (in GBP). Fixed income (at least the corporate bond types that I like) were down too: -3.2% in the UK, 2% in the USA, and 1-1.2% in Oz/ROW. When equities and fixed income are down everywhere, I will suffer.

Thanks to the suggestion of @RIT, I have started tracking the market returns in each geography/asset type that I track against. The back of my envelope suggests the markets I’m exposed to fell, weighted by my exposure, 4.4% last month. Against that backdrop, I’ll take a drop of 3.4%.

The real fun starts this week, now that Greece has overwhelmingly voted to have nothing to do with the reforms the Eurozone insists are required to stay in the Euro.

I don’t expect you to grow, Mr Bond, I expect you to yield

2015-06-112015-10-17 FIRE v London2 Comments

So, no sooner have I completed my trade – topping up a bond ETF – and duly entered it into my blog’s diary, than I see Monevator has just published a post announcing the bond crash. No wonder I observed that my bond ETF is trading near 3 year lows; have I just caught a falling knife?

I don’t expect you to grow, Mr Bond, I expect you to yield. I have held Bond, JNK Bond ETF to be precise (SPDR’s ETF of US high yield bonds), for years. It has weathered the occasional storm extremely well. It has spat out dividends of over 6%, with cashflow occurring every month. And its share price has stayed within a very tight range – $38 to $42 – almost entirely over several years. Some of my holding here has been in a leveraged US bank account, where I am paying <2% for my margin. Receiving 6% while paying <2% is obviously free money, but I am running higher risk; given this risk I particularly value the low volatility on the ETF price.

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My returns since 1/1/2013

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I plan to post my investment portfolio returns on this blog, for others to monitor progress and see how my investment approach pans out in the real world.

I’ve just published my Returns page. It has monthly returns since January 2013 (when I started tracking my investment portfolio in a consistent way). I also show how an initial investment of £1m would have grown with these returns. Over the two and a half year period tracked, my returns are a pleasing double digit number; this is surprisingly high for me, as over a longer time period I expect them to average high single digits.

The eagle eyed will notice I also track my Sharpe ratio and my worst drawdown. Both of these are measures popularised (?) by hedge funds. The Sharpe Ratio is essentially a way of normalising for risk; it expresses the return in relation to the volatility. A higher Sharpe ratio represents more return for a given level of volatility; thus higher is better. The worst drawdown tracks the biggest ever sustained loss; bigger is worse.