JoyofBrex 2019 Portfolio review

[JoyofBricks8]

Many thanks to all those Fools who have posted their portfolios 2019 performance for discussion. I have enjoyed reading them all, so thought I should share also.

While I have been equity investing in fits and starts since 1999, only since 2015 have I kept decent records. Monthly I plug my portfolio values and cash input/output to a spreadsheet to track my rate of return in a manner that allows direct comparison to the kind of performance tables marketed by the investment professionals. (I use the Bogleheads investment returns spreadsheet found here: https://www.bogleheads.org/wiki/Calcula ... al_returns)

My benchmark is cash as my risk averse wife would happily remain 100% cash if not prompted: my motivation for tracking performance was to persuade her that investing our capital would be more rewarding than stuffing it under a mattress.

At the end of 2019 I am pleased to report I am outperforming the mattress.

Trailing investor return (money-weighted return, internal rate of return)

Investor return as of 12/31/2019
Since* 12/31/2015 14.4%


Trailing portfolio return (time-weighted return, comparable return)

Portfolio return as of: 12/31/2019
1 month 1.2%
3 months 3.2%
6 months 4.3%
YTD 19.3%
1 year 19.3%
3 years* 13.2%

Annual portfolio return (time-weighted return, comparable return)
2016 33.9%
2017 23.0%
2018 -1.2%
2019 19.3%

(* denotes annual compound rate)

Comment: So we can see that while 2018 was disappointing in total return terms, I have had a very satisfactory 2019.


Portfolio

Berkshire Hathaway Inc. Class B                             |   1.1
BKG BERKELEY GROUP HOLDINGS (THE) PLC ORD SHS 5P            |   1.4
Bmo Global Smaller Companies PLC                            |   1.3
Henderson Smaller Companies Inv Trst PLC                    |   4.5
Imperial Brands PLC                                         |   1.9
LEGAL & GENERAL GROUP PLC ORD 2 1/2P                        |   2.4
Murray International Trust plc                              |   1.3
Royal Dutch Shell Plc Class B                               |   1.5
Rio Tinto plc                                               |   1.8
Unilever plc                                                |   0.8
Vanguard FTSE All-World UCITS (VWRL)                        |  15.2
WPP PLC                                                     |   0.7
FUNDSMITH EQUITY I INSTL ACC NAV                            |  12.3
VANGUARD LIFESTRATEGY 100 PERC EQUITY ACC NAV               |  25.5
Royal Bank of Scotland Group plc                            |   0.1
VANGUARD FUNDS PLC VANGUARD FTSE EMERGING MARKETS UCITS ETF |   0.9
VANGUARD LIFESTRATEGY 100 PERC EQUITY INC NAV               |   3.5
HURRICANE ENERGY PLC ORD 0.1P                               |   1.7
Polar Capital Technology Trust plc                          |   4.4
Fundsmith Emerging Equities Trust PLC                       |   1.2
Finsbury Growth & Income Trust PLC                          |   3.0
HarbourVest Global Private Equity Ltd                       |   2.4
Games Workshop Group PLC                                    |   1.1
ISHARES FTSE 100 UCITS ETF                                  |   6.3
SGLP Physical Gold                                          |   1.2
Diageo plc                                                  |   0.9
IShares FTSE 250 ETF                                      |   1.8
Cash                                                        |   0.1
                                                            | 100.0

The portfolio is currently ungeared.
.

The good:

My major strategy is to allocate my largest holdings to global trackers. This meant I captured the boom in equities.

Yet again it seems exposure to the American market was a good idea. My slight overweight to tech giants via Scottish Mortgage and later Polar Capital Tech ITs helped. (I switched out of SMT to take advantage of the discount/premium difference and was rewarded by a minor boost)

Other successful trading in the margins occurred around the gold price: I traded into and out of gold ETFs as the year progressed and have ended up ahead a small way. No particular plans to do the same in future. I will always keep a little gold exposure as insurance against collapse like Venezuela, I think. Enough to buy a ticket out of trouble, anyway.

Games Workshop: I finally got on the bandwagon, a full five years after I rejected them in 2015 as being analogue in a digital world. These rewarded with a rapid 30% rise in a month! Gotta be happy with that.

Henderson Smaller Companies gets a gold star for closing its habitual discount after many years. This is my favourite IT in these supposed Brexit end-times. I am tempted to sell and wait for the big discount to reassert itself, but it has done so well for me over a long period I am content to hold longer.

My largest active position, Fundsmith Equity has had a reassuringly decent year again. No plans to ever dispose of this.

The Bad

I started the year with a large allocation to Hurricane Energy ahead of a highly anticipated drilling campaign. The froth well and truly blew off over the year. I have reduced my position at 35p, accepting a big capital loss. What did I do wrong? Essentially nothing- it was a risky share that I had researched to death. I gambled on the drill bit and had the drilling results gone the other way I would have been congratulating myself on running the risk. Main takeaway was the value of limiting such speculations to a reasonable amount of capital, trusting the global trackers with the lions share of capital. I still hold Hurricane, and will follow the story with interest.

Emerging markets have not set the world on fire this year, and I am underwater on both my EM holdings : FEET (active) and VFEM (passive tracker).

I have been too bloody lazy to get rid of my final tranche of Murray International which happily put on a bit of a spurt towards the end of the year. Putting it into the bad column anyway.

Imperial Brands has continued to be a drag on portfolio performance in 2019. I am a long way underwater on it but am holding for the dividends.

WPP-meh. Why do I still hold this? No idea. Price anchoring, probably.

The ugly

The low point of my investing year was the moment I casually discussed Hurricane with a real-life friend of mine. He went ahead immediately and bought at a high price there and then. Subsequently he sold at a low and booked a stinking great loss. He was gracious enough to say it was his responsibility but such things can lead to ill feeling. We remain on good terms but the guilt I feel for opening my mouth about business will linger for a long time.

Never again will I discuss equities with a personal friend: good buddies are hard to find, and a close friendship is not worth risking in this way.

Well that was my 2019. Best wishes and good luck all for 2020. May Fortune be with you in your investing. Thanks for all your posts here at Lemon Fool.

JoB

[EssDeeAitch]

Nice review. Like me, a decent recovery after a poor 2018. And thanks for the link to the spreadsheet as well

[Steveam]

Nice review - thx. I’ll try and do something similar at my year end in April.

I’m very cautious about discussing investing with friends as they generally go off half cocked only understanding a small amount of the message. Financial ignorance in the U.K. is rife and sad.

Thanks again.

Steve

[JoyofBricks8]

Performance of VWRL global equities tracker fund:

2016 29.9%
2017 13.2%
2018 -4.7%
2019 22.0%

My own investment portfolio performance:

2016 33.9%
2017 23.0%
2018 -1.2%
2019 19.3%

I think that is some decent evidence that my investment decisions have put my portfolio ahead of the overall global market at this point, though no doubt I have taken on more risk.

Still, not too shabby.

The “so what” from this comparison- I should probably not put all my capital into passive investments as my active decisions are thus far adding a fair bit of value over a four year period.

[Bagger46]

Not too shabby indeed. Nice report.

In fact your achievement in 2018, which you seem disappointed in, is one of the best I have seen in the 31 online portfolios my family and friends have mutual read access to. And believe me there are some seriously sharp investing minds among them, the best being my eldest sister, and you beat her in 2018.

However, I can’t say I like the portfolio, because no matter how good a choice, a portfolio which has very small investments among very large ones, the small ones won’t shift it. But it works for you.

As for your worrying about discussing investments with a friend, my view is that a true friend, who is interested in the subject, and understand that ultimately he invests through his own decision, won’t mind.

Lastly, I don’t think that 4 years is enough for you to conclude that your stock picking skills are better than the market, start to make this type of judgement when your record keeping reaches ten years.

All the best,

Bagger

[JoyofBricks8]

Not too shabby indeed. Nice report.

In fact your achievement in 2018, which you seem disappointed in, is one of the best I have seen in the 31 online portfolios my family and friends have mutual read access to. And believe me there are some seriously sharp investing minds among them, the best being my eldest sister, and you beat her in 2018.

However, I can’t say I like the portfolio, because no matter how good a choice, a portfolio which has very small investments among very large ones, the small ones won’t shift it. But it works for you.

As for your worrying about discussing investments with a friend, my view is that a true friend, who is interested in the subject, and understand that ultimately he invests through his own decision, won’t mind.

Lastly, I don’t think that 4 years is enough for you to conclude that your stock picking skills are better than the market, start to make this type of judgement when your record keeping reaches ten years.

All the best,

Bagger

All good points, thanks for your kind comments: you are right that 2018 was quite a good result comparatively given the correction in the second half.

I tend to agree the portfolio has some immaterial positions. I tend to think of the portfolio in three parts: the core of 50% passive trackers that are not really tinkered with. This ensures I have a return that is not too dissimilar to the market, guarding against extreme results.

The rest is divided into about roughly 25% active managed collectives which I generally hold for a long time and might tinker with based on discounts closing. I maintain a watch list of ITs that I like and when the discount to NAV becomes attractive I will add.

And the remaining 25% is the playground for my single shares (mostly small HYP remnants that I was content to continue to hold longer to avoid frictional costs) plus any short term market timing or outright punts I want to do. For example I have in this mental pot about 7% in British ETFs currently which are a short term position taken as a (successful) pre- election/Brexit gamble. I do not want to hold them for the long term and anticipate I will trade them away for another whim in 2020.

I hope in time to reallocate capital to my collective investments: the growth focussed ITs in particular have been good performers. MNL and SMT are previous holdings and remain on the watchlist awaiting a discount.

All the best,

JoB