Investment Returns 2020

Cypruseast

I’ve had a brilliant year even though back in Feb/Mar it looked a little scary. My ISA has increased in value by 63% excluding contributions and my company pension has increased by 62%. Both are similarly weighted and both ripe for a bit more re-balancing than I already have done. In my ISA I have the following:

SMT (grown to 55% of my fund value +5yr investments )
PCT (grown to 17% of my fund value +5yr investments)
BGS (8%)
JEFI (9%)
BRSC (10%)

As I am acutely aware it is not balanced that well at the moment, but I’m sure you will appreciate that given the growth of SMT, it has been difficult to look at it and scale back. However, that time is approaching as I’d ideally not like to take a significant step back. The BRSC and JEFI funds were purchased back in Jan of last year - my timing was unfortunate there but BRSC has been making ground and is only -3% and JEFI has some way to go bring -16%. Can’t win them all!!

in regards to my pension it has had some stellar growth too and I have slightly re-balanced it in the past 5 months but again I have work to do there to protect the growth that has been achieved. As I have a minimum of 15yrs and more likely 17yrs before I consider retirement I have taken a fairly aggressive approach here and have chosen winners and maintained my strategy even during the dark days in March of last year. At one stage my pension was back -31% but I didn’t change my philosophy and rode it out. Since that dip it has grown by over 115% and after removing contributions has grown by 62% on the year.

I have invested in the following:

Aviva UK Small Cos (12%)
BG American (67%)
BG International (10%)
BG Managed (11%)

I rebalanced a bit into the Intentional and Managed funds this year and had a bit of a white knuckle ride on the American fund with elections and covid etc..however it has continued to preform really well. I expect growth to be tempered over the next few months. The UK Small Co fund has done very well in the past couple of months but I had been worried about the Brexit situation on the horizon and Covid so had reduced my exposure there a bit and whilst the Managed and International funds haven’t done just as well they offer a bit more balance. However, overall I have more re-balancing to do here. I don’t have a huge array of funds via Aviva to invest in, however, there are some Global funds that I am considering, some other less niche UK funds and possibly a Pacific Rim investment. When to reduce my exposure in the American fund is (excuse the pun) the million dollar question!! 

Any other thoughts anyone has on rebalancing and options especially for the ISA which is obviously limitless in its fund options then I’d appreciate views and ideas. 

[Deleted User]

Any other thoughts anyone has on rebalancing and options especially for the ISA which is obviously limitless in its fund options then I’d appreciate views and ideas. 

Many investors still adhere to the principle of "buggins turn" and rebalance on that basis. In the long run, rebalancing reduces overall returns in most modelling. The exception is when you have a seesaw dynamic to the investments in your portfolio, but you need many crossovers. The main justification for doing it is to "smooth" the investment journey for the investor, in other words rebalancing is of more use to the financial services industry than the clients it serves: it helps to manage their expectations, because people feel a loss more than a gain..

But how to hold your nerve?
An alternative long term strategy is to trust in a wisdom that pre-dates financial advisers 

Genesis 41:25-36

Maximise the good years and use them as store in the knowledge that you shall be hit harder in the bad times, as you found last Feb/March. As you stuck with your investments then, and would have been substantially worse off had you rebalanced earlier, to do so now would most charitably be described as timing the market and less generously as superstition. The best protection against a downturn, by far, comes from racking up good returns when conditions are favourable.

Alexland

darkidoe said:

I have a portfolio return of about 6.9% in 2020 and a personal annual return of 9.4%.

Seeing at an FTSE All World Index had a return of approximately 12% in 2020. My returns didn't seem so great to me. I guess mainly because of my tilt towards the VHYL which had a slight negative performance this 2020.

Food for thought for dividend investors. Might be better to go with an all world tracker.

Passive income trackers have a very poor history as the data drives the algorithm to mostly invest in dividend trap companies with flawed business models. It's a market where an active manager can provide value. Particularly with an IT structure where they can use leverage and have additional freedom to build a more diversified portfolio merging income and growth while providing smoothed dividends. The ongoing charge on VHYL at 0.29% is already roughly enough to pay a good value active income manager.

AlanP_2

Not a great year by any means, and one of the lowest reported on here by the looks of it.

3 Portfolios:

AVC-1 which is 16% of overall investments (Equities @ 34% with 18% in UK and 5% in US + Bonds @ 60% and Property @ 6%) TIME WEIGHTED RETURN of -4.4%

AVC-2 which is 51% of overall investments (Equities @ 91% with 43% in UK and 30% in US + Bonds @ 8% and Property  @ 1%) TIME WEIGHTED RETURN of -2.0%

SIPP which is 33% of overall investments (Equities @ 72% with 7% in UK and 35% in US + Bonds @ 16% and Property / Infrastructure @ 12%) TIME WEIGHTED RETURN of 8.5%

OVERALL (Equities @ 76% with 27% in UK and 27% in US + Bonds @ 19% and Property / Infrastructure @ 5%) TIME WEIGHTED RETURN of 1.2%


AVC-1 is going to be taken in the next 18 months so has an objective of matching inflation and preserving the tax benefit gained. Up until this year it had been doing that so need a good few months now to get it back on track.

AVC-2 was 100% equities until April (50% UK and 50% Global) and the reduction in equities has started as the the lifestyling profile starts to kick in.

[Deleted User]

I suspect that "lifestyling profile" and "de-risking on the retirement glidepath" are also concepts designed to reassure the investor, usually at significant cost.

AlanP_2

ZingPowZing said:

I suspect that "lifestyling profile" and "de-risking on the retirement glidepath" are also concepts designed to reassure the investor, usually at significant cost.

I'd agree with you re lifestyling unless planning on buying an annuity. Retirement glidepath makes sense to me with a higher "floor" than a typical lifestyle approach and then an increasing equity allocation once retirement underway and immediate serquence of returns risk avoided.

AVC-2 is my wife's and she is happy with her choices.

Thrugelmir

Deleted_User said:

Prism said:

Deleted_User said:

Cus said:

Deleted_User said:

morrow56 said:

Is there an easy way to calculate how my SIPP with HL performed percentage wise, overall since Jan 1 last year to Dec 31??

thanks in advance

The correct way:

1. Money weighted return: use XIRR function in Excel.  You need values at the start and end of the period and cash flows in and out.  This is the kind of return you are actually achieving. 

2. Time weighted return: use the spreadsheet in here: https://www.bogleheads.org/wiki/Calculating_personal_returns You will need values at the start of every month as well as what you need for 1.  Time weighted return is what you should be using to compare against benchmarks and returns of others. 

3. You should always look at returns for your overall portfolio in all accounts, including cash, ISAs, savings, SIPP, etc.  Otherwise you are kidding yourself. Someone could be aggressively trading in one account reporting a 100% return on 5% of his money while 95% of his money is getting 0.5% interest.  

Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  

Meaningless yes. Why would longer term returns be any more meaningful?  The only benefit of threads like this is for people to compare apples to oranges and get wrongly disappointed or pleased.
I don't know why values would be usually wrong though. Not exactly hard to calculate a  % change in something. Unless you believe that numbers are being made up? 

Percent change is very easy to calculate. Has nothing to do with “return” though. Which is also easy to calculate.  SISO. 

The other important factor to consider is that nobody is reporting losses in a year when FTSE 100 had the worst year since 2008 and UK property experienced a drop.  

I guess those that have posted do not have major allocations to the FTSE 100 or UK property, or if they do they are more selective. My UK property holdings are up 6% and 17% and my two UK funds 6.5% and 53%, neither of which invest in the FTSE.

I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks. 

If investors hold diversified portfolios, as they should do. Then the positives outweigh the negatives by a sizable margin. Given how far above the long term average some markets have performed this year.  No portfolio is going to contain just winners every year. Your view of UK investors and default managed pension fund options seem somewhat dated. 

[Deleted User]

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

Bobziz

Thrugelmir said:

Including reinvested dividends I'm up 37.7% over the past year.  Has been an exceptional year of returns. Been a year for active trading and good fortune in these volatile markets. Nor has it been a comfortable year, as the recovery from the bottom point of the year back in March is 48.6%. At which point I was 65% cash. Having liquidated a number of holdings over a period from early February.  Cannot recall a period of time when I've traded so often. As prices bounced around and plenty of opportunties arose to pocket gains in a matter of days.

Time to hang up the boots and dial back the risk exposure. As I'm not expecting 2021 to offer the same opportunities. Cautiously optimistic though a small retrenchment in markets wouldn't come as a surprise. 

Good work indeed, what drove you to liquidate in Feb, and are you aiming to move to a similar cash position in the coming weeks ? The analysis consensus in the US seems to be generally bullish, but some of the charts look scary ! I've enjoyed a 20% gain in 4 months, but I'm considering taking some money off of the table for a couple of months to take stock.

[Deleted User]

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. There will always be a few genuine outliers in any given year; far less so over 10 year periods and beyond.