9 min Read
01 Mar 2017

Damien’s £50,000 portfolio performance

A key part of my 80-20 Investor service is to help people invest their own money successfully and profitably, which is why I invest £50,000 of my own money live for the benefit of 80-20 Investor members. That means that I publish every trade along with my reasonings in any easy to follow format. I also publicly analyse my outperformance. No other investment expert or commentator invests their money live publicly. In this article I will show you how I have outperformed the market, passive investment strategies and professional fund managers. I will tell you how I turned £50,000 into nearly £60,000 in just two years. I will also show you how you can too with only a few minutes of your time every now and then.

What is 80-20 Investor?

80-20 investor is our DIY investment service that uses our unique algorithm and investment research to identify the best funds to invest in, so doing the hard work for you. We analyse the thousands of unit trusts, investment trusts and exchange traded funds (ETFs) that you can buy on your chosen investment fund platform to produce fund shortlists. You can see the latest data showing how 80-20 Investor algorithm has helped members outperform the market and professional fund managers below this article. It's therefore unsurprising that 80-20 Investor has received rave reviews. You can find out more about 80-20 Investor here as well as enjoy a FREE 30 day trial.

Damien's £50,000 portfolio performance

Two years ago (in March 2015) I decided to invest £50,000 of my own money using 80-20 Investor. The purpose was firstly to show how you can use 80-20 Investor to invest and outperform the market with only a few minutes effort every now and then. I also wanted to prove the value of an 80-20 Investor membership. The biennial membership costs £288 which equates to just £12 a month. 80-20 Investor members receive:

  • updated fund shortlists based upon our momentum algorithm
  • weekly and monthly market commentary and analysis
  • in-depth research articles to help members invest
  • tools and heatmaps
  • stop loss alerts

That alone is worth the subscription as members regularly tell me. However by investing £50,000 of my own money I wanted to show in pounds and pence that a membership to 80-20 Investor is worth every penny. No other investment commentator, journalist or research provider invests their own money in this way for fear of failing. This is a sorry state of affairs and is precisely why I committed to openly running my own portfolio for 80-20 Investor members to see. It was a bold move particularly as when I started investing my money the markets were near all-time highs and everyone was predicting an imminent market crash.

Since I began investing I have periodically changed my portfolio using the fund suggestions provided by the 80-20 Investor algorithm and associated research. I always disclose the changes at the time they are made.

The best £288 you’ll ever spend?

My portfolio has continued to perform extremely well while not taking excessive risks, as currently around 60% of the portfolio is invested in equities. In just two years I have produced a profit of 18.83% despite the various crises we have experienced including a Greek crisis, a Chinese economic slowdown, a commodity crisis, Brexit vote and Donald Trump’s surprise election win. To date I have turned my £50,000 into £59,365 in just two years.

Coincidentally I made the money back on my initial subscription within weeks of starting my £50,000 investment portfolio. In addition in the aftermath of the Brexit vote I made 5.35% in just 2 days while the FTSE 100 fell by 5.62%! The table below shows how my £50,000 portfolio has performed over the last two years versus:

  • my portfolio’s benchmark (calculated by using the average return for each sector in which my portfolio invested)
  • the average professionally run multi-asset fund with comparable equity content
  • the FTSE 100
  • APCIM benchmarks (the equivalent an investment bank would have made a rich person who could afford their services)
  • AFI cautious and AFI balanced indices (which show how much the typical financial adviser would have made you)
  • Vanguard benchmark – what the equivalent passive Vanguard portfolio achieved using the same equity content
Name 2 yr return % Sharpe ratio Volatility
50k challenge 18.73 0.48 1.28
Passive Vanguard benchmark (passive strategy) 15.73 0.39 1.3
FTSE 100 15.28 0.2 2.14
AFI Balanced (IFA’s balanced portfolio) 14.35 0.37 1.12
Average managed multi-asset fund (fund manager) 12.25 0.23 1.03
AFI Cautious (IFA’s cautious portfolio) 10.57 0.22 n/a
ARC Sterling Balanced Asset (Investment bank) 9.33 0.01 n.a

The takeaway from the above table is that without taken undue risk (shown by the volatility figure) my £50,000 portfolio achieved the best return. In addition, the extra investment risk I took was rewarded by an increased return when compared to the risks taken by other strategies (illustrated my portfolio having the highest sharpe ratio). Other strategies’ risk/return balance is inferior to my portfolio.

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Profit from a 2 year 80-20 Investor membership

The table below shows how much extra profit (net of the 80-20 membership fee and fund charges) I made using 80-20 Investor vs other strategies. Don’t forget that the 80-20 Investor membership is a fixed price and so doesn’t increase just because you invest more money. All figures are net of fund fees and the cost of a biennial 80-20 Investor membership:

Amount invested
£20,000 £50,000 £75,000 £100,000 £250,000
£50k challenge overall profit £3,458 £9,077 £13,760 £18,442 £46,537
extra profit over a Passive Vanguard benchmark £312 £1,212 £1,962 £2,712 £7,212
extra profit over the FTSE 100 £402 £1,437 £2,300 £3,162 £8,337
extra profit over a balanced IFA portfolio (AFI Balanced Index) £588 £1,902 £2,997 £4,092 £10,662
extra profit over an Average managed multi-asset fund £1,008 £2,952 £4,572 £6,192 £15,912
extra profit over the cautious IFA portfolio (AFI Cautious Index) £1,344 £3,792 £5,832 £7,872 £20,112
extra profit over an Investment Bank Discretionary Portfolio (ARC Sterling Balanced Asset Index) £1,592 £4,412 £6,762 £9,112 £23,212

The other thing to bear in mind is that IFAs will typically charge you an extra 0.75% to 1% of your portfolio size each year to run your money which the above figures do not take into account. So their performance is overstated. In addition not only did the passive strategy have a higher volatility but it had larger drawdowns (falls) than my portfolio.

My outperformance has been achieved by following the asset allocation suggested by the 80-20 Investor algorithm and having a concentrated portfolio of funds. For example ahead of the EU referendum I reduced my exposure to UK and European equities, which was a bold but ultimately correct call. At present I have no direct exposure to emerging markets as the strong dollar and US anti-global trade rhetoric has hit these assets.

You can follow my portfolio in full by taking out a free 30 day trial of 80-20 Investor.

Finally…

If you aren’t ready to take a free trial of 80-20 Investor then I have created a free short email series that teaches you how to successfully invest your own money. You will receive a short two minute email each day for 10 days. By the end of it you should be confident enough to decide how to invest your own money. You can sign up here.

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Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

More about Damien