Long-term 80-20 Investor members may remember that four years ago I embarked on a research endeavour to find the Perfect ISA portfolio. At this time of year, when investors are looking at where to invest their ISA allowance, it is a particularly pertinent question.
In simple terms, I was trying to work out the Perfect ISA portfolio asset mix (or whether one even existed). Was there an asset mix that had always produced a positive return in every tax year historically? Of course that wasn't enough, as just investing in cash would have achieved this. So finding the Perfect ISA portfolio also had to maximise the upside, far outperforming cash returns. So I created a number of rules that the Perfect ISA portfolio had to adhere to. The rules were that:
- There would be no constraint over which assets could be included or in what proportions they are held
- The portfolio must have made money every tax year since the last market peak back in 2000
- and not lost money
- It had to at least beat a FTSE 100 Index tracker and
- The asset allocation had to remain constant throughout that time
So, in essence, I wanted to find the perfect 'buy and forget' asset allocation.
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