Damien’s portfolio performance review Sept 2016 – Up 12.72%

The background to my portfolio

Back in March 2015 I decided to invest £50,000 of my own money using 80-20 Investor. The purpose was two-fold, 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. Secondly, no other investment commentator, journalist or research provider invests their own money 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.

Since then 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.

Beating 93% of Managed funds

My portfolio has continued to perform well while not taking excessive risks, as currently only around 45-50% of the portfolio is invested in equities. Since I started the challenge I have outperformed the market, passive portfolios and 93% of managed funds. I have produced a double-digit profit despite the various crises we have experienced including a Greek crisis, a Chinese economic slowdown as well as a commodity crisis and Brexit.

The table below shows that my portfolio has performed brilliantly since the challenge started in March 2015:

Name	Total Return %
50k challenge (my portfolio)	12.72%
Passive Vanguard benchmark	9.34%
Average managed fund	5.57%
FTSE 100	5.49%

Interestingly the portfolio was up over 14% at one point during August, just after the most recent fund switches were made, before the market pulled back slightly.

Potential changes

The table below shows my current portfolio:

Fund	ISIN Code	SEDOL Code	Citicode / TIDM	Allocation
AXA - Framlington Japan	GB00BRJZVR88	BRJZVR8	M3CM	8.38
Barclays - Sterling Bond	GB00B72Y6K08	B72Y6K0	I0TI	9.29
BlackRock - Overseas Corporate Bond Tracker	GB00B58YKH53	B58YKH5	G6ID	19.15
First State - Global Listed Infrastructure	GB00B24HJC53	B24HJC5	A6X1	14
Franklin - UK Equity Income	GB00B7DRD638	B7DRD63	G25P	8.64
Marlborough - European Multi-Cap	GB0001719730	171973	CA33	8.64
Schroder - Global Real Estate Securities Income	GB00B50MLC91	B50MLC9	MEL9	8.64
Schroder - US Mid Cap	GB00B7LDLV43	B7LDLV4	0V2Q	8.64
Threadneedle - Defensive	GB0032010042	3201004	TC71	6
Threadneedle - Global bond	GB00B8C2M701	B8C2M70	GDYT	8.62

The funds in red are those which are not in either of the Best of the Best Selection or the Best Funds by Sector section. As such I will look to remove them from the portfolio over the weekend notwithstanding any sudden surge in market volatility. That's not to say the highlighted funds are suddenly appalling funds, just that there are better opportunities elsewhere. Below I show the performance of the three funds since I've held them versus the average of their sector peers. You can see that in the case of Threadneedle Global bond and First State Global Listed Infrastructure in particular they proved very profitable investments and prove the value that the 80-20 Investor algorithm adds when picking funds. In the case of Threadneedle Defensive the return has been fairly disappointing although the fund has only been held for a month. It may seem brutal to be looking to ditch this fund already but a) I want to exploit better opportunities. and b) I am keen to alter my portfolio's asset allocation so that it is more representative of the Best of the Best Selection's asset mix.

Performance of Threadneedle Global since it's been held (8th March 2016 to date)

The fund is in green while the sector average is in brown (click to enlarge). The fund is up 12.49%.

Performance of Threadneedle Defensive since it's been held (6th August 2016 to date)

The fund is in green while the sector average is in blue (click to enlarge). The fund is up 0.44%

Performance of First State Global Listed Infrastructure since it's been held (19th May 2016 to date)

First State Global Listed Infrastructure is in green while the sector average is in black (click to enlarge). The fund is up 18.96%. The blue line shows the performance of one of the more popular funds within the sector and illustrates the importance of picking the right funds within a sector.

It's pleasing that the portfolio doesn't need any wholesale changes right now, just a bit of pruning. At the time of writing the level of market volatility has dropped to historic lows, so marks a good time to make fund switches and not get caught out by sudden market moves. Unsurprisingly the VIX, also known as the market fear gauge, hit a two year low this week (I explain in this weekly newsletter what the VIX is and how it works). Fingers crossed volatility remains subdued over the short term when I make any changes to my portfolio. Of course, longer term volatility is not a bad thing as it means that trends develop. After all, it's hard to surf in a calm sea!

As usual, once I've decided on the fund switches to be made within my portfolio I will immediately publish the details.