Why I’m sticking to my guns with my portfolio

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Up there with pushing a suitcase with wheels or working in human resources, remembering birthdays (spouse aside) is not for real men. Last week I celebrated my daughter Ivy’s on Thursday before realising it was actually Tuesday. Oops.

Closest friends. Best man. Godchildren. No idea. So I was hardly surprised a fortnight ago to receive an angry email from a reader accusing me of forgetting the second anniversary of this column. He said I did it to avoid a portfolio review.

But then I looked up the first Skin in the Game and it was published on November 19. I haven’t missed it after all. It’s like randomly phoning your mum to be told how lovely you are to remember her special day.

And, unlike many fund managers, I would never hide a two-year record. My numbers are right there in the table. I always try to be open and honest with you — another trait of real men I sadly fail at in other walks of life.

I did review my performance after the first 12 months. For consistency, therefore, let’s use this second milestone as an excuse to assess whichever fool oversees my portfolio. I’d certainly like to give him a piece of my mind.

Mostly about the gaping hole where a chunk of US equities should sit. I have written about this ad nauseam over the past few months. My view on the overvaluation of American stocks is unchanged by Donald Trump’s election win.

Indeed the difference between the price/earnings ratio of the US versus global markets is now as wide as it’s been since I started running money in 1995 (if you exclude a brief spike at the top of the dotcom bubble).

And while I agree that the land of the free has characteristics that warrant a valuation premium (especially by comparison with places such as Europe), this has long been the case and hence today’s exuberance seems overdone to me.

But being short the US has felt like having my goolies in Elon’s chopsticks. While my portfolio is a respectable 9 per cent higher since January 1, and 10 per cent over a year, the S&P 500 has done three times better than both.

This stellar run has probably made me feel worse about my own performance than is fair. All of the funds in my portfolio have done pretty well since its first anniversary, if I’m honest. Nothing is in the red.

My UK stocks have returned 13 per cent, as have my Asian ones in sterling terms. Even after hitting the tatami in August, my Japanese equity fund is also in double digits — domo arigatō gozaimasu. My energy holding is worth a fifth more than a year ago.

The only reason performance overall is in single digits is due to my 27 per cent weighting in US Treasuries — up 4.2 per cent year-to-date and slightly less over 12 months (all in pounds, which rallied versus the dollar from April to late September, reducing my local returns, before the greenback rebounded).

I’ve written previously about not appreciating the currency implications if I was right about a weaker front end of the US yield curve — the Federal Reserve cutting rates, in other words. But given the strength in risk assets, I am OK with this return from bonds. I mean, they are there as a hedge!

All in all, then, not a bad showing from the five exchange traded funds I’ve held throughout the year. I hope some of you made money too. What would make me happier though, is knowing readers went out and purchased what I said I would but then I didn’t.

Like gold, an ounce of which has risen a third in price since I wrote a long column on the best way to invest in it. Sure my wife, a top jeweller, has the odd curb bracelet lying around (I’m going to sell them soon dear!) but I never bought in with any gusto.

Dammit too, that “My new year resolution is bitcoin” headline went the way of all my other 2024 promises. I did buy £1,000 worth in order to research crypto exchanges and wallets. But I have already lost my Exodus password, so that’s a 100 per cent loss.

Annoying when the spot price has doubled, just as my friend Chris — whom I quoted in the column and is now holidaying with his family in Bali for three months — said it would. Star fund manager Cathie Wood reckons bitcoin is going to $3.8mn!

If it is, UK regulators need to get a bloody move on and allow spot bitcoin ETFs as the Security and Exchange Commission did in January. Indeed, last month the SEC granted “accelerated approval” for options to be listed and traded on three of them.

I can’t always blame a lack of investment vehicles for keeping me poor. Especially with regard to private equity, which I wrote about purchasing six months ago. You may recall a free lunch was offered to the reader with the easiest way to gain exposure.

Well the winner emailed again this week — reminding me that the iShares Listed Private Equity fund has produced a total return of 16 per cent since then (more than US equities annualised!) — and demanded a meal.

I really wanted some private equity. But every time I looked at top slicing some of my existing funds, I preferred their valuations. No doubt I suffer from what behavioural wonks call the “endowment effect” — a bias of overvaluing what you own.

But then I wouldn’t have sold my US shares last year. I prefer to think that real men stick to their guns if the facts don’t change. Unlike the dates of birthdays, which always seem to.

The author is a former portfolio manager. Email: [email protected]; Twitter: @stuartkirk__

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