Model Portfolio Update to November 23rd, 2011++
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Since the last update in September, it was like living in revolving doors! Swings in the markets were never longer than a few weeks and yet the velocity and size of the moves, tempting on the way up, destructive on the way down, caused havoc with time lines and - bottom lines. However, WE DID NOT SIT ON THE SIDELINES THIS TIME, but tried our best to recapture the losses of early August!
First, the overview since inception in October 2009, for Portfolios A-D, with D (yellow line) being the highest risk. For more description please click here.
RETURN OVERVIEW SINCE INCEPTION: (25 months)
(on SGD basis!)
Missing the target:
The blue line (PortA) is the conservative portfolio, the one that causes me the greatest concern in recent months. Though conservatively managed, it did not prevent losses since portfolio highs in August. Main contributing factor was falling bond values as yields increased relentlessly pressured by European debt and political woes. This was reminiscent of the negative bond performance in 2008! One had to take risk - and be quite hard-nosed about it - in order to gain during these last two months. But that is not what a conservative investor would accept in current investment conditions. Hence, the model reflects REAL market events and pressures.
Having said that, the comparable conservative portfolio (United Millennium Trust 1) is faring much worse. Our PortA has outperformed its counterpart by about 15%, or about 2 years of conservative target return!
As far as the other portfolios are concerned, I am quite satisfied that we achieved the best we could with the tools and constraints we are working with.
One Year Return Comparison
For the one year return comparison, Model portfolios stayed in plus, except for the conservative one. This was achieved against highly volatile and negative return producing markets. The difference over 12 months is about 12-18%.
Short Term Moves
Since the last update we made 4 switches (No. 18-21).
The last move in particular was extremely high risk, as negative sentiments in the market was at rock bottom, especially in the US (Thanksgiving!) Nonetheless, our technical analysis supported a 4/1 risk-reward advantage, even though this latest upside will not have very long to run either.
Please note, the purple line (PortE, medium high risk, 6 months review only) did not see any changes during this period, and so it is now trailing the ActiveManagement Portfolios by more than 4%! We will be increasing the exposure in PortE in December, provided the review does warrant it.
Summing Up
At the moment, we feel much like hedge fund managers, trying to catch the small gains where we can, in the hope we manage to come out in time before the turn turns nasty. Fat chance for 'FAT TAILS' just yet!
Since the last update in September, it was like living in revolving doors! Swings in the markets were never longer than a few weeks and yet the velocity and size of the moves, tempting on the way up, destructive on the way down, caused havoc with time lines and - bottom lines. However, WE DID NOT SIT ON THE SIDELINES THIS TIME, but tried our best to recapture the losses of early August!
RETURN OVERVIEW SINCE INCEPTION: (25 months)
(on SGD basis!)
MSCI WORLD = down -3%To state the obvious: most portfolio valuations are about 25% above markets indices and benchmarks.
MSCI Asia Pacific = down -11%
LionGlobal MAP Growth = down -7%
LionGlobal MAP Balanced= down -2%
United Millennium Trust1 = down -5.5%
Port A (conservative) = up +9%
PortB (balanced) = up +12%
PortC (growth) = up +13.5%
PortD (trend) = up +16%
Missing the target:
The blue line (PortA) is the conservative portfolio, the one that causes me the greatest concern in recent months. Though conservatively managed, it did not prevent losses since portfolio highs in August. Main contributing factor was falling bond values as yields increased relentlessly pressured by European debt and political woes. This was reminiscent of the negative bond performance in 2008! One had to take risk - and be quite hard-nosed about it - in order to gain during these last two months. But that is not what a conservative investor would accept in current investment conditions. Hence, the model reflects REAL market events and pressures.
Having said that, the comparable conservative portfolio (United Millennium Trust 1) is faring much worse. Our PortA has outperformed its counterpart by about 15%, or about 2 years of conservative target return!
As far as the other portfolios are concerned, I am quite satisfied that we achieved the best we could with the tools and constraints we are working with.
One Year Return Comparison
For the one year return comparison, Model portfolios stayed in plus, except for the conservative one. This was achieved against highly volatile and negative return producing markets. The difference over 12 months is about 12-18%.
Short Term Moves
Since the last update we made 4 switches (No. 18-21).
- We switched back into equity in September 27, but only about 30% of normal allocation.
- On October 13th, we switched an extra 35% of cash into equity, bringing total equity exposure for the high risk Trend portfolio to about 65%. The rally in October helped us get recapture the losses suffered in early August, without having to go full throttle.
- November 16th we switched out of gold futures, in which we had an allocation of average 15%. We also switched out of a few high beta funds, bringing equity exposure back down to about 35%.
- November 23rd /24th, we rebuild equity holdings up to about 70% of portfolio 'ideals' again.
The last move in particular was extremely high risk, as negative sentiments in the market was at rock bottom, especially in the US (Thanksgiving!) Nonetheless, our technical analysis supported a 4/1 risk-reward advantage, even though this latest upside will not have very long to run either.
Please note, the purple line (PortE, medium high risk, 6 months review only) did not see any changes during this period, and so it is now trailing the ActiveManagement Portfolios by more than 4%! We will be increasing the exposure in PortE in December, provided the review does warrant it.
Summing Up
At the moment, we feel much like hedge fund managers, trying to catch the small gains where we can, in the hope we manage to come out in time before the turn turns nasty. Fat chance for 'FAT TAILS' just yet!
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