For calculation methodology see this post. Tracking growth stocks and fixed income CEFs started in April’17.
July was an excellent month all around. My total portfolio gained 2.22% exceeding both SPY at 2.06% and 60/40 at 1.37%. The active accounts gained 2.65% and the passive accounts 1.87%. YTD the total portfolio is at 10.71% vs. 11.43% for SPY and 7.89% in 60/40. For the actively picked stocks, growth stocks had a blistering gain of 10% only to be weighed down by the barely negative showing from the DGI compatriots. Combined they delivered 2.46% in July well above the SPY. Since April, my individual stocks are 0.6% ahead of SPY which is exceeding my expectations. In the “other” category, leveraged options are starting to perform although with a high volatility as expected. There were responsible for about 1% of the overall gains — nothing to sneeze at. Cryptocurrencies recovered a little, just ahead a controversial hard fork; though I don’t expect them to move much probably until year-end. It looks to me that institutions are managing the price levels to accumulate quietly.
AllocateSmartly is now tracking 39 different tactical and static allocations. In July, 2.22% would have placed my portfolio at 11th out of 39, while 2.65% would have tied for 6th. YTD 10.71% would have been 8th out of 39. The active accounts’ YTD gain of 13.33% would have been 2nd overall.
This is the 1-year anniversary of this blog which means there is 12 months worth of return data. My portfolio is still suffering from last July to November such that the 12-months performances are still lagging. On the other hand, the YTD numbers are excellent all around, both absolutely and risk-adjusted. The reason for this improvement is several-fold. Adjustments were made in the composition and location of CEFs that I have written about. In individual stocks, greater emphasis was put on growth over current dividend payout. Lastly, the relative performance of the precious metals was a large contributor to “tracking error” — I put that in quotes since the differential in performance is entirely intentional. PMs reached a peak in July 2016, declined hard for the rest of 2016 and are relatively stable in 2017. Below are two summary plots for my main taxable account at InteractiveBrokers. In terms of account value, today it’s over half of my active accounts, So it’s quite representative of the qualitative behavior of my total portfolio.
Both figures cover the period from the end of 2015 to 7/28/2017. The first shows the cumulative gain vs. SP/EFA/VT. My portfolio outdistanced the benchmarks from the start and never looked back. The decline from July-November 2016 is visible. Then the climb resumed and appeared to be accelerating in the last month. The acceleration is due to the leveraged option positions that I initiated at the end of June and continued adding to in July. If the market continue to behave as my model predicts, the out-performance should pick up momentum. Looking at the relative performance of passive with and without PMs (at parity YTD), PMs appear to have finally turned the corner from the decline going back to July 2016. While I expect a lengthy build-up to a blow-off phase in several years time, PMs should no longer be a detractor for performance for the rest of 2017.
The distribution of monthly returns in the second figure is rather interesting. First of all, international (EFA) was bipolar in the last two years. It was barely positive(?) in 2016 and tremendously strong YTD. As such it had both large gains and losses. My portfolio had positive skew and less big monthly losses than the benchmarks. I dare say these were the return characteristic that professional managers would be proud of.