My Passive Investments - January 2019 (+4.64%)

My Passive Investments - January 2019 (+4.64%)

A short term look on long term investing

Disclaimer

Can’t believe it’s 2019. So much happened in 2018. Damon and I travelled to Disney World for two weeks (I hadn’t been since 2008), I started two websites, this one and our new travel blog called ‘Our Departure Board’ (shameless plug). I also can’t forget travelling down to the SHOMO awards in London back in November. ‘Capital Matters’ was nominated for ‘best new blog’. But, better than that, I met so many wonderful people working in the same industry.

Of course, in the background, the investments were ticking away. The market somewhat recovered this month. December set some interesting records like the ‘worst Christmas Eve in the history of the S&P 500’. Of course whilst major news outlets couldn’t resist the story, I feel that looking back on past single day performance, when the year has 365 to offer, is a little arbitrary.

But, there’s no doubt about it. 2018 was a bad year for equities. But I’m here to attempt to quell the storm and say ‘if there’s a lesson there, it’s don’t invest for one year’.

So, let’s find out what happened in January. But remember, my investment decisions are exactly that, my own. As as UK-based investor, I based each investment decision on my own research. These are, by no means, investment recommendations. Before making any investment decision, you must do your own research and/or speak to a professional.

 
My Passive Investments - January 2019 - Pinterest Pin - Capital Matters
 

Firstly, A Reminder Why I Do These Reports In The First Place

You can read more about this in my first passive investor report, which I made back in June 2018.

My Passive Investment Strategy

Long term, my aim is to invest a portion of my savings every month. An important note here is that the numbers you will see in this report reflect the gains and losses of my invested capital only. When I invest more, for example, I would not state this as a gain in the value of my portfolio.

Similarly, if I sell a portion of my investments, this would not be stated as a loss in the value of my portfolio. The numbers simply reflect the performance of the underlying investments. Simply put, a loss/gain does not take into account buying/selling assets. 

Vanguard Stocks and Shares ISA

All investments are held in a stocks and shares ISA with Vanguard. You can contribute anything up to the limit of £20,000 for the 2018/19 tax year. This means, when it comes to selling any portion of my investments, any capital gain is tax free. 

January Returns (+4.64)

You can see the monthly returns for January 2019 below. The complete monthly return was positive at +4.64%. Remember, I have opted for a single Global All-Cap Index Fund by Vanguard. See why in the November Report. Since I only have one fund, my target weight for that fund in my portfolio overall is, of course, 100%.

Also remember, the global all-cap index fund is extremely well diversified. The FTSE Global All-Cap index contains small, medium and large companies in a range of sectors across developed and developing countries. The index fund contains over 6000 individual stocks, with a median market cap of over £30 billion.

 
January 2019 - Passive Investments - Monthly Return
 

Returns Since Inception (-3.09%)

My returns since the inception date of my investments (end of May 2018) are below. The portfolio return is negative at -3.09%.

 
January 2019 - Passive Investments - Returns Since Inception
 

Of course, I am in the process of drip-feeding a lump sum into the market. This effectively means instead of investing all at once last year, I split the lump sum into 12 equal pieces to invest regularly over the course of one year.

Drip-feeding your money into the market is like buying insurance against a market drop.

Based on historical performance, drip-feeding beats a lump sum investment only one third of the time. The odds were against me to benefit but I based my decision on 3 major reasons:

  1. A long market bull run (stock market corrections happen on average once every 10 years)

  2. The large Shiller P/E Ratio (CAPE) at the time

  3. The large Market Cap to GDP Ratio (The Buffet Indicator) at the time

If you want to read about this decision in more detail, I cover it in October’s report.

Sector Breakdown

You can see how my portfolio is broken down, by market sector, below.

Financials, Technology and Industrials all decreased in my portfolio very slightly compared to last month (-0.1% each).

Consumer Services remains the same (11.5%). Health care is down slightly (11.4% to 11.3%). Consumer Goods is up slightly from 10.8% to 10.9%. Oil & Gas is down by 0.2% compared to last month.

Basic Materials and Utilities are both up 0.2% each. The percentage of my portfolio in other sectors (eg. IT, Consumer Discretionary etc.) is also up slightly from 2.6% to 2.7%.

January 2019 - Passive Investments - Sector Data

Some Definitions:

Technology: A broad industry referring to the delivery of energy transportation.

IT: The Information Technology sector focuses on the delivery of information (ie. smart phones)

Consumer Goods: Products bought by an average consumer (eg. food)

Consumer Services: A range of service products offered to customers who buy a product from a company (eg. technical support, account management)

Consumer Discretionary: Products that are not essential but desirable (ie. luxury items, leisure etc.)

Geography

This section looks at how my investment portfolio is broken down geographically. Since I invest in the Global all-cap fund, the performance of regions in this fund reflects, to an extent, the performance of certain markets around the world.

Figures are rounded for simplicity, so may not total exactly to 100%.

January 2019 - Passive Investments - Geographical Data

North America now makes up 56.9% of my portfolio (a rather substantial drop, relatively speaking, from 58.4% compared to last month). Europe is up from 12.9% to 13.1% this month. Asia/Pacific is also up from 11.9% to 12.7%.

Japan is up very slightly from 8% to 8.2%. The UK and the Middle East/African regions remain the same as last month (5.4% and 1.6% respectively).

Central/South American investments are up slightly from 1.3% to 1.5%. The Eastern European region has also increased slightly from 0.5% to 0.6% of my portfolio.

Indvidual Investments

In this section I look at the top 10 companies in my whole portfolio.

 
January 2019 - Passive Investments - Top 10 Companies
 

Apple stock (AAPL) started trending upwards again towards the end of the month. But that followed a substantial drop in value from October onwards last year. For that reason, Apple is at the number 2 spot in the top 10, dropping from 1.7% to 1.6% of my portfolio this month.

Microsoft, the other IT giant, remains the same at 1.7%, but takes the top spot. Amazon is down slightly from 1.4% to 1.3%. Alphabet, the parent company of Google, stays at 1.3%

Berkshire Hathaway (CEO: Warren Buffett) is up from 0.8% to 0.9%, knocking Johnson and Johnson out of 5th position. JPM chase remains at 0.7% but ups its place in my portfolio to 6th. J&J fell slightly from 0.8% to 0.7% and Facebook remains at 0.7%.

Exxon Mobil (up 0.1%) and Pfizer (same at 0.5%) still hold 9th and 10th position.

My top 10 investments now account for 10% of my portfolio overall. That is a decrease of 0.3% compared to December.

Dividends

The Vanguard FTSE Global All-Cap Index Fund is accumulating (ie. dividends are automatically reinvested back into the fund). I am thankful for that as it keeps the investment process simple. As you will likely know by know, dividend reinvesting is a big part of my long term investment strategy.

Goals For February

Continue to invest, as always, using the Drip-Feed/Pound Cost Average approach.

I hope you enjoyed taking a look at my own passive investments for January 2019. If you like this article, please don’t forget to hit the like button below.

Id love to hear about your own investing experiences and please let me know if you want me to include anything in any more detail. You can do so down in the comments section below. Engaging with my audience is important to me so I read and reply to each and every comment.

If you’re looking for resources to better your own personal finances, here are some of my recommendations:

Rich Dad, Poor Dad by Robert Kiyosaki

The Little Book of Common Sense Investing by John C Bogle

The Intelligent Investor by Benjamin Graham

Also, check out the other resources I use in my day-to-day life.

References

FTSE Global Equity Series | FTSE Russell

Vanguard FTSE Global All-Cap Index Fund (Accumulation)