A short term look on long term investing
March saw Damon and I take a 5 night trip to Venice. This marked the first time we visited a city together that neither of us had been to before. And the first time I’d travelled business class. It was a great trip. Keep an eye on Our Departure Board for more. I’ve also been keeping up the rowing using the awesome machine I bought back in February.
As usual, the beauty with passive investing is that I can focus on other things whilst the investments are working away in the background. So, what happened in March? The last full month of the 18/19 tax year.
First, 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.
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.
March Returns (+3.02%)
March was another positive month, with returns positive at +3.02% since the end of February. The last few months have seen a turnaround in the markets following the downturns in October and December last year.
You can see that the Global All-Cap fund is 100% of my portfolio (making investing for me extremely simple - whilst still being ultra-diversified - read more on that here).The one-fund portfolio is comprised solely of the Vanguard FTSE Global All-Cap Index Fund.
Returns Since Inception (-0.72%)
I started investing with Vanguard at the end of May 2018. So this number reflects the positive/negative return of my portfolio since then. Since the end of May 2018, my portfolio has returned +2.8%.
The graphic below shows how my portfolio is broken down by sector. Underneath the graphic, I talk about how these numbers have changed since last month (February 2019).
The biggest change this month was in the technology sector, increasing from 14.5% (February) to 15% this month. Most other sectors only changed by a small amount.
Financials decreased from 22% to 21.9%. Industrials increased from 13.6% to 13.9%. Consumer Services decreased from 11.6% to 11.3%. Health Care decreased from 11% to 10.9%. Oil % Gas decreased from 6% to 5.9%. Other Sectors decreased from 3.2% to 2.6%
Consumer Goods, Basic Materials and Utilities didn’t shift at all.
Some Helpful Sector 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.)
As you can see below, the one-fund portfolio approach is diversified across the globe too. I’m invested in developed countries, like the USA, UK, Canada, Australia and Japan. But I’m also invested in developing (emerging) countries like China, India, Brazil and Taiwan.
Figures are rounded for simplicity, so may not total exactly to 100%.
Again, not much movement this month. North America is up 0.3%, Asia is up 0.1%, Japan is down 0.2%, Middle East/Africa is down 0.1% and Central/South America is down 0.1%.
Europe, the UK and Eastern Europe’s numbers remain the same as February.
Here is a breakdown of my portfolio, looking more specifically at the individual companies inside it. Since the portfolio is market-cap weighted, the top 10 investments are some of the largest companies (by stock market value) in the world.
The numbers have changed since last month but there is also one new addition to the top 10. Nestlé has taken the number 10 spot away from Bank of America.
Microsoft (1.6%), Apple (1.6%), Alphabet (1.3%) and Exxon Mobil (0.6%) haven’t shifted in percentage or in position. Amazon is still at number 3 but has dropped from 1.4% to 1.3%. Facebook has decreased from 0.8% to 0.7% and has dropped in position from 5 to 7.
Berkshire has decreased from 0.8% to 0.7% and has dropped from position 6 to position 8. JPM Chase and Johnson and Johnson remain at 0.7% but have moved up in position to numbers 5 and 6 respectively.
My top 10 investments account for 9.7% of my portfolio overall. This is down from 10% last month.
Nestlé (Stock Ticker: NSRGY) markets itself as the largest food and beverage producer in the world (with over 2000 local and global brands) and its history dates back to 1866.
The company’s name comes from Henri Nestlé, a German-born pharmacist who launched the company in Switzerland in 1867. But Nestle was in competition with another company at the time, Anglo-Swiss, which was founded one year earlier. Both companies produced similar products with a focus on condensed milk and cereal for infants.
It wasn’t until 1905 that the two competing companies eventually merged to form the Nestlé & Anglo-Swiss Milk Company.
During World War One, there was heightened demand for condensed milk and chocolate but international trade disruption meant that the company couldn’t meet the demand with current production focused in Europe. So, the company instead moved a number of its operations overseas, to the US and Australia.
The 1920’s were a rough time for the company, due to the drop in canned milk demand and the 1929 Wall Street Crash. But the company survived, thrived and introduced another of its most recognisable brands, Nescafé coffee.
After a series of further acquisitions and product diversifications in the following decades, the brand was renamed Nestlé S.A, in 1977. Today, the company is owns a a number of high value brands. Kit Kat, Nespresso, Nestlé Toll House and S. Pellegrino to name just a few.
The Vanguard FTSE Global All-Cap Index Fund is accumulating so all dividends are automatically reinvested back into the fund. Dividend reinvesting is key in my investment strategy long term. The fact the fund does this automatically just makes the whole process even more passive.
Goals For April
Continue to invest, as always, using the Pound Cost Average approach.
I hope you enjoyed taking a look at my own passive investments for March 2019. If you liked this article, please don’t forget to hit the like button below and check out all of my other reports, dating back to June 2018.
As you may know, last year I took the drip-feed approach to investing, rather that investing lump sum. I am now at the end of this process as the whole amount has now been invested. Going forward, I am going to continue investing, as ever, by pound-cost-averaging.
This simply means investing regularly, every month, riding out the volatility of the stock market. I am not letting month-to-month dips/gains affect the way I invest. Long term investing requires that you create a long term plan and stick to it.
I’d 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.