How often do you look at your portfolio? Once a year? Once a month? Once an hour?
If you check your portfolio like you check your email then you’re probably going to drive yourself up the wall and do something you regret – like a teenage conscript nervously fingering his Kalashnikov, you’re primed for action and desperate to relieve the tension.
All this waiting! Let’s do something! Buy something. Sell something. I gotta make a difference!
Well, I haven’t looked at our demo portfolio in the three months since our last Slow and Steady portfolio update [1]. I’m only looking now because I have to write this post. Ideally I’d only take a peek once every six months on preordained dates.
In between times:
- No fretting.
- No impulsive acts.
- No buying yesterday’s winners that turn into tomorrow’s chumps.
- No reacting to the market trader cries of pundits and salesmen.
Ignorance is bliss.
Up, up, and away (a bit)
So did we miss anything while I was asleep?
Not a lot.
The portfolio made £107 last quarter, which finally pushes our gains through the £2,000 barrier after three years. We’re up over 16% on purchase.
The Slow and Steady portfolio is Monevator’s model passive investing [2] portfolio. It was set up at the start of 2011 with £3,000 and an extra £850 is invested every quarter into a diversified set of index funds, heavily tilted towards equities. You can read the origin story [3] and catch up on all the previous passive portfolio posts here [4].
Here’s the portfolio lowdown in spreadsheet-o-vision:
[5]This snapshot is a correction of the original piece. (Click to make bigger).
Japan dropped 5% over the last three months while the US and UK were at a virtual stand still. Europe ticked up 3%. We’ve made precisely £1.08 on our Pacific Rim fund and we’re still up over 2% on UK gilts despite the warnings of Bondageddon.
The only asset where we’re still down on the money that we’ve invested to-date is emerging markets (Russian equities look very cheap [6]!).
This all contrasts very notably with the popular mood when we started our portfolio. Back then – just 36 months ago – emerging markets [7] were all the rage, while Europe was about as popular as sensible haircuts in Shoreditch.
Trends will come and go but our portfolio is designed to suit all seasons. Our hardest task is to stick with it.
Dividends
Our Vanguard UK Equity index fund paid out £65.68 in dividends. Ker-ching! All our dividends are automatically reinvested into more shares – compounding our wealth at an increasing rate. This is accomplished by investing in the accumulation [8] versions of our funds.
New transactions
Every quarter we place an £850 down payment on our future happiness. Our cash is divided between our seven funds according to our soberly planned asset allocation.
We use Larry Swedroe’s 5/25 rule [9] to trigger rebalancing moves. All’s quiet for now though, so on with this quarter’s purchases.
UK equity
Vanguard FTSE U.K. Equity Index Fund – OCF [10] 0.15%
Fund identifier: GB00B59G4893
New purchase: £127.50
Buy 0.66 units @ 19318.5p
Target allocation: 15%
Developed World ex UK equities
Split between four funds covering North America, Europe, the developed Pacific and Japan1 [11].
Target allocation (across the following four funds): 49%
North American equities
BlackRock US Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B5VRGY09
New purchase: £212.50
Buy 160.5 units @ 132.4p
Target allocation: 25%
European equities excluding UK
BlackRock Continental European Equity Tracker Fund D – OCF 0.17%
Fund identifier: GB00B83MH186
New purchase: £102
Buy 60.391 units @ 168.9p
Target allocation: 12%
Japanese equities
BlackRock Japan Equity Tracker Fund D – OCF 0.17%
Fund identifier: GB00B6QQ9X96
New purchase: £51
Buy 41.096 units @ 124p
Target allocation: 6%
Pacific equities excluding Japan
BlackRock Pacific ex Japan Equity Tracker Fund D – OCF 0.2%
Fund identifier: GB00B849FB47
New purchase: £51
Buy 24.673 units @ 206.7p
Target allocation: 6%
Emerging market equities
BlackRock Emerging Markets Equity Tracker Fund D – OCF 0.28%
Fund identifier: GB00B84DY642
New purchase: £85
Buy 82.285 units @ 103.3p
Target allocation: 10%
UK Gilts
Vanguard UK Government Bond Index – OCF 0.15%
Fund identifier: IE00B1S75374
New purchase: £221
Buy 1.718 units @ 12864.9p
Target allocation: 26%
New investment = £850
Trading cost = £0
Platform fee = 0.25% per annum
This model portfolio is notionally held with Charles Stanley Direct [12]. You can use its monthly investment option to invest from £50 per fund. Just cancel the option after you’ve traded if you don’t want to make the same investment next month.
Take a look at our online broker table [13] for other good platform options. Look at flat fee brokers if your portfolio is worth substantially more than £20,000.
Average portfolio OCF = 0.17%
If all this seems too much like hard work then you can always buy a diversified portfolio using an all-in-one fund like Vanguard’s LifeStrategy offering [14].
Take it steady,
The Accumulator
- You can simplify the portfolio by choosing the do-it-all Vanguard FTSE Developed World Ex-UK Equity index fund instead of the four separates. [↩ [19]]