February 2026 Report

The Australian Dollar rose from USD 0.6989 to USD 0.7116 meaning that USD investment returns are better than AUD investment returns. Stock markets mostly rose (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 1.31%

S&P 500: -0.76%

HFRI Hedge Fund Index: 0.41% (forecast)

Australian Dollar Benchmarks

ASX 200: 4.33%

Target Portfolio: -0.17% (forecast - depends on HFRI result).

Australian 60/40 benchmark: 1.27%

In currency neutral terms we gained 1.31%. But in Australian Dollar terms we lost 0.33% and in US Dollar terms we gained 1.48%. So we beat the USD benchmarks but underperformed the AUD benchmarks. We were quite close to the target portfolio. It was the first down month for the S&P 500 since April 2025! February is a seasonally negative month for both the S&P 500 and our own portfolio.

The target portfolio has been flat for several months now as the rise in the Australian Dollar and.a fall in venture capital offset gains in other asset classes:

The SMSF underperformed, losing 1.83%. Unisuper  returned 0.92% and PSS(AP) 1.37%. 

Here is a report on the performance of investments by asset class:

The asset class returns are in currency neutral terms as the rate of return on gross assets and do not include investment expenses such as margin interest, and so the total differs from the Australian Dollar returns on net assets mentioned above. Performance was very mixed with a huge rate of return for futures. Hedge funds slightly edged futures out in terms of contribution. Gold had the worst rate of return and detracted the most.

Things that worked well this month:

• Four investments made more than AUD 10k: L1 Global Long Short (GLS.AX, 26k), Tribeca Global Resources (TGF.AX, 22k), Australian Dollar Futures (14k), Winton Global Alpha (11k). Eleven investments hit new high profit marks including GLS, TGF, and Winton. For TGF the previous peak was in 2022. Cadence Opportunities hit a new peak, with the previous peak in 2021!

What really didn't work:

• Three investments lost more than AUD 10k: Pershing Square Holdings (PSH.L, 24k), gold (15k), and Regal Investment Fund (RF1.AX, 15k). Because of timing issues, the price of the PMGOLD gold ETF fell, while the price of gold rose in US Dollar terms for the month. This wasn't because of the rise in the Australian Dollar. The USD price of gold when converted into AUD rose from AUD 7,000 to AUD 7,413! Ratherm there was a 9% fall in the USD price of gold on the last day of January. But the ASX closed before that happened.

We moved towards our target allocation. Our actual allocation currently looks like this:

 

About 68% of our portfolio is in what are often considered to be alternative assets: real estate, art, hedge funds, private equity and credit, gold, and futures. A lot of these are listed investments or investments with daily liquidity, so our portfolio is not as illiquid as you might think.

Moominmama receives employer superannuation contributions every two weeks. We also make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. There will still be capital calls from Aura Venture Fund II and III. I am receiving monthly pension payments from both Unisuper and our SMSF totalling AUD 5,150 per month. I made non-concessional contributions of AUD 30k Unisuper and AUD 20k to our SMSF. I am thinking to max out the total possible contributions before I probably hit the transfer balance cap at the end of this financial year and can't make any further non-concessional contributions. There is a twist that complicates things. The transfer balance cap is expected to be raised by AUD 100k next year. I was very active in the market, making the following investment and trade moves this month:

• I bought 5k shares of Regal Partners (RPL.AX) on a dip.
• I bought 10k shares of Hearts and Minds (HM1.AX) on the same dip in the market. 
• I bought 4k shares of WAM Capital (WAM.AX) to round out our position to 110k. This was funded really from the gain in our Australian Dollar Futures. When futures rise, the cash in your account increases and vice versa...
• I bought 10k more shares of Cadence Opportunities (CDO.AX). 
• I did two profitable trades in gold and used the proceeds to buy 5k shares of Wilson Alternative Assets (WMA.AX). This should help rebalance our portfolio a little towards real assets. Then I did an unprofitable trade in gold...
• I sold 50 shares of Berkshire Hathaway (BRK/B). I'm a bit disappointed that it is below where I bought it in last year's market correction. This helped rebalance our portfolio a little away from US stocks. 
• I sold 1,000 shares of the ASX 200 ETF, IOZ.AX. This helped rebalance our portfolio towards the target portfolio and together with the BRK/B sale fund the following: 
• I bought 2000 shares of ZIM. I was planning on this being a longer term trade, but I ended up getting out after one day!
• So, instead I bought 500 additional shares of Pershing Square Holdings (PSH.L). 
• I sold more than 23k shares of Regal Investment Fund (RF1.AX). The market price was near the NAV now.
• I then bought 350k shares of the US Residential Property Fund, URF.AX. They now say that they will try to sell all property by the end of the year. This should close the gap between NAV and the market price. Risk is that the Australian Dollar rises a lot in the interim reducing NAV. This also helped rebalance the porfolio.
• I also bought just over 10k shares of the Cordish-Dixon Private Equity Fund III (CD3.AX). I liked the recent presentation on fund performance and think it is really undervalued. 
• I invested USD 3,750 in another start up with Unpopular Ventures.
• I made a new investment in 500 shares of the Alerian MLP ETF. This also helped rebalance towards real assets.

Here are the income and spending accounts * for this month:

Other income includes Moominmama's salary, a refund Moominpapa received and employer superannuation contributions. There was a larger than normal transfer into superannuation as I made the non-concessional contributions mentioned above. Spending was almost AUD 30k. This was the highest monthly spend since January 2015 when we bought our house and paid stamp duty! This was a high month due to school fees and a big "professional" expenditure by Moominpapa. As a result dissaving was AUD 23k for the month, which is just at the 4% rule limit. Because we lost AUD 24k investing, net income was AUD -18k. As a result of all this, net worth decreased by AUD 49k to AUD 8.608 million.

* Results are shown separately for retirement and non-retirement accounts as well as housing, which nowadays doesn't have much activity. The grey shaded rows are additional notes. Total investment income is split into investment income before exchange rate moves and the contribution of exchange rates. Other income is non-investment income including salaries, employer superannuation contributions, and net tax returns. Investment income is shown pre-tax. Tax credits include franking credits on Australian Dividends and imputed tax on industry superannuation returns and and actual SMSF tax. These are taken away from investment income to get changes in actual net worth. Inheritances include gifts from relatives. Saving is from non-investment income, transfers, and inheritances. 

Just Cancelled My Life and Disability Insurance

I hadn't realised I was still paying life and disability insurance premia post-retirement. I just cancelled them online, saving about AUD 700 per year. The amount you pay is fixed or rising with inflation, but the coverage that you get falls as you get older and stops entirely for disability at 70 and death at 75.

Switching to Gold in Little My's Portfolio

 

Little My (our younger child) has an investment bond managed by Generation Life. Now and then I decide to tweak the portfolio allocation. I just noticed that iShares Physical Gold is now an option. So, I am switching from Magellan Global (soon to be managed by L1 instead) to gold. Gold is in the target portfolio and my own portfolio and we already have more than 1/3 of the portfolio managed by L1. So this is the new allocation:

iShares Physical Gold: 9%

Atlas Infrastructure: 8%

L1 Long Short Fund: 35%

Generation Life Tax Effective Australian Shares: 20%

Dimensional 70/30 World Allocation: 28% 

So, in terms of asset classes:

Australian Shares: 30%

International Shares: 10% 

Hedge Funds: 35% 

Credit 8% 

Real Assets: 8%

Gold: 9%

The gold position is not quite one ounce (shown in the picture above). 

The portfolio is more aggressive than the target portfolio, which makes sense as Little My is very young. 

Alerian Master Limited Partnership ETF

I made a small investment of 500 shares of this ETF in the SMSF. It is an ETF of master limited partnerships, which are entities owning pipelines in the US. So, this counts towards my real assets allocation. It pays a high dividend of 7.8%, so it contributes towards our income investments that are intended to fund the SMSF pension. In recent years, since the pandemic it has performed well with a relatively low beta and high alpha to the stock market. So, it counts towards my "passive alpha" category as well. In the long-term though it has tracked the price of oil to quite a large degree and so isn't a set and forget investment. But I expect that in the near future energy demand to generate electricity for AI will be growing.

Bad Timing Switching Funds

In May last year, I switched from the Aspect Diversified Futures Fund to the Acadian Global Long Short Fund in our SMSF.* Since then Aspect has done very well:

I sold almost right at the bottom. It has gained more than 25% since then! What has Acadian done? It has risen a bit and then fallen:

Maybe a 3% gain :( The longer term performance has been really good though. If I had stuck to our target allocation, I would have kept Aspect and done better. I'm not going to switch back now. It's just as likely that Aspect falls again and Acadian continues its long term trajectory.

* The linked post talks about switching from Generation Global to Acadian. That was in another account. We switched to Acadian in two accounts. Generation rose about 12% after the switch but has now nose-dived to be down about 4%. So, that switch made sense.

Local Auction Boosts Our Estimated Net Worth

I went to the auction of a townhouse within my data catchment that I use to estimate the value of our home:

 

It sold for AUD 920k with two serious bidders. When I plug the number into my model, it boosts the value of our house by around AUD 250k, which seems crazy! As more data rolls in for this year, I think the estimated price will go down.

This was a popular TV show when I was in primary school:

 

That was worth a lot more back then.😀

ZIM

 

I bought 2000 shares of ZIM. A takeover was announced by Hapag-Lloyd, but the shares are trading about 25% the acquisition price based on the fear that the Israeli government wouldn't approve the deal and that the workers have announced a strike over job losses. But part of the company will be carved out and sold to an Israeli private equity firm to assuage this concern. Presumably, some sweetener will be found for the workers. In the meantime, the company will hopefully continue to pay its very high dividends. The price has been in the doldrums because shipping rates are currently low and presumably there is geopolitical risk. Potentially, the EU could be concerned about the merger. Well, this is just a 1% speculative position.

Update 19 Feb 26

Well that didn't last long. I saw this article and immediately dumped my position for a USD 333 profit. It's hard to believe that Hapag-Lloyd didn't discuss this with the Israeli government before structuring this deal. But I don't want to risk losing money on this.

More Good Venture Capital News

I recently reported that my investment in the Aura VF2 fund was now in profit. Now, our Angellist investments through Unpopular Ventures have swung into profitability too:

 

There is a 3 month lag in reporting values. We invest in their Rolling Fund as well as individual firms. One of those firms is now reporting that it is worth 9.5x the value I invested at. On the other hand, two companies I invested in have effectively gone to zero. While I am excited to not be losing money any more, our overall IRR on our Angellist investments is only 2.76% so far. 

But this is an AUD 60k bump in value that makes a substantive change to our numbers for 2025. It pushes up our 2025 rate of return to 9.68% in AUD terms or 18.14% in USD terms. That puts us just ahead of the S&P 500 for the year:

The "retirement number" rises to AUD 7.011 million. Total net worth at the end of the year Was AUD 8.252 million, which is comfortably ahead of the base case net worth projection of AUD 8.2 million. Also, the private equity return for the year roses to 9.3% from 4.7%! The annual contribution to total return from private equity was 1.8% instead of 0.9%. Unpopular Ventures returned AUD 40,118 for the year, making it our 8th best investment.

How Closed-End Funds Should Trade in Theory

An interesting post from Financial Samurai or how closed-end funds trade. A closed-end fund is one that trades on a stock exchange but has a fixed number of shares on a day to day basis.* They may occasionally do additional share issues, or reinvest dividends, or even buy back shares, but they don't buy and sell shares continuously to keep the market price at the net asset value or NAV. ETFs, by contrast, do continually create or redeem new shares to keep the market price close to NAV. I posted a comment about where the equilibrium price of a closed-end fund should be that I thought was worth its own post here.

In theory, if the fund manager grows the NAV of the fund with distributions reinvested faster than the average stock market rate of return (for assets with similar beta), then a closed end fund should trade higher than NAV and vice versa. 

This should be the equilibrium price, so that investors don’t get a free lunch of a higher than average return or conversely a worse than average return. If the average fund manager performs the same as the market before fees then on average after fees managers will under-perform the market and so the typical closed end fund will trade at a discount to NAV.

Of course, actual prices often deviate from this equilibrium for a long time! Pershing Square Holdings, which trades on the LSE, is a classic case. It has either outperformed or matched S&P 500 performance over the last few years while investing mainly in large cap US stocks, but trades at a massive discount to NAV. As an investor, one of my reasons for investing was this large discount. We’ve experienced good returns but not much closing of the discount. In fact the discount today is the same as it was in 2021 when we finished buying our current position. The market price is 25% below NAV! Our internal rate of return has been 20%, which is clearly better than the stock market average. The S&P 500 has returned 15% p.a. over the last ten years or 14% over the last five. So, it is crazy that the discount hasn't at least narrowed.

* Sometimes people refer to unlisted private equity funds that raise a given amount of money and then invest it as closed end funds too.

Concentration in the Mag 7 (Updated 27 February)

What is our exposure to the Mag 7? This came up in recent discussions. People are worried about being overly concentrated in a few maybe over-valued companies. I can't put an exact number on our exposure, as Unisuper and PSS(AP) do not publish their asset allocation at the individual stock level and other funds also have partial or no information. But we can estimate it. I'll go through the calculation, fund by fund, in the following.

Unisuper: This is Moominpapa's employer superannuation fund. I estimate that 22% of the fund is in US stocks. The share of the Mag 7 in the S&P 500 is 34%. Without further information, I assume this share applies here. 11.6% of net worth is in Unisuper. Multiplying these three numbers together gives 0.87% of net worth.

PSS(AP): This is Moominmama's employer superannuation fund. I estimate that 13% of this fund is in US stocks and 8.5% of net worth is in the fund. Therefore, 0.38% of net worth is in the Mag 7 here.

CREF Social Choice: This is the main fund in Moominpapa's US retirement account. I estimate that 42% is in US stocks and 3% of net worth is in this fund. This fund, therefore, contributes 0.43% of net worth exposure to the Mag 7.

WCM Global Quality (WCMQ.AX): In their latest portfolio disclosure, they report holdings of Microsoft, Amazon, and Nvidia. Total exposure is 9.6%. WCMQ is 1.5% of our net worth. 1.5%*15.55% = 0.14%.

Hearts and Minds (HM1.AX): Again, Microsoft and Amazon are in the top 10 holdings, as is Nvidia. But we don't know how much of the portfolio either of these is. The top 10 as a whole represents 44% of total portfolio holdings. Let's guess that MSFT and AMZN are 3/10 of this. The remaining non-conference holdings are 21% of the portfolio. Let's assume that 65% of this is US stocks and Mag 7 is 34% of this. 18% of the total portfolio is then estimated to be in the Mag 7. HM1 is 1.7% of net worth. So our exposure is estimated at 0.30%.

Pershing Square Holdings (PSH.L): They hold three Mag 7 stocks–Google, Amazon, and Meta. The annual report shows total expsoure of 36.71%. We have 6.3% in PSH and so our net worth exposure is 2.3%.

Acadian Global Long Short: They provide a top 10 list of holdings, which includes all the Mag 7 apart from Tesla! The total exposure is 25.6%. I assume that they do not hold Tesla and given our portfolio exposure of 3.3%, our Mag 7 exposure is 0.84%.

L1 Global Long Short (GLS.AX): They have not published any information on portfolio allocation. Assuming that 65% is in US stocks and 34% of that is in the Mag 7, given our 4.6% allocation to GLS, our exposure would be 1.02%.

In total, we have a 6.28% net worth exposure to the Mag 7. This is very small compared to someone who followed Warren Buffett's advice to just invest in an S&P 500 index fund. Someone who invested in a 60/40 portfolio including a global index fund would have about a 14% exposure. So, it's small compared to that too. Are we under-exposed to tech stocks? Well, we have around a 10% exposure to venture capital and WCMQ's largest holding is AppLovin. So, I don't think so.

Annual Report 2025: Long-term Graphs

After looking over some of my previous annual report posts, I realised that I haven't posted long-term graphs of net worth in recent annual reports. I focused more and more on just the year under consideration. So, here is some longer term context that I used to include.

Here is net worth since 1996 and a breakdown into home equity, retirement accounts, and everything else: 

 

The big jump in 2018 is the inheritance. Non-retirement accounts have not increased that much since then as we moved money into home equity and retirement accounts. The next graph shows a breakdown of savings:

 

This graph is rather messy, which is maybe why I stopped posting it :) Retirement and non-retirement accounts are each split into savings and investment earnings. Non-retirement savings are negative because we moved money into home equity and retirement accounts. There was a jump this year when I received the redundancy payment. On the other hand, non-retirement profits are the largest component. This year saw a fall in home value and slow progress in retirement accounts as discussed in the first post in this series. But there were strong non-retirement earnings. Retirement accounts value is roughly 50/50 contributions and earnings at this point.

 

Annual Report 2025: Individual Investments

As promised, here are the individual investment results for 2025 (Australian Dollars):

Other costs and benefits like interest and fees and exchange rate gains and losses are not included here. I also don't go down to the level of the very small individual investments inside the Masterworks, Unpopular Ventures, and Domacom investments boxes.  

I also make no attempt to compute individual rates of return. My goal is to have twice as many winners as losers and to make at least twice as much on winners as I lose on losers. So, position sizing is part of the story. Based on that goal, I had more than enough winners, but only won slightly more on each winner as I lost on each loser. Without the two worst losers, I only lost $9.9k per loser. In the long term, my winning positions have gained more than five times as much as losing positions have lost. Of course, both Bitcoin and Defi Technologies gained more in the previous year than they lost in 2025. In the long run, these were winning investments.

Gold was the top performer this year, after coming in second last year. It was followed by two listed hedge funds and then the Aura Venture Capital Fund 2. Next came our two employer superannuation funds, each of which is 8-12% of our portfolio. The diversified Regal Investment Fund put in a good showing at 7th position. WAM Capital is a new investment I made during the April Tariff Tantrum. Australian Dollar Futures are paying off this year after being the worst performer last year. Finally in the top 10, CREF Social Choice is a balanced fund in my US retirement account (403b).

Annual Report 2025

All $ signs in this report indicate Australian Dollars. I'll do a separate report on individual investments. I do a report breaking down spending after the end of the financial year.

Overview 

Investment returns were positive and net worth again increased. My base case net worth projection was $8.2 million and we reached $8.192 million. In December we again travelled to China and this time Vietnam for the first time. I did some short business trips to Sydney and Brisbane during the year as well. My 61st birthday was in December and at the end of November I took a redundancy package from my employer and retired.

Investment Return

In Australian Dollar terms we gained 8.7% for the year while in USD terms we gained 17.1%. The big gap is because the Australian Dollar rose. The MSCI gained 22.9% and the S&P 500 17.9% in USD terms while the ASX 200 gained 11.9% in AUD terms. The HFRI hedge fund index gained 12.7% in USD terms. Our target portfolio gained 7.3% in AUD terms and the Vanguard 60/40 AUD benchmark returned 9.8%. So, we under-performed all benchmarks apart from the target portfolio and HFRI. But we didn't do that badly compared to the S&P 500 given we target a much lower volatility. The poor performance of the target portfolio was also due to the rise in the Australian Dollar.

This chart compares our portfolio to the benchmarks in Australian Dollar terms over the year:

 

It was actually a smoother ride in USD terms:

This was unusual as the Australian Dollar usually falls during stock market crises.

  

Here are annualized returns over various timeframes:

 

We beat the HFRI, the target portfolio, and the 60/40 portfolio over the last 5 and 10 years. Our performance over 20 years is still very weak, though it matches the HFRI.

 

Here are the investment returns and contributions of each asset class in 2025 in currency neutral and unlevered terms:

The contributions to return from each asset class sum to the total portfolio return. The portfolio shares are at the beginning of the year. Rest of the world stocks did worst, because of the performance of Defi Technologies, followed by futures, which includes bitcoin. Gold was the best performer followed by hedge funds and each made similar large contributions to the total return. Private equity was disappointing, in large part due to the fall in 3i near the end of the year, the shutdown of Kyte, and a disappointing earn out at IPS. A good result from Aura VF2 saved the day.

Investment Allocation

There were significant changes in asset allocation over the year:

 

We reduced exposure to futures = crypto (-12.8% of portfolio), RoW stocks = Defi Technologies (-4.3%), and real assets (-4.2%) over the year and increased exposure to all other asset classes and hedge funds, in particular (+7.7%).

Accounts

Here are our annual accounts in Australian Dollars: 

 

Percentage changes are for the total numbers. There are lots of quirks in the way I compute the accounts, which have gradually evolved over time. There is an explanation at the end of this post. 

We earned $440k after tax in salary etc. This grew massively due to the redundancy payment. Total non-investment earnings including retirement contributions were $473k, up 97% on 2024.

 

We gained (pre-tax including unrealized capital gains) $507k on non-retirement account investments. The rise in the Australian Dollar reduced those gains by $43k. We gained only $30k in retirement accounts with $32k in employer retirement contributions. Gold and hedge funds contributed strongly to non-retirement funds and retirement funds suffered from the crypto theme.

 

The value of our house is estimated to have fallen by $64k. As a result, investment gains totaled $472k and total income $945k.

 

Total spending (doesn't include mortgage payments, life insurance, margin interest etc.) of $158k was down 7% on last year.

 

$21k of the current pre-tax investment income was tax credits – we don't actually get that money directly so we need to deduct it to get to the change in net worth. We do receive some refund of franking credits in our annual tax returns, which count towards "Other income". We saved $289k from salaries etc. before making contributions of $74k to superannuation. I also record a $7k "inheritance", which is a gift we received on our trip to China. Current net worth increased by $701k.

Taxes on superannuation returns are just estimated because, though we know the tax paid by the SMSF, our employer superannuation funds only report after tax returns. I estimate the tax these funds paid to make retirement and non-retirement investment returns comparable. The total estimated tax on superannuation was $29k. Net worth of retirement accounts increased by $108k after the transfer from current savings. With the gain in the value of our house, total net worth increased by $745k.

Projections

Last year my base case scenario for 2025 was for an increase in net worth of $800k to $8.2 million, which we hit. For this year, my best case scenario is for an increase of $900k to $9 million. My bear case is for a decline to $7.5 million, which is roughly what we would expect if stock markets fell 20% assuming a beta of 0.5 and alpha of 5%. The Australian Dollar would likely fall in that scenario, boosting the Australian Dollar value of foreign investments.

Notes to the Accounts

Current account includes everything that is not related to retirement accounts and housing account income and spending. Then the other two are fairly self-explanatory. However, property taxes etc. are included in the current account. Since we notionally converted the mortgage to an investment loan, mortgage interest is counted in current investment costs. So, the only item in the housing account now is increases or decreases in the value of our house. This simplified the accounts a lot but I still keep a lot of cells in the spreadsheet that might again be used in the future.

 

Current other income is reported after tax, while investment income is reported pre-tax. Net tax on investment income then gets subtracted from current income as our annual tax refund or extra payment gets included there. Retirement investment income gets reported pre-tax too while retirement contributions are after tax. For retirement accounts, "tax credits" is the imputed tax on investment earnings which is used to compute pre-tax earnings from the actual received amounts. For non-retirement accounts, "tax credits" are actual franking credits received on Australian dividends and the tax withheld on foreign investment income. Both of these are included in the pre-tax earning but are not actually received month to month as cash.... 

 

"Saving" is the difference between "other income" net of transfers to other columns and spending in that column, while "change in net worth" also includes the investment income.

Where the Money Came From

I just updated this graph, which breaks net worth down into savings, inheritance, and investment profits. 

Savings are from salaries etc and tax returns as well as employer superannuation returns. Inheritance is self explanatory. Investment returns include franking credits and an estimate of the taxes paid by industry and public sector superannuation funds. Here I also include the increase in the value of our house. To get actual net worth, we need to subtract from the total tax paid by the SMSF, franking credits received by non-superannuation investments, and taxes paid by those large superannuation funds. These taxes currently sum to AUD 400k.'

Roughly one quarter of net worth is from savings, one quarter from inheritance, and half from investment returns. You can see the recent effect of the redundancy payment on savings on the bottom right.

It would make more sense to place profits as the bottom layer on the graph as they were negative during the dot-com crash and the GFC. But I think it is more instructive to see the steady rise in savings over time. Now of course, I expect it to go slowly down again as we dissave.

 

January 2026 Report

We had very strong investment performance in January, especially in USD terms. The Australian Dollar rose from USD 0.6674 to USD 0.6989 meaning that USD investment returns are better than AUD investment returns. Stock markets rose (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 2.98%

S&P 500: 1.45%

HFRI Hedge Fund Index: 0.75% (forecast)

Australian Dollar Benchmarks

ASX 200: 1.78%

Target Portfolio: -0.74% (forecast - depends on HFRI result) - this is negative because of the rise in the AUD and the negative performance of venture capital this month.

Australian 60/40 benchmark: 0.53%

We gained 2.84% in Australian Dollar terms or 7.70% in US Dollar terms. So we crushed all benchmarks. Here is a graph comparing the portfolio's track record with two of the AUD benchmarks:

As you can see, the three portfolios have very similar volatility, which justifies using them as benchmarks. Also, all three target 60% exposure to equities.

The SMSF again outperformed, returning 3.25% beating Unisuper (0.82%) and PSS(AP) (0.33%). 

Here is a report on the performance of investments by asset class:

The asset class returns are in currency neutral terms as the rate of return on gross assets and do not include investment expenses such as margin interest, and so the total differs from the Australian Dollar returns on net assets mentioned above. Only US stocks lost money. Gold had the highest rate of return and largest overall contribution. Australian Dollar futures contributed to the strong Futures result.

Things that worked well this month:

• Gold was the greatest gainer at AUD 116k - the greatest monthly gain for gold so far. In all, seven investments gained more than AUD 10k: L1 Global Long Short (GLS, AX, 41k), Tribeca Global Resources (TGF.AX, 36k), Australian Dollar Futures (23k), Pengana Private Equity (PE1.AX, 17k), Regal Investment Fund (RF1.AX, 17k), and 3i (III.L, 13k).

What really didn't work:

• Only one investment lost more than AUD 10k: Pershing Square Holdings (PSH.L) with a loss of AUD 28k.

We moved towards our target allocation. Our actual allocation currently looks like this:

About 68% of our portfolio is in what are often considered to be alternative assets: real estate, art, hedge funds, private equity and credit, gold, and futures. A lot of these are listed investments or investments with daily liquidity, so our portfolio is not as illiquid as you might think.

Moominmama receives employer superannuation contributions every two weeks. We also make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. There will still be capital calls from Aura Venture Fund II and III. I am receiving monthly pension payments from both Unisuper and our SMSF. I made an AUD 13k concessional contribution to our SMSF to bring my concessional contributions for the tax year up to the 30k cap. I will decide how much to more to contribute as non-concessional contributions to superannuation later in the financial year. I made the following investment moves this month:

• I sold 9k WAM Capital (WAM.AX) shares.
• I sold 500 3i shares (III.L).
• I sold 1,000 shares of the gold ETF, PMGOLD.AX.
• I bought almost 7k Hearts and Minds (HM1.AX) shares.
• I bought 19k shares of Tribeca Global Resources (TGF.AX).

Here are the income and spending accounts * for this month:

Other income includes Moominmama's salary and employer superannuation contribution and Moominpapa's payment of Division 293 tax :( There was a larger than normal transfer into of superannuation as I made the concessional contribution mentioned above. Spending was low - we spent the first 2/3 of the month in China and Vietnam. As a result dissaving was only AUD 3k for the month. The 4% rule says we could dissave AUD 23k per month :) Next month's spending is going to be a lot higher as we pay school fees. As a result of all this, net worth increased by AUD 193k to AUD 8.386 million.

* Results are shown separately for retirement and non-retirement accounts as well as housing, which nowadays doesn't have much activity. The grey lines are additional notes. Total investment income is split into investment income before exchange rate moves and the contribution of exchange rates. Other income is non-investment income including salaries, employer superannuation contributions, and net tax returns. Investment income is shown pre-tax. Tax credits include franking credits on Australian Dividends and imputed tax on superannuation returns. These are taken away from investment income to get changes in actual net worth. Inheritances include gifts from relatives. Saving is from non-investment income, transfers, and inheritances. 

Aura VF2 Reports

The Aura VF2 venture capital fund has reported for the final quarter of calendar year 2025 and it has jumped sharply into profit.

 

I now have an IRR of 10.6%. It increased the rate of return for December to 2.5% in AUD terms or 4.5% in USD terms, which crushed all benchmarks.

Tribeca Global Resources

After several years of disappointing performance, Tribeca Global Resources (TGF.AX) has performed extremely strongly in recent months:

My investment hit a new profit high exceeding the 2022 peak. After previously giving back all the 2022 gains, this strong performance makes me wonder if I should sell now. One reason not to sell is that if I wait my capital gains tax rate should be lower next financial year (it's in my personal name). Also, there is still a big gap between NAV and the share price, which wasn't the case at the 2022 peak. Pre-tax NAV is $3.81 and post-tax $3.34 while the share price is $2.88. Will the gap close? Finally, the fundamentals supporting resources strength don't seem to be changing yet. So, I think I will hold on for now.

Moomin's 2025 Investment Performance

I recently reported how well Little My's portfolio did in 2025. I was pretty pleased with his performance for the year. Today, my brother sent me the 31 December value of Moomin's investment portfolio, which he manages in my mother's home country. Both received the same amount of money (£25k) from my mother's estate. He gained 57.4% in AUD terms! His account is now worth AUD 114k while Little My's is worth AUD 73k. For the last two years Moomin's money has been invested in two mutual funds. Prior to that my brother had many more investments and changed them frequently with mediocre results. 

Each child can access their money at age 23. Two of my brother's children were already 23 when the estate was settled. I was interested to hear that neither of the two who had their 23rd birthday since then have asked to get their money. So, he is still managing their accounts as well as his youngest daughter's.

How Well Did Your Super Fund Do in 2025?

The Australian reports on superannuation funds' performance for calendar year 2025. Neither of our employer funds - Unisuper and PSS(AP) - made the top ten. Unisuper Balanced is in the top 10 for the last 10 years. The average return for 2025 was between 8.8% and 9.3% depending on the source. I assume this is for accumulation funds. I estimate that Unisuper made 7.8% pre-tax or around 6.8% post-tax. PSS(AP) made 10.5% or 9.2% post-tax. On the other hand, our SMSF returned -6.1% pre-tax :( This is mostly because of its outperformance in 2024 (34.0%) and cryptocurrency coming back down to Earth in 2025.

Little My 2025 Investment Performance

Little My (our second child) had a good year investment-wise:

His estimated pre-tax return was 20.8%.* The ASX200 had a gross return including estimated franking credits of 11.9%. The MSCI gross world index returned 14.1% in AUD terms and our target portfolio has an estimated return of 7.3%. 

 

Seems like I have finally managed to put together a decent portfolio for him. Currently, we have 33% in the L1 Long Short Fund, 28% in the Dimensional 70/30 fund, 10% in Generation Life Tax Effective Australian Shares, and the remainder in two Magellan fund options.

 

* 30% tax is deducted automatically from the returns of "investment bonds".  However, there is a trick that could reduce this tax to the recipient's marginal tax rate when the bond is finally cashed out. By adding an additional payment the ten year period of investment that is needed to get the 30% rate will be reset. This makes sense if the recipient has a marginal rate below 30%. This works because additional contributions have to be within 125% of the previous year's contribution in order not to reset the bond. Given that our additional contributions since the initial investment have been zero...

 

December 2025 Report

December was the first post-retirement month. I am changing the layout of these reports to remove investment performance over the last five years and add in the income and spending report I dropped back in 2018. This is because I have a new focus on making sure spending stays within our budget, whereas it is hard to change investment performance over a five year period on a monthly basis. I will report on longer term investment performance in the annual review as usual.

In December, the Australian Dollar rose from USD 0.6550 to USD 0.6674 meaning that USD investment returns are better than AUD investment returns. We had a good month in terms of investment return. Stock markets were slightly up with a lot of intramonth volatility (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 1.07%

S&P 500: 0.06%

HFRI Hedge Fund Index: 0.26% (forecast)

Australian Dollar Benchmarks

ASX 200: 1.36%

Target Portfolio: -0.19% (forecast - depends on HFRI result)

Australian 60/40 benchmark: 0.22%

We gained 1.28% in Australian Dollar terms or 3.28% in US Dollar terms. So we outperformed all benchmarks apart from the ASX 200, which we got fairly close to.  These returns are preliminary, as we won't get results from Aura Venture for more than a month, and Angellist report with a three month lag. I was curious about how much I end up revising my monthly performance figures when all the data is available. Here are the results for the last year:

"Original" is the rate of return reported in this blog and "Current" is my current estimate. In the last year, on average I overestimated the rate of return initially. On the other hand, I initially underestimated the return for last December but as you can see I have already trimmed this December's number a little.

The SMSF again outperformed, returning 0.62% beating Unisuper (0.37%) and PSS(AP) (0.40%). 

Here is a report on the performance of investments by asset class:

The asset class returns are in currency neutral terms as the rate of return on gross assets and do not include investment expenses such as margin interest, and so the total differs from the Australian Dollar returns on net assets mentioned above. Only US stocks lost money. Futures had the highest rate of return with Australian Dollar Futures contributing the most. Hedge funds made the largest overall contribution.

Things that worked well this month:

• As mentioned above, most hedge funds did well with Tribeca Global Resources (TGF.AX) gaining AUD 42k and Regal Investment Fund (RF1.AX) 17k. Gold, 3i (III.L), and Cadence Opportunities (CDO.AX) all gained between AUD 9 and 10k.

What really didn't work:

• Only five investments lost money and no investment lost more than AUD 10k.

We moved towards our target allocation. Our actual allocation currently looks like this:

About 65% of our portfolio is in what are often considered to be alternative assets: real estate, art, hedge funds, private equity, gold, and futures. A lot of these are listed investments or investments with daily liquidity, so our portfolio is not as illiquid as you might think.

Moominmama receives employer superannuation contributions every two weeks. We also make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. I made the last USD 10k contribution to the Unpopular Ventures Rolling Fund this month. There will still be capital calls from Aura Venture Fund II and III. I am receiving monthly TTR pension payments from both Unisuper and our SMSF. I will decide how much to recontribute to superannuation later in the financial year. 

This was a quieter month in terms of transactions:

• I sold 5k WAM Capital (WAM.AX) shares.
• I bought net 1k shares of WCM Global Quality (WCMQ.AX). 
• I sold 250 Perth Mint Gold ETF (PMGOLD.AX) shares. 
• I sold all our position in WAM Strategic Value (WAR.AX, 100k shares) in order to fund the 1:1 entitlement offer for the L1 Global Long Short Fund (GLS.AX, formerly Platinum Capital, 85k new shares). 

Here are the income and spending accounts for this month:

Results are shown separately for retirement and non-retirement accounts as well as housing, which nowadays doesn't have much activity. The grey lines are additional notes. Total investment income is split into investment income before exchange rate moves and the contribution of exchange rates. Other income is non-investment income including salaries, employer superannuation contributions, and net tax returns. Investment income is shown pre-tax. Tax credits include franking credits on Australian Dividends and imputed tax on superannuation returns. These are taken away from investment income to get changes in actual net worth. Inheritances include gifts from relatives. Saving is from non-investment income, transfers, and inheritances.

This month, salary hit a record number as I received the redundancy payment of more than AUD 1/4 million. Spending was fairly average at AUD 12k. There was a larger than normal transfer out of superannuation as I made excess concessional superannuation contributions in the previous tax year, which I withdrew from Unisuper. We received a cash gift from Muminmama's father (counted as inheritance). As a result of all this, net worth increased by AUD 347k, almost all of it in non-retirement accounts. Now, I will have to decide how much to contribute to superannuation. I want to hit the goal of transferring AUD 2 million to a tax free pension account. I also want to max out the concessional contribution cap of AUD 30k for this year to help reduce my taxes, which will be very high because of the redundancy payment. The payment itself has low taxes but it pushes most of the rest of my income into the top tax bracket.

To keep things simple, I will use net worth at the end of this month as the "retirement number". Net worth at the end of December not including our house is AUD 6.875 million. Using the 4% rule means we could dissave AUD 275k per annum. Our spending is a lot below that. Total net worth is AUD 8.112 million.

A More Realistic Target Portfolio

A couple of changes to the target portfolio. There are really two target portfolios. One is our desired asset allocation and the other is the benchmark portfolio I compare performance to each month and year. 

The first change applies to the benchmark portfolio. Up till now, I have used the FTSE DSC venture and buyout indices as the proxy for venture capital and buyout PE. But these indices track gross performance before investment fees. Investment fees are very high for these asset classes and it is unrealistic to assume I could match the gross performance. By contrast, the HFRI index I use for hedge funds is net performance after fees. So, I am going to apply the standard 2 and 20 investment fee structure to the returns of these indices. 2 refers to the 2% annual management fee and 20 refers to the carried interest or performance fee - 20% of the profits. 

There is actually a big difference between hedge funds and private equity in how these fees are applied. Hedge funds charge 2% of NAV each year and 20% of the profit above a hurdle rate of return. Usually, if gross profits are in a drawdown - below the previous "high water mark" - no performance fee would be charged. Private equity charges 2% of the original investment and only charges carried interest when an investment is realised - but usually there is no hurdle rate. I will deduct 2%/12 of NAV each month and 20% of profits when gross profits are above the high water mark. I implement this by computing the gross index and then a high water mark index - the maximum of the gross index in all previous months. If the gross index at the end of the month is above the the high water mark, 20% of the percentage increase relative to the high water mark is deducted from returns.* This exaggerates likely fees. On the other hand, I don't take into account the dilution that often happens to early stage venture investors. 

Venture returns are reduced from 1.67% per month gross since January 2008 to 1.22% net and buyout returns fall from 1.29% to 0.93%. These returns are still better than any other asset class.

I have also tweaked the allocations to give 20% to each of long public equity, hedge funds, and private equity. I have also increased the credit allocation to 10%. So, the benchmark portfolio consists of:

MSCI All Country World Index Gross in AUD 9%  

ASX 200 Total Return Index 11%

HFRI Fund Weighted Hedge Fund Index 20%

Net FTSE Venture Index 10% 

Net FTSE Buyout Index 10%

Gold Spot Price in AUD 10% 

TIAA Real Estate Fund 12%

CREF Bond Fund 10%

Winton Global Alpha Fund 5%

Australian Dollar Cash 3%

Short Australian Dollar Futures 31% 

The index is effectively rebalanced monthly.

The 31% short Australian Dollar position is half the total position in hedge funds, private equity, real estate, and bonds. The indices or funds for each of these is in US Dollars. This hedge implies that half of the allocation to these assets is in Australian Dollar denominated funds and half in US Dollar denominated funds.

Our target allocation for investment is close to this. We split the Australian stock allocation into 7% large cap and 4% small cap. Real assets, credit, and futures categories are also broader than the specific funds listed here.

I won't bother deducting fees from the long stocks allocation as you could use ETFs with very low fees to track these indices. 

Here is a graph of the simulated performance of the benchmark since September 1996:

The benchmark has about matched the returns of the MSCI index and gold with a lot less volatility. My own performance was terrible up to 2012 and has tracked the benchmark pretty well since then (it's a log chart). Here is a comparison of the benchmark, myself, and the Vanguard 60/40 benchmark since the latter funds inception:

 

* A simpler approach is just to multiply the gross return by 0.8 and deduct 2%/12 each month. The result of this approach is highly correlated with the high water mark approach. The high water mark approach is more realistic though. Let's say you invested $1000 and gross performance was 100%. Your account now has $1800 and the manager has $200. Now the gross price falls by 10%. Both your share and the manager's share fall by 10%. It would be incorrect to say that your $1800 fell by only 8%.

Effects of Inflation Versus Growth on Stock Returns

 

From this video. Growth is relatively low currently. This explains why the Fed is cutting rates. The most bullish region for stocks is low inflation and moderate growth. Will the fund cut too much and reignite inflation more? Hard to be that bearish here.

November 2025 Report

In November, the Australian Dollar rose very slightly from USD 0.6542 to USD 0.6550 meaning that USD investment returns are slightly better than AUD investment returns. Stock markets were flat or fell with a lot of intramonth volatility (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 0.02%

S&P 500: 0.25%

HFRI Hedge Fund Index: 0.01% (forecast)

Australian Dollar Benchmarks

ASX 200: -2.51%

Target Portfolio: -0.34% (forecast - depends on HFRI result)

Australian 60/40 benchmark: -0.42%

We lost 1.93% in Australian Dollar terms or 1.88% in US Dollar terms. So the only benchmark we beat was the ASX 200. Our performance was hit by the crash in the price of 3i (see below). After underperforming last month, the SMSF returned 0.16% beating Unisuper (-1.06%) and PSS(AP) (-0.61%).

Here is a report on the performance of investments by asset class:

The asset class returns are in currency neutral terms as the rate of return on gross assets and do not include investment expenses such as margin interest, and so the total differs from the Australian Dollar returns on net assets mentioned above. Returns were very mixed. Gold had the largest gain, while rest of the world stocks had the lowest. Gold made the greatest positive contribution and private equity the most negative contribution.

Things that worked well this month:

• Two investments gained more than AUD 10k: Gold (AUD 38k), Berkshire Hathaway (11k).

What really didn't work:

• Four investments lost more than AUD 10k: 3i (-), bitcoin (-28k), Defi Technologies (-20k), and Dash/IPS (-17k). 3i crashed after saying sales growth recently was soft in Action's French market. A more than 25% fall in the share price seems to be an irrational response. The actual earnings report was great. I bought more, but as usual was too early. I got out of all crypto investments (see below). IPS didn't do as well as hoped and so the "earn out" component of the takeover was less than expected.

Here are the investment performance statistics for the last five years:

The top three lines give our performance in USD and AUD terms, while the last three lines give the same statistics for four benchmarks. The middle block gives our performance relative to the indices. 

Our alpha relative to the ASX200 is 2.9% with a beta of only 0.51. We have much lower volatility, resulting in a information ratio of 1.30 vs. 0.99. We capture much less of the downside moves than the upside moves in the market. We also have very good performance relative to the Vanguard 60/40 portfolio with similar volatility but 3.5% p.a. more return. We captured 104% of the upside of this portfolio but only 69% of the downside. But as we optimize for Australian Dollar performance, our USD statistics are much worse. We do beat the HFRI hedge fund index in terms of return, but at the expense of far higher volatility. Our USD volatility is at least less than that of the MSCI index, but our return is almost five percentage points lower!

We moved a bit away our target allocation due to investments and investment performance. Our actual allocation currently looks like this:

About 65% of our portfolio is in what are often considered to be alternative assets: real estate, art, hedge funds, private equity, gold, and futures. A lot of these are listed investments or investments with daily liquidity, so our portfolio is not as illiquid as you might think.

We receive employer superannuation contributions every two weeks. We make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. There is one remaining USD 10k contribution to make to the Unpopular Ventures Rolling Fund and there will be capital calls from Aura Venture Fund II and III. I am now receiving TTR (soon to be retirement) pension payments from both Unisuper and our SMSF and contributing more than the total of these back to my superannuation accounts for the remainder of this financial year. 

I was quite busy making the following additional moves this month:

• I bought 700 shares of 3i (III.L) after the price crashed. I still believe in the company.
• I sold our entire bitcoin position across three accounts. This was just over one bitcoin's worth.
• I also sold our ether position. 
• I sold our Defi Technologies (DEFT) position (15k shares).
• I bought 36k WAM Capital (WAM.AX) shares.
• I bought 5k Regal Partners (RPL.AX) shares.
• I sold 1k WCM Global Quality (WCMQ.AX) shares.
• I sold 500 Pershing Square Holdings (PSH.L) shares.
• I bought 30k Cadence Opportunities (CDO.AX) shares.
• I bought 1k Putnam BDC (PBDC) shares.
• I sold 750 PMGOLD.AX gold ETF shares.
• I made a non-concessional contribution of AUD 40k to Unisuper.
• I bought 2k Hearts and Minds (HM1.AX) shares. 

On the whole it is a shift from speculative investments to income investments, though the extra 3i shares are speculative. The last day of the month was my retirement date. This month's net worth (not including our house) together with the redundancy payment I should get this week constitutes our "retirement number". It should be approximately AUD 6.8 million. Using the 4% rule means we could spend AUD 272k per annum. Our spending is a lot below that. Total net worth at the end of November is at AUD 7.78 million.

Update to the Target Portfolio

Time to tweak the target portfolio we use for benchmarking and asset class allocation. I am lowering the allocation to futures from 7.5% to 5% and increasing the allocation to hedge funds from 15% to 17.5%. This better reflects current reality.

Private vs. Public School

Moominmama is a Chinese Mum who stereotypically thinks you should sacrifice anything for your children's education. Her friend from uni days also lives in our city and sends her children to the most expensive private school. So, we have been sending both children to a private school that is in walking distance of our home. I think that public schools are fine, at least where we live. Fees at the private school have increased by 8% in each of the last two years. Then a couple of weeks ago they announced 2026 fees. They are up for the school years relevant to us by almost 23%. The school is suggesting that fees will increase by 9-12% for 2027 and after that by smaller numbers, but it would likely be 7% per year I think. The school community is shocked and outraged by this. The school has taken some financial missteps, but we can't see how more than say 10% is justified. We have gotten a lot of education on school finances in the last fortnight, both on a huge parent WhatsApp group and from the school's own presentation in reaction to the outrage. On Monday there will be a live parent-organized town hall. 

So, I have modelled the effect of these on our finances and in theory we could cope with it, though by Little My's final year the school would be as expensive in real terms as some of the more expensive schools in Melbourne and Sydney now. Trinity Grammar at AUD 44k matches what this school would cost in his final year. Our school has 2,200 students. It grew so big by offering a private education at a reasonable price. Lots of parents are talking about leaving. If students numbers fell but costs remain high they could go into a death spiral, in my opinion, where they have to raise fees more and choke off more and more demand. 

So, we are starting to think about public schools seriously again. Moomintroll will be in Year 5 next year. High School starts in Year 7 here. We are locked into next year pretty much, and it doesn't make sense, I think, to move him to a public primary school for just one year. So, maybe he would move to our local public high school in Year 7.  That school has reasonable NAPLAN test scores. 47% of students are from the top socio-economic quartile compared to 80% at the current school. This will depend on what we think the future trajectory of school fees will be how are finances are holding up.*

In another negative shock, Moominmama's employer announced another restructuring. They will make 5% of research staff redundant and maybe a much higher share of her division. So far, she has managed to survive all the previous restructurings, but maybe her luck will finally run out. Again, we could handle this, but all of this is adding stress. 

* The public high school is a bit awkward to get to. You need to change buses in our local "town centre". I don't think Moominmama should have to drive him there and back every day. After the first year, I think it would be reasonable for him to cycle there and back if the weather is OK. It is actually only 2.5km away. There are bike paths, but also big highways to cross, though there are traffic lights on the crossings. But I did a thought experiment where he took Uber back and forth every day. That would cost about AUD 5k per year, which is a sixth maybe of the private school fees!