Thursday, July 02, 2009

June 2009 Monthly Report

The following is based on the available data as a couple of funds as usual won't report till near the end of the month and as 30th June was the end of the financial year here in Australia we're waiting for the final reports from Australian mutual funds which should improve a bit the data reported here due to the distribution of tax credits - even though there were big capital losses this financial year most large companies continued to pay dividends with the attached "franking credits" for Australian profits or "foreign tax credits" from non-Australian firms. As usual everything is in US Dollars unless otherwise stated.

The MSCI World Index lost 0.52% in USD terms and the SPX gained just 0.20%. The Australian Dollar appreciated at a slowing rate against the USD from 79.91 US cents to 80.54 US cents. So foreign exchange rate changes did not have a big impact on this month's results. At one point during the GFC the Aussie fell to 60 US cents. That was probably undervalued and today's exchange rate is likely a little overvalued. We gained 3.67% in USD terms (2.85% in AUD terms and 3.07% in currency neutral terms).

Performance was strongest in Australian stocks both small cap (ror = 6.09%) and large cap (3.86%). Commodities (estimate = -3.7%) and real estate (-3.27%) probably performed worst - I only have very partial data on hedge funds at this point. Alpha measured against the USD MSCI was 3.6% with a beta of 1.14 currently. Though performance for the month was above the risk-adjusted expectation.

We spent $5,843 ($A7,255). Major expenditures were new couches ($A3,054) and a suit ($A683). The couches arrived today and they are very nice. So apart from that we only spent $A3,500 which is good (as our rent is $A1,955):

After a month where Snork Maiden's employer managed to stuff five contributions into her retirement account this month they only managed one. They are very erratic.

Net worth reached $270k ($A336k). Asset allocation moved away from our target but there were no dramatic changes this month:

Hedge fund allocation increased due to buying AOD and private equity allocation fell due to the AEP capital return.

Sorry that there are again no pretty charts in this month's report. I don't fell like posting them until we have a substantial rebound in net worth to report or something dramatic happens. At this point we're making a nice but moderate rebound from the worst of the GFC inflicted damage. In AUD terms net worth is currently 36% below its all time high in August 2007. That turns out to be exactly the average financial loss suffered by Australians from the GFC.


Anonymous said...

David- what are your thoughts on Harry Browne's permanent portfolio? In case you are not familiar it invests in 4 equal weighted asset classes of 25% gold, 25% equities, 25% short term treasuries and 25% long term treasuries and is designed to perform during times of inflation, deflation, recessions and prosperity. Since 1972 it has generated a 10.0% annual return with only 2 losing years. There is an excellent blog dedicated to this strategy at

Also, one investment advisor that I am also considering is Sitka Pacific (Shedlock). Any input on these two is appreciated.

mOOm said...

I have written about the permanent portfolio strategy before. I haven't followed up on how it has performed through the GFC. I receive the monthly Sitka Capital newsletter and they seem pretty solid. Unfortunately for regulatory reasons they've stopped publishing the performance in the newsletter (these US laws are idiotic). I'd certainly consider them as a candidate if I was looking to invest $US100k plus in the US (I assume that that's their minimum).

Interesting that you think my name is David but you're anonymous...

Anonymous said...

FYI- we traded investment ideas via email awhile back however I lost your email address and recently received a linkedin request by you.... Anyway, I appreciate the kind reply.

In case you are interested there is an excellent blog dedicated to Harry Browne's permanent portfolio @ It has averaged 10.0% annual returns since 1972 with only 2 losing years! HB's original concept is not being implemented by the Perm Portfolio mutual fund so please check out the site if interested.

Also, thanks for the comments on Sitka as I have been searching for an absolute return manager for some time. If you can disclose it please advise what absolute managers that you decided on for your mother as well as perhaps recommending any others?
Thxs again!

mOOm said...

OK Heather - with my Mom's portfolio we either have to buy into a fund through UBS or we can choose from a limited number of separate account managers offered by a local broker where she lives (we could also buy shares,bonds etc. through that broker but don't). The latter don't include absolute return. They are US and international equity managers. So the absolute return is through UBS and consists of: