February 2021 Report

The month ended quite turbulently, but stock markets were still up for the month. The Australian Dollar rose from USD 0.7663 to USD 0.7737. The MSCI World Index rose 2.35%, the S&P 500 by 2.76%, and the ASX 200 rose 1.65%. All these are total returns including dividends. We gained 1.65% in Australian Dollar terms or 2.68% in US Dollar terms. The target portfolio is expected to have gained only 0.23% in Australian Dollar terms and the HFRI hedge fund index is expected to gain 1.05% in US Dollar terms. So, we outperformed or matched all our benchmarks. The S&P 500 isn't a benchmark.

Here is a report on the performance of investments by asset class (currency neutral terms): 

 

Hedge funds added the most to performance and gold detracted the most. Things that worked well this month:

• Tribeca Global Resources (TGF.AX), Regal Funds (RF1.AX), and Hearts and Minds (HM1.AX) were the top three performers gaining AUD 20k, 18k, and 11k, respectively. In other notable gains, we gained AUD 5k in Treasury Wine (now a 2% of net worth position) and Winton Global Alpha gained for a change, up AUD 3k.
  

What really didn't work:

• Gold was the worst performer, giving back AUD 30k of gains.
  

The investment performance statistics for the last five years are:

The first two rows are our unadjusted performance numbers in US and Australian Dollar terms. The following four lines compare performance against each of the three indices. We have the desired asymmetric capture for all three indices now and positive alpha compared to all of them.

We moved further towards our long-run asset allocation. Real assets (real estate and art) are the asset class that is furthest from their target allocation (7.2% of total assets too little) followed by bonds (2.9% too much):

 

On a regular basis, we invest AUD 2k monthly in a set of managed funds, and there are also retirement contributions. Other moves this month:

• I sold my USD 25k of Virgin Australia bonds for 8.125 cents on the dollar. With Australian borders closed longer than we would have expected at the beginning of the year, I guess the company's financial situation will be worse than they expected when they told us we would likely get 9 cents.
• Prospect Capital called its baby bonds (PBB) early, resulting in another USD 25k reduction in our bond exposure.
  
• I started systematically daytrading ASX200 CFDs and futures....  I made a little money, just under AUD 600. I also started trading soybean futures using my version of the turtle model. This system doesn't trade that often. It made one trade which was stopped out for a loss.
  
• Two days before the earnings release, I sold 2000 of our Treasury Wine shares (TWE.AX) as I was anticipating some turbulence. The next day the price fell sharply and I bought them back almost a dollar lower. By the end of the day the price recovered. On the earnings day not much happened. Then the day after earnings the stock price rose 17% on a broker upgrade and a positive article in the Fin Review. After that there was more turbulence and I adjusted the positions a little
  
• I invested USD 10k in another painting at Masterworks. I now have USD 60k invested in 6 paintings.