May 2024 Report

In May, the Australian Dollar rose from USD 0.6494 to USD 0.6650 so US Dollar returns are much stronger than Australian Dollar returns this month. Stock indices and other benchmarks performed as follows (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 4.12%

S&P 500: 4.96%

HFRI Hedge Fund Index: 1.87% (forecast)

Australian Dollar Indices

ASX 200: 0.75%

Target Portfolio: 0.56% (forecast)

Australian 60/40 benchmark: 0.36%. 

We gained 1.22% in Australian Dollar terms or 3.62% in US Dollar terms. So, we beat all the Australian Dollar benchmarks and the HFRI index but not the MSCI or S&P 500 indices.

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

The asset class returns are in currency neutral returns as the rate of return on gross assets and so are larger than the Australian Dollar returns on net assets mentioned above. Returns for most asset classes were positive. Futures had the highest rate of return and made the largest contribution to returns while gold had the lowest return and private equity detracted the most from returns.

Things that worked well this month:

• The top 3 investments this month were: Bitcoin (AUD 49k), Pershing Square Holdings (PSH.L, 13k), and Tribeca Global Resources (TGF.AX, 9k).
  

What really didn't work: 

• Nothing was particularly bad this month.
  

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 results for three indices. Compared to the ASX200 we have a lower average return but also lower volatility, resulting in a higher Sharpe ratio of 0.92 vs. 0.64. But as we optimize for Australian Dollar performance, our USD statistics are much worse and worse than either the MSCI world index or the HFRI hedge fund index. We do beat the HFRI in terms of return, but at the expense of much higher volatility. We have a positive alpha relative to the ASX200 of 3.61% with a beta of only 0.45.

We are fairly close to our target allocation. We are most underweight private equity and Australian large cap stocks and overweight real assets and hedge funds. Our actual allocation currently looks like this:

About 70% 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, monthly, or quarterly liquidity, so our portfolio is not as illiquid as you might think.

We receive employer contributions to superannuation every two weeks. We are now contributing USD 10k each quarter to Unpopular Ventures Rolling Fund and less frequently there will be capital calls from Aura Venture Fund II. This was a bit quieter month than April. We made the following additional moves this month:

• I sold all 1,000 shares of PBDC and all 350 shares of the Bendigo Bank hybrid security. I expected to keep these longer, but new opportunities came up. Made AUD 356 on the Bendigo trade or about 1% in a month and USD 725 or about 2% on PBDC so it was better than holding cash.
  
• I bought 65k shares of Defi Technologies (DEFI.CA). I ended up buying 35k on the Canadian CBOE exchange and 30k on the US OTC market, as there was a public holiday in Canada. Brokerage is lower for buying in Canada.
  
• I bought another 5k shares of Platinum Capital (PMC.AX).
• I bought 3k shares of Regal Partners (RPL.AX).
  
• I bought another 100 shares of FBTC and six bitcoin futures trades, all of which made money (total of USD 1,645).
  
• I invested USD 7.5k in three new investments syndicated by Unpopular Ventures. This may seem like very small investments but I have now invested USD 32.5k in their syndicated investments. I am treating this like gradually buying into a fund that holds these different investments. These are in addition to our rolling fund investments. It's just random chance that three investments that met my criteria were offered in a single month. My last syndicated investment was in September 2023.