December 2024 Report

The numbers in this report may change a little once all data on private investments becomes available. I will write an annual report after all the data are in. In December, the Australian Dollar fell from USD 0.6515 to USD 0.6196. Stock indices and other benchmarks performed as follows (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): -2.33%

S&P 500: -2.38%

HFRI Hedge Fund Index: -0.20% (forecast)

Australian Dollar Indices

ASX 200: -3.10%

Target Portfolio: 0.57% (forecast)

Australian 60/40 benchmark: -0.34%

We gained 1.41% in Australian Dollar terms or -3.56% in US Dollar terms. So we underperformed the USD benchmarks and outperformed the AUD benchmarks.

The SMSF returned 3.58%, compared to Unisuper at 0.43% and PSS(AP) at 0.05%.

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 so the total differs from the Australian Dollar returns on net assets mentioned above. RoW stocks (mostly Defi Technologies) gained 8.4% and made the largest contribution to returns followed by gold. Several asset classes lost money, futures including bitcoin lost the most and made the most negative contribution to returns.

Things that worked well this month:

• Defi Technologies (DEFI.NE) gained AUD 37k, followed by gold at 17k, Pershing Square Holdings (PSH.L) at 15k, and Pengana Private Equity (PE1.AX) at 13k.
  

What really didn't work:

• Bitcoin lost AUD 30k, followed by Australian Dollar Futures at 22k, and 3i (III.L) at 10k.
  

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 three indices. The middle block gives our performance relative to the indices. Our rate of return is now higher than the ASX200 and we have much lower volatility, resulting in a Sharpe ratio of 1.00 vs. 0.54. Our alpha relative to the ASX200 increased to 4.71% with a beta of only 0.46. We capture much less of the downside moves than the upside moves in the market. 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 much higher volatility. Our volatility in USD terms is now a little lower than the MSCI World Index, but our rate of return is much lower.

We maintained our distance from the target allocation this month. We are now most overweight rest of the world stocks. 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 superannuation contributions every two weeks. We contribute USD 10k each quarter to the Unpopular Ventures Rolling Fund and less frequently there will be capital calls from Aura Venture Fund II. I am now receiving TTR pension payments from both Unisuper and our SMSF and contributing more than the total of these to the SMSF (around AUD 4k net contribution per month). I made the following additional moves this month:

• I bought AUD 30k worth of shares in Regal Investment Fund's (RF1.AX) capital raising.
  
• I bought 100 shares of FBTC, Fidelity's bitcoin ETF. We now have a total position of around 5 bitcoins.