In June, the Australian Dollar fell from USD 0.6559 to USD 0.6433 meaning that USD investment returns are worse than AUD investment returns. Stock markets rose (total returns including dividends):
US Dollar Indices
MSCI World Index (gross): 1.38%
S&P 500: 2.24%
HFRI Hedge Fund Index: 0.27% (forecast)
Australian Dollar Benchmarks
ASX 200: 2.36%
Target Portfolio: 1.82% (forecast - depends on HFRI result)
Australian 60/40 benchmark: 1.90%
We gained 3.38% in Australian Dollar terms or 1.38% in US Dollar terms. So the only benchmark we didn't beat was the S&P 500. It seemed that some stocks that were beaten down at the end of the last Australian financial year rebounded strongly. A good example is Regal Partners (RPL.AX), which gained 35%. Maybe a classic case of selling for tax losses. In absolute Australian Dollar terms it was our fourth best month ever gaining AUD 203k. November 2024 was the best ever month with a gain of AUD 335k followed by January 2025 (280k) and March 2024 (229k).
Our SMSF returned 4.59% beating Unisuper (1.67%) and PSS(AP) (2.08%). This was a welcome change after five months of under-performance.
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. All asset classes had positive returns. Australian small cap had the greatest return and hedge funds made the largest contribution to total return.
Things that worked well this month:
- Ten investments gained more than AUD 10k: Pershing Square Holdings (PSH.L 40k), Regal Partners Fund (RPL.AX, 22k), Regal Investment Fund (RF1.AX, 22k), Pengana Private Equity (PE1.AX, 15k), Bitcoin (15k), Unisuper (12k), Gold (12k), WAM Capital (WAM.AX, 12k), PSS(AP) (11k), and WAM Alternatives (11k).
What really didn't work:
- Australian Dollar Futures lost AUD 12k. (-14k).
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. This month, we have added the Vanguard 60/40 ETF portfolio to the set of benchmarks. The middle block gives our performance relative to the indices.
Our alpha relative to the ASX200 is 3.2% with a beta of only 0.49. We still have much lower volatility, resulting in a information ratio of 1.46 vs. 1.12. 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 the same volatility but 4% p.a. more return. We captured 100% of the upside of this portfolio but only 60% 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 more than four percentage points lower.
We moved a little bit away 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.
We receive employer superannuation contributions every two weeks. We make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. 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 back to my superannuation accounts. I made the following additional moves this month:
- Made a USD 7,500 investment in African start-up Yassir. In my reporting, all these small investments are reported together with the UV Rolling Fund. Similarly, individual paintings I invested in at Masterworks are all reported together and different property investments at Assetora (formerly Domacom) are wrapped together.
- Bought 400 more shares of the Monochrome bitcoin ETF (IBTC.AX).
- Bought 2,000 more shares of WCM Global Quality (WCMQ.AX).
