March 2019 Report

In March the Australian Dollar fell from USD 0.7106 to USD 0.7096. The MSCI World Index rose 1.32% and the S&P 500 1.94%. The ASX 200 rose 0.97%. All these are total returns including dividends. We gained 0.53% in Australian Dollar terms and 0.40% in US Dollar terms. Our currency neutral rate of return was 0.39%. The target portfolio gained 1.10% in Australian Dollar terms and the HFRI hedge fund index 0.97% in US Dollar terms. So, we underperformed our benchmarks.


Here again is a detailed report on the performance of all investments:

The table also shows the shares of these investments in net worth. At the bottom of the table I also included the Australian Dollars return from foreign currency movements and other net investment gains and losses - net interest and fees. This time I also combined all individual corporate bonds into a single investment. Their individual returns are not very informative. At the asset class level only Australian small cap stocks and hedge funds lost money this month. U.S. stocks were the best performing asset classs.

Things that worked very well this month:

• Pendal Property Investments an Australian fund of REITs did surprisingly well. Pershing Square Holdings continued to gain as Bill Ackman turned round his recent poor performance.

What really didn't work:

• The Tribeca Global Natural Resources listed hedge fund performed very badly this month.

We treaded water relative to our new long-run asset allocation:*

The main driver is continued movement of cash from my US bank account to Interactive Brokers where I am buying bonds before eventually transferring some of the money to our Australian bank accounts when the broker allows..... We are now quite underweight in Australian shares.

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

• USD 135k of corporate bonds matured (Santander UK and Welltower) and I bought USD 284k of bonds (HCA, Virgin Australia, Viacom, WGL, Goldman Sachs, and Kinder Morgan). 
• I bought 755 Commonwealth Bank hybrid securities (preferred stock).
• I sold 10,000 shares of PIXX.AX and bought 30,000 shares of PMC.AX after the premium to NAV of the latter fell substantially.
• I bought another 1089 OCP.AX shares.
• We completed the deleveraging this month, just in time for the US yield curve to invert out to the 10 year maturity. I sold all of Moominmama's units in the CFS Geared Share Fund and bought units in the Imputation Fund instead. I also sold all her units in the CFS Geared Global Share Fund and bought units in the Generation Global and Platinum International Fund (same as PIXX.AX) instead. Yes, we still have a margin loan, but we have the cash to pay it off, just not yet in the right country...
• I applied for the Pengana Private Equity IPO.
  

* Total leverage includes borrowing inside leveraged (geared) mutual (managed) funds. The allocation is according to total assets including the true exposure in leveraged funds. From this month though we no longer have any leveraged funds.

CommBank App Not Working

More financial frustrations today... Recently I set my phone up to pay cardlessly using the CommBank App. But today, I went to buy lunch and it wouldn't work. This was the first day I didn't bring a credit card so I have less stuff to carry around. I couldn't log into the app either. I got a message that I didn't have an internet connection, despite everything else on my phone working fine. I phoned Commonwealth Bank and their solution: Delete the app and reinstall it. Apparently the cardless world hasn't arrived quite yet.

One thing positive I can say about CBA is that their phone service is excellent. Wait times are always very low and the representatives have the solutions to the problems immediately. I can't say that about some other Australia companies. Telstra for example.

Restrictions on Withdrawing Cash at Interactive Brokers

If you move money to Interactive Brokers through the American banking system, they put a hold on your money so that you can't withdraw it to another bank for 44 days. This works in a very strange way. If you have more than the amount on hold in US dollars you can obviously withdraw that excess money in US Dollars. But if you want to withdraw money in Australian Dollars you also have to have more than that amount in Australian Dollar cash! Well, this is what an IB representative just told me to explain why I can't withdraw any money in Australian Dollars despite having cash in that account, including cash I received from dividends that absolutely wasn't transferred from a US bank.

This will slow down my financial restructuring plan. I don't want to buy that many Australian Dollars all at once, though I could use futures contracts to retain exposure to the US dollar... but for psychological reasons I find that harder to do. And I would have to sell the US corporate bonds I bought to do it. The only thing that I really want to do that is time bound is to make a non-concessional contribution to superannuation before the end of the financial year. I guess I will sell some Australian managed funds to come up with the money.