Save 4% on Transferring Money to Australia

My brother is planning sending me my share of the proceeds of selling my mother's apartment. If we sent the money in Falafeland currency to our account at Commonwealth Bank in Australia we would lose around 5% of the value relative to the exchange rate on the forex market (representative rate). The spread between their buying and selling rates is around 10%. This is just crazy. I can think of another word that starts with "cr". I checked the rates of other Australian banks. HSBC and Macquarie are better, but not that much better.

My brother got a quote from his bank in Falafeland to convert the money to Australian Dollars and then send to Australia. The cost is about 1% relative to the representative rate. Online, I found that TorFX is recommended for such transfers. I now have a quote from them which is about 1.2%. So, we will go with the Falafeland National Bank.

You can get much, much better rates by trading in the forex market yourself using a broker like Interactive Brokers. But I can only hold currency in AUD, USD, GBP, and EUR at IB. So, I can't make a conversion from Falafeland money to AUD.

Doing More Trading Research

Seems like April is the time for me to think about trading. I developed a very simple mechanistic trend-following model for trading Bitcoin futures. I have placed orders in the market but they haven't triggered yet. Initially, I tried to be too clever, but quickly decided that just using mechanical rules will work better...

Now I am returning to thinking about more sophisticated models as well. Here are the results from a very simple mean reversion model – it goes short when stocks are strong and vice versa, with daily trades on the NASDAQ index:

This assumes perfect trades with no fees. It worked great until the end of 2008. Then it did nothing for three years and then started working again. But in the last five years it again went nowhere. Strangely, it looks a lot like the returns from trend-following over this period. Still, from 2005 to the present it returned 19% per year. I might be wrong, but I'm thinking that this is a benchmark for more sophisticated forecasts. If we can predict that we should trend follow rather than mean revert for a few of the worst days here, returns would improve a lot. But it has to be a very simple method that won't result in overfitting.

On the other hand, the NASDAQ 100 index itself returned 14.18% and go long with a stop if the market falls 1% or more intraday returned 19.85% a year.

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.