Gold just overtook Unisuper to become our most profitable (in absolute dollar terms) investment ever.
Chart shows price of gold in Australian Dollars for roughly 1/100 of a ounce. I say roughly, because actually this is the PMGOLD ETF that now has some small management fee. In earlier years they withdrew units from each holder to pay the management fee so it exactly tracked the gold price.
Also sold out of The China Fund (CHN) at a huge loss for this account (SMSF) though we only lost a little (USD -1.7k) in the long-term as we previously had positions in other accounts that did well. Should have gotten out a long time ago, of course. Internal rate of return to date was -0.75%.
I sold my 100 shares of BRK/B. The last earnings report raised questions about the performance of several major Berkshire businesses. My target asset allocation said I could reduce my exposure to US shares and I wanted to do something else with the money. Yeah, I bought more bitcoin. Munger would have been horrified.
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Total profit on Berkshire to date was USD 18k and the internal rate of return was 11.09%.
This was a very good month investment-wise. Not all numbers are in, we still might get updates from more illiquid investments. But based on what we have, we had our best investment result ever in terms of absolute Australian Dollars (rather than percentage return) at AUD 228k. It's beginning to feel like 2021 again:
In March, the Australian Dollar rose slightly from USD 0.6504 to USD 0.6514. Stock indices and other benchmarks performed as follows (total returns including dividends):
US Dollar Indices
MSCI World Index (gross): 3.20%
S&P 500: 3.22%
HFRI Hedge Fund Index: 1.53% (forecast)
Australian Dollar Indices
ASX 200: 3.57%
Target Portfolio: 2.76% (forecast)
Australian 60/40 benchmark: 2.41%.
We gained 4.44% in Australian Dollar terms or 4.60% in US Dollar terms. So, we beat all benchmarks. Shocking 😀.
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 lower than the Australian Dollar returns on net assets mentioned above. Returns were positive for all asset classes. Gold had the highest rate of return and made the largest contribution to returns followed by futures in terms of contribution and Australian small caps in terms of rate of return.
Things that worked well this month:
What really didn't work:
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 0.97 vs. 0.72. But as we optimise for Australian Dollar performance, our USD statistics are much worse and worse than either the MSCI world index or the HFRI hedge fund index. Well, 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 3.3% with a beta of only 0.45.
The SMSF continued to outperform both its benchmark funds after under-performing for a few months:
We are fairly close to our target allocation. We are underweight private equity and hedge funds and overweight real assets and futures. Our actual allocation currently looks like this:
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. It was quite a busy month:
As Ramit's Conscious Spending Plan says that we aren't doing enough "guilt-free spending", I booked a trip to Queensland for when the weather will be colder here 😀. Took under 2 hours to decide on location, book an apartment, book flights, and book a car. Pretty efficient I think. Total bill for a family of four: AUD 5,350. I think those are all the additional costs compared to doing similar activities based at home on a staycation. Not sure I am "guilt-free", though! Now we could have picked cheaper options throughout. But we got an apartment on the beachfront with a sea view and a swimming pool, a car that will definitely fit our luggage and extra legroom on the flight (front row) at convenient times. We got the cheapest available price on Jetstar on the way back.
One interesting thing is that I thought about using my Qantas Frequent Flyer points, but my 160k points were only worth about AUD 1,000. Apparently, they are worth more for international flights, so I kept them for now. Will probably find I'm not allowed to use them when I next try to book an international flight.
Today I received three cheques in the mail from the Reserve Bank. Here is one:
They are my payout from the collapse of HIH back in 2001. It's about a third of the value of the shares I had bought. I computed the internal rate of return on this investment: -9.44%.
After a couple of failed attempts at merging the Diversified Property Fund with other funds, Australian Unity has decided to rid itself of managing the fund by selling the management rights to ASA Real Estate Partners. I don't have any objections to this. The previous mergers would have reduced the diversification of the fund and also financially disadvantageous to existing unit holders. This sounds like an experienced team.
