2017 Investment Performance Review

In my last post I spoke about re-focusing on blog updates, and that includes periodic reviews of portfolio performance. Because I’ve been behind in blog updates in general, it took me a while to key in the last four months of returns to see where we sat at year-end. But, the numbers are in!

Highlights:

  • Total returns for the year 10.98% vs. benchmark of 10.70%
  • Passive income for the year in excess of $7,700, beating last years total by 11.51%
  • Assets under management growth of 26%

Monthly and Annual Performance

Monthly Performance as of December 31, 2017

The biggest drag on monthly performance for the past quarter was the purchase of some GE options following GE’s announcement to re-org.  From a long-term perspective I believe GE will pull through and ultimately increase share price.  Based on that, I’ve purchased some call options which expire in January 2020.  However, since that purchase GE has plunged even deeper: when I purchased the call options the market price was ~U$20, and it is now hovering at the U$15 mark, a 25% drop.  The options have dropped in a similar fashion.  However, I am not overly concerned.  That particular position accounts for only 0.14% of the overall portfolio, so even a material loss of 25% amounts to an insignificant drop in the overall scheme of things.

My employer has also been doing relatively well lately, so my EPSP and DC pension plan with the company have been performing well.  My DC is actually a model of the couch potato portfolio–similar to the LIRA–so for the most part it moves in lockstep with the benchmark.

Trailing Twelve Month Performance as of December 31, 2017

Trailing Twelve Month Performance as of December 31, 2017

On a year over year basis, we came in at 10.98% for the year vs. the benchmark return of 10.69%, so we just barely beat the benchmark.  At the end of 2016 we had come in at 10.63% vs. a benchmark return of 7.27%.  So we did not beat the benchmark as much as we did last year, but we still beat it.  To me, that is a win.

Passive Income

Passive income for the year came in at $7,700, which beat my goal of increasing by 5%.

2014 $4,400 n/a
2015 $7,000 58.7%
2016 $6,900 (2.3%)
2017 $7,700 11.5%

Reviewing the historical data, things are shaping up like I thought they would.  The large drop in 2016 was mainly due to liquidating a large chunk of the portfolio to purchase a house.  Since then, I have been aggressively working to increase overall income.  To date, the work seems to be paying off (no pun intended).

Asset Allocation

My asset allocation did not improve much year over year.  In fact, it got worse.

Asset Allocation as of December 2017

Asset Allocation as of December 2017

Total allocation to equity went form 73.15% in 2016 to 76.37% in 2017.  I’ve invested the majority of new capital into REIT ETFs, primarily Vanguard’s VRE, to increase my real estate exposure.  However, even with that, my real estate  exposure decreased from 11.35% to 10.94% year over year.  The primary driver for this was the overall increase in the value of my holdings: put simply, my stocks appreciated more than my real estate holdings.  Taking the long view this is not a bad thing, however I still have some work cut out for me to rebalance this year.

Total Returns Since Inception

All in all, the total fund came in at 10.98% for 2017, which has pulled the nine-year compounded return down from 12.35% in 2016 to 12.20%:

Year Return Since Inceptoin
2009 23.59% 23.59%
2010 14.69% 19.06%
2011 (1.60%) 11.73%
2012 13.51% 12.17%
2013 21.59% 14.00%
2014 15.41% 14.23%
2015 3.27% 12.60%
2016 10.63% 12.35%
2017 10.98% 12.20%

A 12.20% per year return is nothing to scoff at, so I am generally happy with the way that things have been going.

In terms of pure assets under management, total assets under management have gone up by 26% year over year.  Of the growth, 37% was organic (i.e. growth in holdings, dividends, favourable exchange rates), and the remaining 63% was accretive (i.e. new invested capital).  I’m happy to say that I have finally broken the quarter-million mark in AUM, since the portfolio now holds north of $310M.

Closing Remarks

My plan this year, other than the goals mentioned in my last post, is to stay the course.  Except for the gamble on GE I took, as a whole the portfolio has grown considerably.  Here’s hoping for another good year.

Onwards and upwards!

 

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Portfolio Update December 2016 – $620 realized returns

My discount brokerage, BMO InvestorLine, only released statements to its clients on January 23; so the update for December 2016 has been incredibly delayed. But was the delay worth it? Given the data we have at hand, I would say yes! Key highlights:

  • Passive income of $620, 350% over our benchmark
  • Total passive income for 2016 of $6,627, 29% over our benchmark
  • Total fund returns for December 2016 of 2.7% vs. benchmark of 1.2%
  • Total fund returns for 2016 of 11.0% vs the benchmark 7.8%

Some stellar numbers! Let’s see how this looks on the graphs.

Monthly Returns ending 2016-12

First up, you’ll notice that there is a new portfolio added, that of EPSP. I recently became a full-time employee of a major FI again, mainly to maintain stability of income, and now have access to their Stock Ownership program. This gives me a great way to receive commission free trades on a regular basis, directly debited from my pay, which results in regular, periodic investments into my tax deferred account. The EPSP portfolio is also responsible for the huge retroactive spike in November 2016. Overall, 4 out of 6 of my portfolios beat the benchmark, with only my LIRA and EPSP lagging behind. Overall however, the entire portfolio for December brought in a 2.7% return, whereas the benchmark returned only 1.2%: I effectively doubled the benchmark, and then some.

Monthly Returns TTM Returns ending 2016-12

On a trailing twelve month perspective (i.e. all of 2016), I am generally happy with the results. Because I am heavily weighted in Canadian stocks, I did not experience as much of an updraft as some US investors since Trump won the election in November 2016, but overall my portfolio has been on a positive uptrend all year, ending the year at +11.0%, whereas the benchmark is only up 7.8% for the year; my portfolio beat the benchmark by over 40% in 2016. One point of pride: each and every one of my portfolios beat my benchmark; since each portfolio has a slightly different mandate, this is a great feat, which I hope to continue in 2017.

Of course, I am a dividend investor, so passive income is one of my key measures of success. What follows are the passive income returns for December 2016, as well as for the year.

Passive Income ending 2016-12

Passive Income TTM ending 2016-12

These graphs look different from previous ones, but I believe they provide a simpler comparison of actual vs. benchmark income. For December we brought in over $600 in income, vs. the benchmark of $138. For all of 2016, we brought in $6,267, whereas the benchmark only brought in $4,859; a whopping 29.0% increase for the year.

That said, I expect to see a huge spike in January 2017 in the benchmark, mainly due to timing. You’ll notice that December had a very low benchmark income number, and generally speaking, March, June, September, and December, should be roughly equal in benchmark passive income. Because my benchmark is composed of ETFs, those ETFs did not pay anything in December 2016, and instead paid many of their distributions in January 2017 — so any missed income from December should catch up to us in 2017. A similar event happened in October 2016, where the benchmark returned zero passive income, but there was much higher passive income in November, when compared to July and August.

With the year at an end, I have also been able to calculate my forward income. In 2017, based on current holdings and current rates, I expect to generate $6,800 in dividend income, roughly 8.50% higher than all of 2016. As I mentioned in my investment goals post, I wish to increase my total income by 5.00%, which means I have to generate another $340 in passive income to make that goal. I feel this should be a realistic goal given the current environment, assuming I do not have to liquidate any holdings in the near term.

So there you have it: F2016 in a nutshell!

Onwards and upwards!