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

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%.

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

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%:

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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