Thoughts on my investment Strategy

Thank you @Burgs . Yes i definitely feel better about the direction I am going in.
So the Magellan fund is one that I have been in since I started with equities 4 years ago, my initial advisor recommended it. And when I culled about 50% of the active funds its one that I was happy to keep. Management fee is 1.25% and no performance fee. This is the wholesale version. And so far it has performed strongly.
These are a few numbers I quickly pulled up from the BT Panorama platform about the fund.
6 month mgf 14.58 index 15.85. 1 year mgf 25.93 index 23.58. 3 year mgf 18.73 index 15.78. doesn’t mention if that’s after fees, but I would think it is as they normally quote after fees. I am happy with that result as I am still not comfortable going 100% index just yet.
Also most of the return is from growth. Under 2% has been from income.

 

That’s sounds a better deal than retail option as there’s usually a performance fee from memory.

Is it this one:

Fund Report - Morningstar.com.au

 

Fund Inception 14 Jan 2015

 

While there is always the whispers in the back of my mind about the desire to time the market in some manner or another I am now shutting that down quickly and saying to myself NO STICK TO THE PLAN.

Good point. I did not think of that. I do also hold another two actively managed Global funds. IFP Global Fund which I believe is more focused on Consumer staples and Walter Scott Global fund which I could not tell you what they focus on but can tell you they have performed well over the last 4 years I have held.

 

That's the one.

I think that's the wholesale version. The fund in general I believe was established in 2007.

 

@Big A, the post by @Isla_Nublar has I think made a very good point in regard to The Plan. The 95% aspect is one some should mull over. There is more to it than a superficial read may indicate.

 

I could not agree more. Like I said this past year I have learnt so much and all of it has been about the phycological and behavioural aspects of investing. I cant read charts or analysis any stocks and I really have no interest in doing that at this stage. My best bet is to keep it simple and stick to a plan that I am comfortable with and seems sensible to me. So every time I find myself trying to over analysis the plan or what the market is doing or going to do next, I will tell myself to stop it and just stick to the plan.

And I know it will happen. I will regularly get tempted to go off track and think but maybe if I just …
But the more I resist these thoughts and continue on as per the schedule then it will get easier and the temptation to tinker will fade.

 

Thank goodness for that or you would have likely done much worse.

 

Another thing that just came to mind regarding the Magellan fund. This time last year when the market wobbled and most funds performed poorly I recall the Magellan fund did not do to bad. It still finished the year well in the black. So that makes me a little more confident in there ability when the market does turn around.

 

The best year financial markets have ever had?

 

Happy New Year fellow PC members.

Thought I might continue documenting my journey into 2020 for those interested. I feel like this year might involve less posts and might be a little more boring. And that is probably exactly how it should be.

2019 was full of should I do this or that, buy now or wait, buy this or buy that. This year I am hoping more of just executing a simple plan of buying a fixed sum at the start of every month. Not holding large cash surplus while waiting to time the market and hopefully significantly increasing the equities portfolio by years end.

And so far of to a good start. Today I did the monthly buy in and also bit the bullet and did the next lump sum buy. I spent the day thinking maybe I should wait a few days and watch what the market does before I lump sum in today. But I slapped myself and said I shall not allow this year to start with any further procrastinating. I am a big believer of starting the year of on the right foot which will set the tone for the remainder of the year.

So hit buy I did and it felt good. No over thinking and second guessing. I am still putting some thought and tweaking what I buy. Such as I still feel with the US market having had such a strong run that going to hard into index VGS might not be ideal. So for international I am still tilting more into active for now. With the Aus equities side I am more comfortable with where the index is sitting, so I am sticking to the 50/50 split active passive with Aus allocation.

So I hit buy on
VAS & VGS for the passive side today. Again both in the wholesale versions
Hyperion Australian Growth for Aus Active.
Magellan Global & Walter Scott Global for International Active.

So I now still have a small portion of the original cash holding still dry. To be honest I am not sure why I am not just deploying it right now. Might give it another month and see if there is anything else I might deploy it into. I have a significant holding in contributory Mortgage funds with Australian unity and don't even mind increasing that if new funds open that I am comfortable with.
While this type of investment is a pure income play which I don't really need anymore of, I say there is no such thing as too much income flow. The more the merrier. Not the most tax efficient strategy. But with the use of a company for this investment it mitigates that to some degree. Then I can channel that income into monthly equity buys.

Here's hoping for continued simplicity and clarity in 2020.

Cheers

 

And a continued bull market would be nice too

 

Sure why not.

But honestly for me it makes no difference. If anything being that I want to accumulate heavily in the next 12 - 24 months and hopefully even much further than that, then the higher prices means higher buy in points.

If I had to guess what the market was going to do this next 12 months I would say not much. Mostly sideways I think. Again GUESS being the key word.

And if that is what happens then I would be happy. Buy heaps at the current market price and when it does eventually move higher I will look back and think I got a great deal at today’s price.

 

Have the taxi drivers been giving tips yet? (I dont use taxis)
My tipping was wrong. Got a date and a move right but it kept going up not continue down like I predicted. Ouch!
Good luck to anyone who is piling in right now. Hope it works well for you.
Im not game to right now with all the exuberance going on.

 

Honestly I could not tell you what the Taxi or Uber drivers are saying. Don't use either.

I would have to say there appears to be exuberance in the US market as it keeps moving higher. But the Australian market is not showing the same level of exuberance. Hence why I am more comfortable with Aus equities right now than US.

It took just over 10 years for the Aus index to get back to its high and since then its bounced around just below that high for the last 6 months or so. Yield is still in the 4s and only slightly below its long term average. Factoring in current interest rates I would say the Aus market is fairly valued.

 

Market Statistics

 

So yield is spot on Average and PE is slightly above average. Again I would say fair value based on the lower for longer rates outlook.

 

Hi @Big A another way to think of it is in terms of post inflation highs. Given we are now only seeing the highs of approx 12 yrs ago, there is a clear argument that we are no where near the 2007 highs, once u take into account inflation. The market would have to gain approx 15-20% to really be at a new high. Totally different picture when you look at the accumulation index....

 

Thanks @Isla_Nublar. So again that tells me the Aus market is actually undervalued at current prices not factoring in dividend yield.

Either way I am comfortable to keep buying more Aus equities at current prices. Yes there is a risk of a correction as there always is. But the correction shouldn’t be as a result of the market being over priced. I mean earnings could tank and dividends drop which could then mean today’s prices are high.

But I can only judge based on what’s in front of me today not what might or could happen tomorrow. Earnings could increase by years end and dividends also increase and all of a sudden valuations start to look cheap.

So anything is possible. Now US market looks a little frothy to me. But as I have committed to not trying to time and keep investing when possible I am still buying international. Only that I have kept the international buys more into active than passive, hoping that the active gives me some downside protection if the frothiness decides to de froth.

 

Interesting. here's my take.

Yields need to rise (SP values drop)
PE needs to drop (SP values drop)

Then all will be well......again.

Its over cooked, IMHO.