Midway along the journey of our life
I woke to find myself in a dark wood,
for I had wandered off from the straight path.Dante, The Divine Comedy: Inferno, Canto I
This is my forty-fifth portfolio update. I complete this update monthly to check my progress against my goal.
Portfolio goal
My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).
This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent.
Portfolio summary
| Vanguard Lifestrategy High Growth Fund | $733 769 |
| Vanguard Lifestrategy Growth Fund | $41 794 |
| Vanguard Lifestrategy Balanced Fund | $78 533 |
| Vanguard Diversified Bonds Fund | $110 771 |
| Vanguard Australian Shares ETF (VAS) | $216 758 |
| Vanguard International Shares ETF (VGS) | $64 542 |
| Betashares Australia 200 ETF (A200) | $237 138 |
| Telstra shares (TLS) | $1 540 |
| Insurance Australia Group shares (IAG) | $6 043 |
| NIB Holdings shares (NHF) | $5 532 |
| Gold ETF (GOLD.ASX) | $121 976 |
| Secured physical gold | $19 535 |
| Ratesetter (P2P lending) | $8 998 |
| Bitcoin | $177 310 |
| Raiz app (Aggressive portfolio) | $17 421 |
| Spaceship Voyager app (Index portfolio) | $2 759 |
| BrickX (P2P rental real estate) | $4 477 |
| Total portfolio value | $1 848 896 (+$48 777 or 2.7%) |
Asset allocation
| Australian shares | 41.5% |
| Global shares | 22.6% |
| Emerging market shares | 2.2% |
| International small companies | 2.8% |
| Total international shares | 27.6% |
| Total shares | 69.2% (5.8% under) |
| Total property securities | 0.2% (0.2% over) |
| Australian bonds | 4.4% |
| International bonds | 8.9% |
| Total bonds | 13.3% (1.7% under) |
| Gold | 7.7% |
| Bitcoin | 9.6% |
| Gold and alternatives | 17.2% (7.2% over) |
Presented visually, below is a high-level view of the current asset allocation of the portfolio.
Comments
The portfolio has increased in value for the fifth consecutive month, and is starting to approach the monthly value last reached in January.
The portfolio has grown over $48 000, or 2.7 per cent this month, reflecting the strong market recovery since late March
The growth in the portfolio was broadly-based across global and Australian equities, with an increase of around 3.8 per cent. Following strong previous rises, gold holdings decreased by around 2.2 per cent, while Bitcoin continued to increase in value (by 2.5 per cent).
Combined, the value of gold and Bitcoin holdings remain at a new peak, while total equity holdings are still below their late January peak to the tune of around $50 000. The fixed income holdings of the portfolio continue to fall below the target allocation.
The expanding value of gold and Bitcoin holdings since January last year have actually had the practical effect of driving new investments into equities, since effectively for each dollar of appreciation, for example, my target allocation to equities rises by seven dollars.
New investments this month have been in the Vanguard international shares exchange-traded fund (VGS) and the Australian shares equivalent (VAS). These have been directed to bring my actual asset allocation more closely in line with the target split between Australian and global shares set out in the portfolio plan.
As the exchange traded funds such as VGS, VAS and Betashares A200 now make up nearly 30 per cent of the overall portfolio, the quarterly payments they provide have increased in magnitude and importance. Early in the journey, third quarter distributions were essentially immaterial events.
Using the same ‘median per unit’ forecast approach as recently used for half yearly forecasts would suggest a third quarter payout due at the end of September of around $6000. Due to significant announced dividend reductions across this year I am, however, currently assuming this is likely to be significantly lower, and perhaps in the vicinity of $4000 or less. Continue reading “Monthly Portfolio Update – August 2020”