Consider the subtleness of the sea; how its most dreaded creatures glide under water, unapparent for the most part, and treacherously hidden beneath the loveliest tints of azure.
Herman Melville, Moby Dick
This is my eighty-ninth monthly portfolio update. I complete this regular update to check progress against my goal.
Portfolio goal
My objective is to maintain a portfolio of at least $2,870,000. This should be capable of producing an annual income from total portfolio returns of about $99,000 (in 2024 dollars).
This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.
A secondary focus will be achieving the minimum equity target of $2,300,000.
Portfolio summary
| Vanguard Lifestrategy High Growth Fund | $829,474 |
| Vanguard Lifestrategy Growth Fund | $42,725 |
| Vanguard Lifestrategy Balanced Fund | $75,673 |
| Vanguard Diversified Bonds Fund | $88,028 |
| Vanguard Australian Shares ETF (VAS) | $505,498 |
| Vanguard International Shares ETF (VGS) | $701,541 |
| Betashares Australia 200 ETF (A200) | $297,692 |
| Telstra shares (TLS) | $1,956 |
| Insurance Australia Group shares (IAG) | $8,159 |
| NIB Holdings shares (NHF) | $8,940 |
| Gold ETF (GOLD.ASX) | $159,700 |
| Secured physical gold | $25,127 |
| Bitcoin | $1,079,961 |
| Raiz app (Aggressive portfolio) | $22,918 |
| Spaceship Voyager app (Index portfolio) | $3,920 |
| BrickX (P2P rental real estate) | $4,547 |
| Plenti Capital Notes Market Loan | $17,000 |
| Total portfolio value | $3,872,859 (-$176,669) |
Asset allocation
| Australian shares | 30.2% |
| Global shares | 28.2% |
| Emerging market shares | 1.2% |
| International small companies | 1.5% |
| Total international shares | 30.8% |
| Total shares | 61.0% (-19.0%) |
| Total property securities | 0.1% (+0.1%) |
| Australian bonds | 2.2% |
| International bonds | 4.0% |
| Total bonds | 6.2% (+1.2%) |
| Gold | 4.8% |
| Bitcoin | 27.9% |
| Gold and alternatives | 32.7% (+17.7%) |
Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.
Comments
This month has seen a signficant fall in the value of the portfolio, with losses of around $177,000 – or around 4.4 per cent.
This follows a strong period of growth of the last six months – and returns the portfolio to just above the level it was at around the end of February.
The portfolio losses this month were broad-based.
Bitcoin corrected following the ‘halvening’ event, down around 9.5 per cent, constituting the majority of the losses. From here, the halvening will act to restrict the growth of newly mined Bitcoin relative to the existing stock to below the historical growth in the supply of gold.
Australian shares also fell around 3.8 per cent, and now sit just above the sub-target for domestic equities – of $1.15 million. Some of this fall can be attributed to the paying out of distributions, but a significant element reflects less confidence on the path of future interest rate reductions.
Global equities also fell with prolonged concern around the pace of inflation reductions across the United States. This led to a fall in the value of international equties of around 3.0 per cent.
Towards the end of this month, Japan’s currency also experienced significant rapid depreciation, in circumstances where their prevailing debt position makes raising rates to defend the currency problematic. This event has the potential to send out waves of destabilising impacts to other developed economies financial markets.
Added to this, bond holdings in the portfolio performed poorly, with losses of 1.9 per cent.
Amidst this growing instability, the gold holdings performed extremely strongly, rising nearly 6 per cent. This is likely due to a combination of factors, but interestingly historical correlations between the inverse yield of US real rates and gold prices have recently broken down, portending that the future of rates may have little to no influence on gold prices in this current phase.
A further move from the US Congress to seize Russian central bank assets held in the United States, liquidate these, and use the proceeds to fund aid to Ukraine is also likely resulting in a longer-term re-appraisal by sovereign actors of the safety of US Treasury bills and bonds as a safe asset, and a continuing reinvigoration of gold purchases by central banks.
Taken together, these moves leave the overall portfolio above its target, but still in losses for the month. The financial portfolio (completely excluding Bitcoin) sits at around $80,000 below its target level.
Continue reading “Monthly Portfolio Report – April 2024”