Each month we like to make sure that the funds we own are acting right. In our opinion, as well as the long-term performance of the present fund manager being a key factor in fund selection, the short-term performance of the fund manager is very important too. It’s vital because we’ve noticed that strong funds tend to get stronger and weak funds tend to get weaker.
That means we simply hold onto funds that continue to outperform and exit the ones that underperform. On December 27th 2014, we took a good look at the returns of our five funds, the returns of the FTSE 100 and returns of the NASDAQ Composite. This is what we discovered:
This information is taken from The Big Picture, to download a sample copy please just click here.
The laggard
When this data was collected 27th of December 2014, the laggard in our portfolio was Fund D. Even though it was underperforming when measured over three monthly and monthly periods, it was demonstrating outperformance over the weekly time frame. We then subsequently took a look at its performance since purchase and compared those returns with the FTSE 100 – to see if it was outperforming or underperforming our UK benchmark. Take a look at this table and you’ll see that since it was bought, it’s beaten the FTSE 100 by almost 4%.
Yes, the data concluded that Fund D had ‘outperformed’ the FTSE 100 from date of purchase through to December 27th. This helped to confirm our decision to keep hold of it for now but from here we will be keeping a very close eye on it, especially with this fund being red flagged in the past.
Our outlook for 2015 and beyond
We are extremely proud to end 2014 with a return of 7.4%*. The FTSE 100 over the same period made a net loss of 2.7%. We are delighted with our performance because normally when the FTSE 100 scores a negative year, we also score a negative year and often our losses are greater than our UK benchmark.
Our 2014 7.4% return also means we outperformed the FTSE 100 by 10.4% which most investors would be pretty pleased with. After making a 23.1% return in 2013 versus the FTSE 100’s 14.4%, outperforming the Footsie in 2014 by 10% is extremely encouraging.
For 2015, we expect volatility to rise and because we’ve made good solid gains since the six-year bull market began (December 31st 2008–December 31st 2014, 111.5% total return, 13.3% annualised), we believe that we’ll experience flat or slightly negative returns for 2015. Investors have to constantly remind themselves that not every year in the market is going to be up and that investing in equities using collective investments such as funds should be viewed as a long-term venture (5 years plus).
And that’s why trying to time the market in the short term is guesswork and almost impossible to pull off. The important thing to remember is that right now we are in a strong bull market and that means until we see an impending bear market on the horizon we will be sitting tight and most probably staying fully invested throughout the year. Our outlook for the longer term (5-10 years) is that we believe the markets will be much higher than they are right now. From here we are therefore happy to sit out what we think will be much ‘milder’ correction periods than the ones investors experienced 2000-2002 and 2007-2009. This means that if you are a long-term investor like us, and have the courage to stay in the game, the future is looking bright.
* January 1st 2014 - December 31st 2014. ISACO investment performance verified by Independent Executives Ltd.
Exceeding performance expectations
Our aim is to outperform the FTSE 100 and we are proud of our 7.4%* 2014 return which some would say is pretty good when compared to the FTSE 100’s negative return of negative 2.7%.
* January 1st 2014 - December 31st 2014. ISACO investment performance verified by Independent Executives Ltd.
Long-term performance
If we go back even further, since beginning investing back in 1997**, we’ve outperformed the FTSE 100 by 77.9% which means we’ve beaten the main UK stock index on average by 2.9% per year.
** 31st December 1997 - 31st December 2014. ISACO investment performance verified by Independent Executives Ltd.
This information is taken from The Big Picture, to download a sample copy please just click here.
As always, if you have any questions or thoughts on the points covered in this post, please leave a comment below or connect with us @ISACO_ on Twitter.
About ISACO
ISACO specialises in ISA and SIPP Investment and is the pioneer of ‘Shadow Investment’; a unique service that allows you to look over our shoulder and buy the same funds that we are buying. Together with our clients, we have an estimated £57 million actively invested in ISAs and pensions***. Clients like us because we have a track record of ‘beating’ the FTSE 100**. Over the last 17 years, we’ve outperformed the Footsie by 77.9%. You can find us at www.ISACO.co.uk.
What is Shadow Investment?
Picking the right fund for your ISA and SIPP is not exactly the easiest job in the world. And knowing 'when' to buy and 'when' to exit is even more difficult! Our ‘Shadow Investment’ Service is here to help. Our service allows you to look over our shoulder and buy the same funds that we are buying.
When we are thinking of buying a fund, we alert you so that you have the opportunity to buy it on the same day that we buy it. We also tell you about when we are planning to exit the fund. You control your investment account, not us. You can start small and invest as little or as much money as you like.
By knowing what we are buying, when we are buying and when we are exiting, throughout the year you can mirror our movements and in effect replicate our trades. This means you have the opportunity to benefit from exactly the same investment returns that we get. Our investment aims are 10–12% per year.
We are totally independent, fully transparent and FCA compliant. We’re warm, friendly and highly responsive and it’s a very personal service that gives you direct access to the Sutherland brothers; ISACO’s two founders.
Who are ISACO’s clients?
Clients who benefit most from our service have over £250,000 actively invested and the majority of them are wealthy retirees, business owners, self-employed professionals and corporate executives. We also have clients from the financial services sector, such as IFAs and wealth managers.
Do you have questions?
To have all your questions answered, call 0800 170 7750 or email us at: info@ISACO.co.uk.
* January 1st 2014 - December 31st 2014. ISACO investment performance verified by Independent Executives Ltd.
** December 31st 1997 - December 31st 2014 ISACO 105.5%, FTSE 100 27.6%. ISACO investment performance verified by Independent Executives Ltd.
*** November 15th 2012: Internal estimation of total ISA and pension assets owned by ISACO Investment Team and ISACO premium clients.
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