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 February 26th 2015, we looked at the returns of our five funds and compared them with the returns of our benchmark, the FTSE 100. This is what we discovered:
This information is taken from The Big Picture, to download a sample copy please just click here.
Two laggards
When this data was collected2, the two laggard funds in our portfolio were Fund A and Fund D. Since Fund A’s purchase on the 8th of July last year, this is the first time it has lagged our benchmark and so initially we were surprised to see it drop 5.7% for the month. However on closer inspection, the fall seemed normal and justified because in January3 it surged an incredible 15.4%.
However since we purchased Fund D, again on the 8th of July last year, it has repeatedly popped up in our monthly analysis as the laggard. Our initial reaction this month to its disappointing performance was that it might be time to either par down on it or exit it completely. However after a more thorough analysis and much debate, we have decided to keep hold of it. The first reason for not doing anything was that last month it shot up 7.5%4 and so retracing 2.8% this month appears normal. Also when looking at its chart, it looks like it may have formed a sound base and that right now it could be setting up for a breakout move.
3 Performance of Fund A from 1st January – 29th January 2015.
4 Performance of Fund D from 1st January – 29th January 2015.
ISACO investment performance verified by Independent Executives Ltd.
Our outlook for 2015 and beyond
We are proud of the fact that so far in 2015 we have made a fairly respectable return of 6.4%5 compared to the FTSE 100’s 5.8%5. After making 7.4% in 2014 compared to the FTSE 100’s negative return of 2.7% and a 23.1% return in 2013 versus the FTSE 100’s 14.4%, we are delighted that our investment decisions appear to be working out quite well.
We have to say however that making a fairly strong start to the year has caught us a little by surprise. Only two months ago we said…
’…we believe that we’ll experience flat or slightly negative returns for 2015.’
For now and to err on the side of caution, we are sticking with this forecast due to the robust gains we’ve made over the last two years. We are also adhering to it because we currently only have two months behind us and another ten to go and that means things could easily change dramatically over the course of the year.
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 2015. 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 (tech crash) and 2007-2009 (subprime crash). 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.
5 Performance data collected 28th February 2015. ISACO investment performance verified by Independent Executives Ltd.
ISACO 2015 performance
Our aim is to outperform the FTSE 100 and we are very proud of our 2015 return of 8.0%6 compared to the FTSE 100’s 5.7%6.
6 Performance data collected 28th January 2015. ISACO investment performance verified by Independent Executives Ltd.
ISACO 3 year annualised performance
We are also pleased with the returns that we’ve made over the last three years7 too. From the beginning of 2012 to the end of 2014, we have annualised 9.5% versus the FTSE 100’s 5.7%.
7 December 31st 2011 - 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 19978, 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.
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.
As we grow our wealth, you grow yours. Together we prosper.
ISACO are a specialist in ISA and SIPP investment and together with our clients have an estimated £75 million actively invested9. To help investors like you, we offer a high end service called ‘Shadow Investment’. Put simply, we invest and you invest beside us. As we grow our wealth, you grow yours.
How does Shadow Investment work?
Shadow Investment allows you to look over our shoulder and buy the same investments that we are buying. It’s an intensely personal service which gives you the opportunity to piggyback on our expertise and makes investing easier, simpler and much more enjoyable.
Delivering a superior performance
We have an active investment strategy which aims to control risk and deliver a superior performance. Over the last 17 years10, we’ve beaten the FTSE 100 by 77.9% and over the last 3 years11, we’ve made an average annual return of 9.5% versus the FTSE 100’s 5.7%.
Get in touch
If you have over £250,000 actively invested, click here to arrange a free financial review (valued at £495) with Paul Sutherland, ISACO’s Managing Director.
9 Internal estimation taken January 1st 2015 of total ISA and pension assets owned by the ISACO Investment Team and ISACO premium clients.10 December 31st 1997 - December 31st 2014 ISACO 105.5%, FTSE 100 27.6%.
11 December 31st 2011 – December 31st 2014.
ISACO investment performance verified by Independent Executives Ltd.
