Monday 31 August 2015

August 2015 Review

August saw my net worth fall by 1%, with a terrible month in the equities markets resulting in falls in my investment portfolio and pension funds.  This was my worst month on record, with the poor investment performance more than offsetting monthly savings.  However i get some comfort in knowing it could have been a lot worse.  With roughly two thirds of my assets in property and cash i'm somewhat protected from the recent volatility, and if anything, view it more as a buying opportunity.

The value of my investment portfolio was down over 4%, and over the last 3 months it has fallen by over 9%. Again it was a volatile month, but generally emerging markets and asia performed very badly, which then spread to global markets.  I increased my holdings of a global high yield ETF (VHYL) along with some HK & UK based equities.  I also subscribed to the latest HK ibond, albeit only receiving a small allotment. The markets picked up a bit in the last week of August, but still look quite vulnerable.

Pension unit prices fell by over 6% and are now firmly negative for the year.  The falls were broadly in line with wider markets although one fund is more heavily exposed to HK.

Property rental income was paid in full & on time.  I received my first monthly rent from the new property although much of this was offset by expected start up costs.

Cash balances were lower as i tried to add to the investment portfolio as the markets fell.  Expenses were broadly in line with expectations.

Year to date net worth growth: 13.8%
Year to date savings rate: 69%

Saturday 29 August 2015

Market volatility

After a fairly soft June & July in the markets, August has been pretty awful.  Concerns have shifted from Greece to China and emerging markets in general,  with significant falls in currencies (verses the us dollar) and equities.

Whilst it is pretty depressing to see my investment portfolio and pension funds fall in value, i'm trying to see the positive side of recent events.  My investment strategy continues to be buy & hold well diversified ETFs with a focus on yield.  I have no intention so sell anything and as such should not realise any actual losses.  If anything, i'm viewing the falling markets as an opportunity to add to the portfolio whilst prices are low.

In recent months i've been adding to emerging markets and asian focused ETFs, which have been the hardest hit.  Whilst it is tempting to keep on buying these at low prices, i'm instead focusing my attention at the moment more on the UK, US & Europe equities, which have also been dragged lower by the general concerns about China and the global economy, but in my opinion remain fairly healthy.

The main thing holding me back from some more significant additions to the investment portfolio is a lack of cashflow.  After recently completing a property purchase my cash reserves are relatively low and much is tied up in longer tenor time deposits to boost yield.  This is forcing me to take a slow and steady approach to investing, which is not a bad thing with such volatility and uncertainty in the markets.


Property update

My new investment property is now occupied, with tenants moving in earlier in August. The rent was at the high end of expectations, with a gross yield close to 6.5%.  The combined yield of my properties after agency fees, regular costs and taxes is around 4%.

Property is once again my largest asset class at around 44% of total assets.  The investment reduced my cash position to around 28% of total assets, much closer to my long term target of around 20%.

The only slight concern is the tenancy agreement is only for 6 months.  I'm hoping this will be extended, but if not it could mean a load more agency costs on a more regular basis than i would hope for.

Also some good news with my other property.  The existing tenant has just signed up for another year, with a rent increase of 4%.  This is particularly good news as it means there shouldn't be any immediate need for any maintenance costs / refurbishment.  In the 5 years or so of renting out this property it has only been vacant for about 5 days between tenancies.