Thursday, 23 April 2015

'Backtesting' the DIY World ETF Income Portfolios

Does back testing help traders?
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Last month I suggested that it would be possible to create a DIY geographically-diversified income-oriented portfolio using just ETFs (Exchange Traded Funds). The idea was to create a long-term DIY portfolio that was easy to administer and which also minimised risk, whilst retaining (what I see as) the benefits of a yield-based income-oriented approach to investment.


One reader asked whether it would be possible to review the past performance of such a portfolio - so here goes...

Thursday, 16 April 2015

When It Goes Wrong: Huntsworth

A lot of eggs in a lot of baskets
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The DIY Income Investor portfolio has recently hit an all-time valuation - that is very reassuring but the portfolo does contain some problem holdings.

Buying high-yield securities directly (as opposed to a high-yield ETF) exposes you to specific security risks. In a sense, that is what the high yield should tell you: buyer beware!

So what should you do when a security goes bad?

A Simple Decision (Portfolio Buy)

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The perennial question: what to buy now?

This time - thanks to the new focus of the DIY Income Investor portfolio on building up the ETF (Exchange Traded Fund) holdings - the decision is relatively simple.  

Tuesday, 14 April 2015

What a Difference a Week Makes (Portfolio Sale)

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I've been AWOL and AFK* for a week - cut off from civilisation in deepest Oxfordshire; no news or share-price up-dates.

Firing up the spreadsheet on Monday morning - a little apprehensively - I was very pleased to see that the DIY Income Investor portfolio has hit another all-time high valuation. It could have gone the other way, of course.

With the portfolio increasingly on ETF autopilot, there should be less and less to do. However this week it did seem necessary to sell something - and it was an ETF. Here's why...

Tuesday, 31 March 2015

9%

Ubisoft Stocks Fall 9% After Assassin's Creed Unity Launch
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Another milestone: the 2014/5 financial year comes to a close. The DIY Income Investor portfolio closes the year (one day to go) with a total return - capital gains plus rolled-up income - of just over 9%.

My view is that this seems a fairly pedestrian performance compared with previous years. Yes, it's better than cash (even the 6%-plus return you can get from Ratesetter) but nothing extraordinary. So, the question is: how good or bad is this result? And could I have done better?

Thursday, 19 March 2015

Alea Jacta Est! (Portfolio Buy/Sale)

 Alea jacta est.
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So said Julius Caesar (reportedly) when he marched his troops across the Rubicon river on to Rome. The die is cast - a decision has been made and it's too late to change.

A couple of times in my life I have taken a fairly large financial gamble. Being naturally cautious, it is usually not a 'bet the farm' type of gamble - but rather one that could gain or lose a substantial amount of money.

So it is today...

Tuesday, 17 March 2015

The World ETF Income Portfolio

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As regular readers will be aware, the DIY Income Investor portfolio is steadily increasing its share of income-producing Exchange Traded Funds (ETFs). ETFs provide ready-made, low-cost and diversified funds but are more targeted than simple market tracker funds - and therefore (in my view) more powerful financial tools.

A reader asked whether it might be possible to identify an ETF-only portfolio. This might be attractive for a new investor or someone who does not want to be too involved in the investment process. This seemed like an interesting challenge; so, here goes...

Saturday, 14 March 2015

Know Your Strategy! (Portfolio Buy)

Contrarian Investing
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My long-term strategy for the DIY Income Investor portfolio is to develop an investing style that doesn't require much skill or input. The objective is to pass on investment nest eggs that more-or-less manage themselves.

So, 'DIY' taken almost to an extreme - Do Very Little Yourself!

Monday, 9 March 2015

Sell Your Winners! (Portfolio Sale)

(Andy Rainford/iStockphoto)
Now, what does this button do..?
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I've just sold a holding in my DIY Income Investor portfolio and realised a 29% capital gain over less than one year - enough to pay for a family summer holiday. 'Not bad' you might say - but was I 'right' to sell?

The typical advice given to new investors is 'hold your winners and sell your losers'; but presumably that can't be the whole story (or you would never realise your capital gains). I'm afraid that my own approach does not really follow this advice - although it doesn't ignore it completely.

Saturday, 7 March 2015

Me, Britain and Dividends (Portfolio Buy)


UK-Currency-Money-Coins-700.jpg
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Following my long-term strategy of 'automating' the DIY Income Investor portfolio I have been buying some more ETF (Exchange Traded Fund) shares.

As regular readers will be aware, ETFs are collective, diversified investment funds that (usually) follow a specific index more-or-less mechanically; this means that they are diversified and (generally) low-cost. In keeping with the main theme of the portfolio, I specialise in ETFs that produce income - from dividends or from fixed-income securities. In addition, it is possible to invest globally with ETFs that are quoted on my 'home; market (the LSE); by contrast it is a lot more complicated to do that with individual securities on different markets.

The latest purchase takes the ETF share of the portfolio to over 40%.