Saturday, July 7, 2012

2012 First Half Performance Review

Half way thru 2012 now! What better time to reflect on the first half, and do a performance review :)

Luckily for me, I don't have to answer (at least not in the short term) to some boss about my performance. That doesn't mean I shouldn't review my own work so far anyways. I think regular reflection is a way we can improve ourselves. It allows us to look at our successes with a smile, and mistakes thoughtfully.

Without further ado, here's a summary of my 1H2012 results

My Portfolio
First my personal portfolio and what I benchmark against

The first one is my portfolio. The next 3 are fairly obvious. They're the 3 main indices that affect north american investors: S&P500, Dow Jones, and Toronto's TSX. Hybrid is a mix of the 3, weighted based on how I would have allocated my funds had I put all my money in index ETFs or index funds. I have it set up as 30% TSX, 45% S&P 500, 25% Dow. The last one is the same hybrid but adjusted for foreign exchange (beginning vs end FX). All other portfolios are non-FX adjusted returns. My own portfolio return is in CAD, using June 29 USD/CAD FX rates. Total return means returns if dividends are reinvested.

YTD: +8.32%
S&P 500 Total Return (TR): +9.50%
Dow Jones Industrials TR: +6.83%
TSX TR: -1.53%
Hybrid TR: 5.52%
FX-Adj Hybrid TR: 5.20%

As you can see I've managed to do okay for 1H2012. I've managed to beat all indices except the S&P500, as well as my main benchmark, the FX-Adj Hybrid TR model. This performance result was within my expectations for the first half, primarily because my portfolio tends to outperform when there is a lot of market turmoil, just like 2011 when I severely underperformed until the back half of the year.

Next let's take a look at my account break down.

RRSP: +4.45%
TFSA: +6.11%
nonReg CDN: +6.87%
nonReg USD: +10.50% (non FX adjusted)

Pretty consistent across the board, unlike 2011, when I had mid double digit gains in RRSP and TFSA, and mid single digit losses in my 2 non-registered accounts. This year my gains seem to be occurring across accounts, with my 2 non-registered accounts leading the way (after slacking off last year!)

Next we'll look at annualized forward expected dividend income, based on assets held on those dates

December 31, 2011: $3509.92, 3.12% yield on cost
March 31, 2012: $3795.36, 3.27% YoC
June 30, 2012: $3978.86, 3.36% YoC

There has been some slowing down of my dividend income accumulation this year, compared to years past. The one main reason for this is I've been aggressively saving for a vehicle. This has acted as a drag on my asset accumulation. I expect it will continue to have some impact in 2H2012. The second reason has been because I felt the market had run too much in 1H2012. I feel much better about investing at current levels vs April 2012 levels. With my current cash levels, there is about $150-$200 worth of dividends sitting on the sidelines, waiting for an opportunity.

Assets Under Management
I'll now review assets under my management. These are not my assets! I only started taking them under my wing at the end of 2011, so some of the numbers might seem a bit strange (like the crazy dividend growth). Most of the money was in mutual funds previously. I won't go into too much detail on these, but the categories up for review are the same. The hybrid numbers are a bit difference because the target allocation for these assets are more overweight our Canadian home market.

YTD: 7.50%
S&P 500 Total Return (TR): +9.50%
Dow Jones Industrials TR: +6.83%
TSX TR: -1.53%
Hybrid TR: 3.3%
FX-Adj Hybrid TR: 3.1%

Lastly, we'll look at annualized forward expected dividend income for assets under my management

December 2011: $1415.20, 3.76%
March 31, 2012, $2237.20, 3.69%
June 30, 2012, $2647.64, 3.61%

As you can see, the performance and yields are similar to my own portfolio. There is a bit more home country assets, so the performance in 2011 is slightly more muted. The dividend yield is a bit higher than mine, due to the age of the investors.

I think its important to due a self-review twice per year, to see how you're doing, and to deal with any significant issues before they get worse. One nice thing about not managing money professionally is I'm not subject to the same restrictions fund managers are. I can make long term investment decisions for the benefit of my clients, without worrying about stupid rules like being fully invested all the time, not being allowed to own stocks under $5, or under a certain market cap, or over a certain market cap, etc. My clients also understand investing is a long term game, and will not start redeeming funds if we get some short term volatility. That being said, I apply the same conservative principles to assets under my management whether it is my own portfolio or that of a friend or family, or client.

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