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Portfolio Update – July 2019

Hi there!

I hope you and your portfolio are doing well, despite the latest turbulence on the stock markets.

We have now seen July pass, and thus it is now time to summarize how my All Seasons Portfolio did on a month-to-month basis. This month, I have actually not added any funds to the portfolio, partly to compensate for my aggressive injections during the first half of the year and partly as I have had some one-off expenses in my private life to consider this month. I will get back on the investing track soon again.

So, all in all, there have been no dramatic movements that have caused so much change in the allocations since the June update. The splits are fairly equal, as the individual movements of each asset class have been rather small and aligned. For example, gold saw a huge jump in June, but has now stabilized in July at around USD 1,400/oz, although it has again increased some at the time of writing in August.

Because of the current uncertainty on the stock markets, certain safe havens and traditionally safe investments have seen great volumes of inflows during the summer. Many investors are, in addition to buying gold, also moving their funds to Government Bonds, despite the low interest rates offered. That is quite logical anyway: if an investor’s expected returns from stocks is let’s say -10% over the coming 12 months, then yields from government bonds of -1% to +2% is in fact more attractive.

Therefore, I have seen that my fixed income assets such as the TIPS (dark blue at the bottom), Long-term Government Bonds (gray) and Intermediate-term Government bonds (orange) are all experiencing slight positive development, as you can see from the graph below.

As I haven’t added any funds this month, it is actually easier to visualize the development month-by-month.

Also stocks have gone up, mainly due to to Federal Reserve lowering its interest rates to stimulate the economy ahead of a feared recession. This was quite an unusual move, as the FED have not lowered its rates in anticipation of a recession in more than 40 years, but have only lowered them as a reaction to a recession (for example during the 2008 financial crisis). Thus, stocks now saw a slight increase in my portfolio, albeit small, so it can almost be considered as that they are only moving sideways.

Commodities, on the other hand, are moving in the opposite direction currently, and that is downwards. Much has to do with the tension around the Strait of Hormuz where Iran has seized a British flagged oil tanker, after the UK seized an Iranian tanker heading towards Syria in breach of EU sanctions. Markets are not a big fan of uncertainty and political tension, and thus oil prices have lowered. However, would the tension flame up to a conflict, it is probable that oil prices will increase, as the amount of oil available on the market will decrease. It would be ‘Supply and demand’ in action. We’ll see how this plays out.

It was also dividend season, and EUR 12.84 was added to the account in this form from my corporate bonds and Emerging Market Long-term Government Bonds. These funds are currently on the cash balance, waiting to be invested, and are thus not visible in the graph above.

Total portfolio value was by end of July EUR 3,113.52 (up from EUR 3,084.43 in June), excluding the dividends of EUR 12.84).

By close of business on 31 July 2019, my portfolio consisted of the below ETFs, including their values compared to end of June number:

iShares $ TIPS UCITS ETF USD (Acc) (EUR)TIPSIE00B1FZSC47377,72 € 387,98 € 2,72%
Vanguard EUR Corporate Bond UCITS ETFCorporate BondsIE00BZ163G84375,61 € 380,52 € 1,31%
iShares € Govt Bond 3-5yr UCITS ETF EUR (Dist)Govt Bond MidIE00B1FZS681173,43 € 174,54 € 0,64%
iShares J.P. Morgan EM Local Govt Bond UCITS ETF USD (Dist) (EUR)Govt Bond LongIE00B5M4WH52380,23 € 381,92 € 0,45%
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Dist) (EUR)Govt Bond LongIE00B1FZS798355,01 € 363,10 € 2,28%
Invesco Bloomberg Commodity UCITS ETF (EUR)CommoditiesIE00BD6FTQ80343,28 € 331,96 € -3,30%
Xtrackers Physical Gold ETCGoldGB00B5840F36469,44 € 465,49 € -0,84%
SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF EUR AccEquityIE00BSPLC298167,83 € 166,15 € -1,00%
SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD AccEquityIE00BSPLC413441,91 € 461,86 € 4,51%
Dividend6,07 € 12,84 € 111,43%
Total (excluding dividends)3 084,43 € 3 113,52 € 0,94%

For each month that passes, I am getting more and more convinced, that this diversification between assets is key. I am less worried about the macro economic development and how that impacts my investments now than a year ago when I was only heavily exposed to stocks.

Now, I will take som vacation during August, and will catch up again with you in the beginning of September with my August update. Remember to follow my new Facebook page to get updates on when new posts are added, and to ask any questions:

Until next time!

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