The Hare and the Tortoise, 11/06/2021
I have never really identified with a Tortoise if I am honest, but when it comes to investing irreplaceable capital and delivering sustainable investment income the Tortoise is our idol.
They are not sprinters, very steady, have big reserves in their shells to help them stay the distance and know when to disappear inside to avoid anything too nasty. They get the job done, even if it takes a while.
On May 14th we commented on the dangers of Bitcoin, which was already 24% off its highs and causing some pain. Less than a month later it’s down another 24% and 45% off its highs. Such is the way that losses like this impact, that the hapless investors who bought at the peak will now need a 77% return on Bitcoin, or some alternative investment, just to get their money back. Get rich quick investments can be very tempting but the fall-out when they go wrong can take years to recover from.
Our portfolios have continued to grind up in the last two weeks with different parts of the diversified portfolios coming good at different times. Bonds are doing well again, and Nick below highlights the recent return on our Global Real Estate investment fund.
Compounding returns are the great joy of investing, and they do not need to be that high to have a real impact. I checked today on some of our early investors from 2012 who have enjoyed compounding returns in the 5-6% per year region net of all fees. After inflation that means those who have been reinvesting income have around 40% more money today in real terms, those spending 3-4% still have all their money intact at today’s prices. This has been achieved with what we view as a medium to low-risk portfolio with more bonds and alternatives than equities and benefiting from the higher certainty of returns that the bonds bring to the mix.
Our medium risk multi-asset portfolios have just passed a 5% return year to date net all fees. For someone who invested £1m with us at the beginning of 2012, portfolio value of £1,551,000 at the beginning of this year using the historic returns described above, the year-to-date return would equate to £77,500 or 7.8% on their initial investment.
Investment Update, 11/06/2021
Talking to the Talent, 28/05/2021