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2023 Portfolio Update (Part 2): A Satisfying 44.8% Return

Full results are in. A very satisfying year in terms of investment returns.

2023 Performance YTD

My Portfolio: +44.8%

Vanguard 500 Index: +26.11%

Performance since inception (Jan 2021)

My Portfolio: +20.35%

Vanguard 500 Index: +31.76%

(Based on an arbitrary starting amount of $10,000)

My portfolio steadily beats the Vanguard 500 Index in 2024. In terms of 3 years returns, my portfolio still trails Vanguard 500 Index. But I'm confident that I could beat the index in terms of 5 years returns. If we evaluate the results in terms of CAGR, my portfolio has a CAGR of 6.35% across a three year period. That's certainly not bad results as this is better than what I could get from putting my money in CPF. For the index, the CAGR is around 9.61% across the same time period. In case anyone forgets, the index has a -18% return in 2022. Despite having a bad year, the index still returns a 9.61% CAGR across a three year period. This is probably a good reason why you should always hold a long term perspective for your investments and not focus too much on performance in the short term. To put things into perspective, my portfolio didn't do well in the first two years but I still manage to have a CAGR of 6.35%. I am confident this CAGR value will continue to grow in the coming years to meet my expectations of at least 9%.

In case you are curious about the performances of various hedge funds in 2023, here are the results.

Well, I guess there is nothing to complain about as my portfolio beats all the hedge funds with the exception of Discovery Capital. But of course, this is only performance for a single year.

I think it's also important to highlight that I adopt a super passive approach to my portfolio. I never do any active trading throughout the year at all. In fact, I hardly trade. I determined what's the right allocation of constituents in my portfolio at the beginning of the year and left it untouched for the rest of the year. On an annual basis, I only rebalance my portfolio to their target allocation. That's it. I don't spend any time trying to actively add or reduce my position throughout the year and I simply let the market do its magic. So in case you are looking for proof that passive investing works, this is it. You do not need to be obsessed with the market to get respectable returns. Instead, spend those time reading, travelling and building memories with your loved ones. Let your money work for you.

For the performance of the individual constituents in 2023 in terms of returns, here they are.

URTH (iShares MSCI World ETF): +23.97%

BRK.B (Berkshire Hathaway): +15.46%

BABA (Alibaba Group): -10.81%

MCHI (iShares MSCI China ETF): -11.22%

ARKK (ARK innovation ETF): +69.03%

ARKG (ARK Genomic Revolution ETF): +16.22%

SHEL (Shell PLC): +20.20%

BTC (Bitcoin): +157.44%

All have positive returns except for the Chinese equities. Bitcoin takes the crown again with a triple digit return. I have shared my thoughts about these constituents in Part 1 so I'm not going to share more here.

Instead, I am going to focus on the tweaks I am going to make to my portfolio in 2024.

  1. Increase the allocation of URTH from 26% to 30% of my portfolio

  2. Increase the allocation of BRK.B from 16% to 20% of my portfolio

  3. Increase the allocation of SHEL from 6% to 7% of my portfolio

  4. Decrease the allocation of MCHI from 14% to 7% of my portfolio

  5. Decrease the allocation of BABA from 6% to 4% of my portfolio

It has always been my intention to slowly increase the allocation of UTRH and BRK.B in my portfolio as I age to provide a stabilising effect to my portfolio. With these changes, these two constituents now form 50% of my portfolio. At the same time, it's time to cut losses on China equities. In my posts of late, I have explained why I no longer think investing in China equities is a sound idea. I am still keeping them in my portfolio but I am keeping the allocation to just 11% instead of 20%. I have also made a slight adjustment to increase my allocation to SHEL to increase my exposure to the energy sector.

While I am still bullish about Bitcoin (maybe more than ever with the ETF approval), I am still keeping my allocation to Bitcoin as 20% of my portfolio to avoid a case of over-exposure.

So, this is how my portfolio allocation looks like in 2024.

URTH (iShares MSCI World ETF): 30%

BRK.B (Berkshire Hathaway): 20%

BABA (Alibaba Group): 4%

MCHI (iShares MSCI China ETF): 7%

ARKK (ARK innovation ETF): 7%

ARKG (ARK Genomic Revolution ETF): 5%

SHEL (Shell PLC): 7%

BTC (Bitcoin): 20%

Here's to a good 2024 for all of us!

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