2021 performance

Hope you all had good 2021. SP500 has given a 28% return this year and i hope we have beaten the index performance with our stock picks :blush:

Personally i haven’t beaten that rate!

4 Likes

Good question. You really want to work out your time weighted return to do a like for like comparison. Not sure where I’m sitting at.

3 Likes

Crazy isn’t it! I’m sure I have beaten it but no way to know for sure until Trading 212 add weighted returns. The graph doesn’t even show your yearly returns, as it only ever shows all time…

2 Likes

I would say I have done, but that’s easily said because 70% is weighted towards the S&P500 and the rest is typically big tech like Alphabet which is up 75% or so.

I made a google sheet that does weighted returns, will let you know my results later as I need to add in other accounts.

EDIT: *I look to be beating VWRP FTSE All World Index ETF which was my aim. so that’s something…

*My performance of late has been dipping as I decided to buy some AML, ARB.K and SAGA after a trip to the pub.

3 Likes

I think comparing your returns to the S&P 500 is all good but as long as it doesn’t detract you from long term goals and for instance making you sell something because it is underperforming. here’s a random example I can think of:

Johnny is 21, he is young and wants to take a risk and beat the S&P 500, he buys 5 high growth tech stocks he believes in and sits back and waits for large gains, he will keep a close eye on the S&P 500 to compare how he is doing. After 1 year he compares his returns to the S&P 500 and he is down -30% while the S&P 500 is up 30%. Down at the pub people are laughing as S&P 500 has had great returns while Johnny sees he is failing in comparison to others who didn’t even do any research like he did, he gives up on his dream of outperforming S&P 500 and sells his portfolio at a loss and jumps on the S&P 500 bandwagon. Fast-forward 10 years, Johnny is doing OK, his S&P 500 stocks have given him an OK return. Out of interest he checks the 5 tech stocks he sold to see how they are doing, to his shock they have made a huge comeback and exploded and he would now be very rich. Johnny thinks “if only” I didn’t sell then I would be much better off now. Fast forward 20 years, Johnny is still thinking about those 5 stocks, telling his children about them. Fast forward 60 years, the stocks Johnny sold haunted him until his grave and it will be just one of many “what if” stories in the world of investing (ok morbid ending sorry but it’s kind of true in a way) .

Johnny had a good plan but never stuck with it, he gave up too early, at what point in time do we rule Johnny’s 5 tech stock portfolio a “failure”? after 1 year? 5 years? 10 years?

TL:DR: yes compare yourself to the S&P 500 returns but don’t do anything irrational like selling stocks at a loss after a short period, give your stocks as much time as you can to perform for you to give yourself best chance to beat the index if that is your goal.

4 Likes

A benchmark is good but often peoples default is the S&P 500, if you are only really investing in companies within the S&P 500 then yes perhaps thats a good benchmark, but I would see something like VWRL a more accurate one for me, albeit not reflective of my weightings. My US equities make up around 45-50% of my single stock holdings, China and UK make up the other 50+%. VWRL for example is 60% US, 3.8% China, 3.8% UK, rest is Japan and others.

But I have definitely underperformed the market this year (whether VWRL, VUSA or even factoring in a portion of VFEM) as Chinese equities have struggled, as well as many of my US/UK value plays haven’t come to fruition yet, likely 2022/2023 some will do well I would argue so will be interesting next year, but at least 20-30% may take longer to really get going.

@Dougal1984 Do you have a link to a spreadsheet template? I struggle to work out time weighted returns.

I haven’t beaten the FTSE but happy with my returns, i think the most important thing as we go into 2022 is for investors to realistic with their expectations and recognise that 2021 was an exceptional year.

Only 3 hedge funds outperformed sp500 in 2021

1 Like

10.06% return on my long term portfolio, but it also has fixed income assets and commodities.

1 Like

Ok got it yes I have.
Portfolio vs S&P 500

Is it hard to do the time weighted returns?

To work it out, you essentially want to unitise your portfolio. So open an account with £100, and call that 100 units so £1 a unit.

You make a 20% average gain on your holdings, so your portfolio is now worth £120 and each unit is worth £1.20. You then deposit another £100, so you now have deposited £200 in total, your portfolio is worth £220, and have 183.33 units at £1.2 if that makes sense?

I half plan to work on my sheet at the weekend to simplify it, but becomes moot once 212 add the below:

It avoids distortion of inflows and outflows to give a common comparison to funds/benchmarks.

So you have the total value of your portfolio at each point we deposit/withdraw from 212, it’s a case of doing that sum. It’s not straight forward as people think but 212 have all the data points to calculate.

2 Likes

I can’t wrap my head around it, I’ll maybe give it a go another time. I know it’s hard which is why I’ve never done it

image

Why not use Excel with XIRR function, it uses time and money to calculate the return (XIRR)?

It’s simple and fast, why trying to invent the wheel? :wink:

There are some XIRR Excel templates on the Web, you just need to adjust to your personal needs.