Portfolio performance report Q1 2020
· 530 words · 3 minutes read
My investments as of April 1st 2020
Composition
The composition of my portfolio hasn’t changed since last quarter. Also, there’s no need to rebalance yet.
| Type | ETF | Ticker | Allocation |
|---|---|---|---|
| Government bonds | Xtrackers Global Government Bond EUR Hedged | DBZB | 18% |
| Developed | iShares Core MSCI World | IWDA | 49% |
| Small cap | iShares MSCI World Small Cap | IUSN | 14% |
| Emerging markets | Xtrackers MSCI Emerging Markets | XMME | 10% |
| REIT | Amundi ETF FTSE EPRA NAREIT Global | EPRA | 9% |
Growth of the portfolio
Portfolio performance as of April 1st 2020.
The first quarter of 2020 has been dominated by one thing: coronavirus. It has been an interesting time because it’s been the first bear market that I’ve experienced as an investor. December 2018 was a bad month but it wasn’t as severe as last quarter. Between January 1st and April 1st, my portfolio went from a 14.4% gain to a 5.2% loss.
That didn’t stop me from continuing to invest, on the contrary. I invested €2,508 during the first quarter of 2020. This is more than I usually do, mainly due to the sale of some cryptocurrencies that I had lying around.
Despite the additional investments, the value of my portfolio dropped to €31,762.
Performance per asset
Performance per asset in my portfolio as of April 1st 2020.
Pretty dramatic graph, isn’t it? All four equity funds (IWDA, IUSN, EPRA and XMME) dropped significantly. As expected, the government bonds (DBZB) didn’t follow suit and actually went up slightly. The beauty of diversification through investing in uncorrelated assets couldn’t be clearer.
What I learned this quarter
The most important lesson that I internalized is that profits made over years can be wiped out in weeks. The drops that we’ve seen in the last few weeks have been steep. But that is the reality of investing in equities. The higher expected returns of stocks over the long term come at the price of a high volatility.
Will this experience change my investment behaviour for the future? No. I’m in it for the long run and I’m convinced that the global economy will rebound from this. As we wrote in our answer to a reader question on Curvo, the world has suffered from some terrible events throughout the 20th century. Just think about World War I (20 million deaths) and World War II (70-85 million deaths) for instance. In my eyes, these events have been a lot more devastating than what we’ve seen so far from the coronavirus pandemic. Yet the global economy has recovered every single time.
Of course, maybe this time it’s different. The Japanese economy, if we use the MSCI Japan index as a measure, reached a peak in 1989 from which it still hasn’t recovered. That’s a drawdown period of over 30 years. Are the US and Europe today comparable to the Japan of the early 90s? Will we suffer the same fate? Maybe.
But just like we backtest our portfolios to get the expected return for the future, we can look at past events to get an idea of the expected outcome of the coronavirus pandemic. And to me, they say that we can expect to be alright and that the global economy will recover.