Portfolio performance report Q4 2020

· 627 words · 3 minutes read Investing

My investments as of January 1st 2021


After the modifications I did earlier in the year (see why I removed the small-cap fund and the REIT fund), my portfolio has remained unchanged:

ETF Type Allocation
Xtrackers Global Government Bond EUR Hedged Bonds 18%
iShares Core MSCI World Stocks 72%
Xtrackers MSCI Emerging Markets Stocks 10%

Growth of the portfolio

Portfolio performance as of January 1st 2021.

Portfolio performance as of January 1st 2021.

The end of the year was very good. I didn’t invest any additional funds but the value of my portfolio nonetheless grew by 7.6%. I was happy to be invested to make use of the rising prices!

My portfolio is currently valued at €42,180, with total gains of €6,251 or 18.1%. Since the start of my investment adventure in the second quarter of 2018, I’ve seen an compound annual growth rate of 6.9%.

Performance per asset

Performance per asset in my portfolio as of January 1st 2021.

Performance per asset in my portfolio as of January 1st 2021.

Both equities in developed markets and emerging markets recovered well. But the rise of emerging markets has definitely been spectacular.

What I learned this year: peace of mind is invaluable

This year’s corona-crisis was the first crisis that I experienced. On the various investment communities that I participate in, I saw a fairly high number of people who panicked, sold and decided to wait until “better times come”. I can’t imagine how much additional stress this must have put on them during the rest of the year. Because that decision meant that they had to carefully track the markets on a daily basis to make sure that they didn’t miss the rise they’re waiting for. Some people most likely got lucky and came back in at the right time, but I suspect a large number missed the boat and bought back in either too early or too late.

Seeing that, the peace of mind that comes with staying the course became very apparent to me this year. By leaving my investment pattern unchanged throughout the year and trust that the markets would recover eventually, I didn’t have to feel any of the stress that comes with needing to time the markets. When times got better towards the second half of the year, it felt good knowing that I was still fully invested and that I would reap the complete benefits of the rising markets.

Of course, it would have been possible that I was wrong about the eventual recovery of the markets. Maybe this time it was different and the corona-crisis was really a unique event for the financial markets compared to other events in the past. Maybe that unlike the 2008 financial crisis, or the second World War for that matter, the global economy would not have recovered from the pandemic and that humanity had reached a peak in terms of economic productivity that it would never reach again.

What would have been the odds? Certainly not zero. But I’d say not very high either, likely close to zero. So from a rational point of view, I do not think that it’s a reasonable standpoint to sell your investments because you think the economy as it is has reached a peak and will never recover again. The odds are so much against you. And if you do think so, with such low odds, you might as well go all-in and short the entire market.

Of course, all of this is the old “your psychology is the investor’s worst enemy” saying that all investment books talk about. And I think that this year was a test for many. I’m personally glad and grateful that I didn’t succumb to the temptation and that my rational belief in the foundation of passive investing ended victorious over my psychology and biases. I’m confident for the future!