Fund Portfolio: £100,000 invested 2nd Jan 2019 to 17 May 2019
2019 monthly performance table
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Portfolio and benchmark
Cash entered on 31 December 2018. Invested from 2 January 2019. Performance monitored in SharePad.
Benchmark: FTSE All-Share Total Return Index.
The All-Share Total Return Index has been chosen as the benchmark because it is what most UK investors try to outperform. Readers are welcome to use an alternative benchmark. The All-Share Total Return Index has one price for a day except when there has been an event such as a share split. The closing price on 31 December 2018 is the opening price on 2nd January 2019.
To buy into the All-Share Index someone would need to purchase a ETF or open-end fund that tracks the index. Both would have ongoing fees and a tracking error. Accordingly, a fund designed to track the All-Share Index will generate a slightly lower result.
Portfolio performance: includes bid/offer spread and stamp duty
The approach taken is to factor in costs that don't vary according to broker or the portfolio size. Costs that do vary according to portfolio size or platform are not factored in. This makes portfolio performance is then more comparable. Readers can factor in the "drag" that comes their investment platform's costs and portfolio size.
Bid/offer spread and stamp duty (included) - The portfolio takes into account the bid/offer spread and stamp duty when entering positions. They are unavoidable and don't vary according to the investment platform/broker used. Positions are bought at the "ask" price and the portfolio is valued on the "bid" price.
Trading costs (excluded) - These vary by investment platform/broker and according to portfolio size. Hargreaves Lansdown doesn't charge a commission for buying into an open-end fund, for example, while most platforms do. For a modest to large portfolio the trading costs are not likely to be significant. This is because the charge for a trade is typically a flat fee (i.e. £10).
Platform fees (excluded) - These vary by investment platform/broker and according to portfolio size. They are also in place if you buy an All-Share tracker. Accordingly, they won't have an impact on the relative performance of the portfolio versus an All-Share tracker.
Valuation - SharePad calculates the valuation for the portfolio using the bid price for ETFs and the latest open-end fund price. Open-end fund prices are a day out of date because today's realized selling price will be published a day later.
Summary - The skew between the real return on an All-Share Total Return tracker and the portfolio is the exclusion of commission for buying and selling funds. Both will incur investment platform fees. The commission for buying the All-Share Total Return fund only occurs when it is bought. The Fund Hunter portfolio has trading commission over time. However, trading commission is relatively low on funds and so the overall impact is not likely to be significant.
31th December 2018 - £100,000 entered into SharePad. This allows both the initial portfolio and the All-Share Total Return index to start at 100,000.
2nd January 2019 - £100,000 invested between 3pm and 3.30pm. Time chosen because Exchange Traded Funds tracking the US market have more liquidity and lower spreads when the US market is open.
ETFs - These are invested in straight away at the asking prices shown.
Open-end Funds - To space out the initial investment the open-end funds were invested two day's after the market traded funds on 4 January (before midday).