My rules-based SIF portfolio has been less volatile than the market over the last few months. That’s hardly surprising given that more than 60% of the portfolio is in cash.
The end result hasn’t been too bad, though. The portfolio’s performance has only fallen 2% short of the market so far this year, with none of the fuss:
I should point out that this hasn’t been a deliberate strategy on my part. My stock purchases for this model portfolio are dependent on the feed of new ideas supplied by my SIF buying screen.
The rules used in this screen are built around the concept of looking for companies offering affordable growth and near-term momentum. In recent months, there just haven’t been many stocks that have satisfied my rules. Most of those which have are already in the portfolio.
For example, four of the six stocks that qualify for the screen as I write are already in SIF. Of the remaining two, Wentworth Resources (LON:WEN) is under offer and Kaspi.kz AO (LON:KSPI) is a foreign stock that’s outside my investable universe:
In fact, I’ve only bought six stocks for SIF since September last year. That’s low for this portfolio, which is more of a trading strategy than a buy-and-hold approach.
With the ISA deadline looming, I’m feeling a subconscious urge to act. I’d like to buy more stocks. I mirror SIF with a portion of my own real-money portfolio, so I’m sitting on a lot more cash than I’d normally choose to have in my investment accounts.
Of course, there are worse problems to have. And it may well be that my rules are right. In the past, following my screen and allowing the portfolio’s cash balance to fluctuate has helped me to preserve past gains while waiting for new opportunities.
Since its inception in April 2016, the portfolio has delivered an annualised return of 7.9%, or 10.4% including dividends. That’s left it nearly 50% ahead of the FTSE All-Share index over the same period:
As we’ve now reached the end of the first quarter, I’ll use the remainder of this piece to review the…
