Hey guys,
As the year comes to an end I find myself reflecting a lot on my portfolio’s strategy and opportunities for improvement.
Let’s take a look at my portfolio as of today, and compare my overall returns including dividends to the S&P 500.
Total share price appreciation
- S&P 500 from January 4th – December 28th: +29.33% ((438.48-339.03) / 339.03) x 100
- My portfolio from January 4th – December 28th: +26.14% ((((57,282.19 – 6,000 – 1,277.98) – 39,641.18) / 39,641.18) x 100)
Total return as of Dec. 28th:
- S&P 500: +30.58%
- My Portfolio: +28.91%
I mentioned this in my last blog post, but there’s thing that sticks out to me about my portfolio’s performance. To illustrate my point, let’s take a look at my portfolio slices and their overall performance to date:
- Growth + High Yield: +39.11%
- Moonshot Growth: +2.40%
- Stable Yield: +18.69%
- Growth 1st Dividend 2nd: +33.99%
- REIT: +26.79%
This has been a wonderful year for the overall market. If you look at the S&P 500 returns from January, you’re looking at an overall market return of over 30%!
So what gives? In this low interest rate high revenue growth environment, shouldn’t the riskier stocks be performing better? After all, the top performing stock in my entire portfolio is Tesla – the epitome of a moonshot growth company.
I took a deeper look to see if there has been an issue with high-growth stocks in general. Below are two indexes that track high-growth names and high-growth tech names specifically. These are indexes that I expect my moonshot growth slice to track more closely.
- IJK (iShares S&P Mid-Cap 400 Growth ETF): +19.14%
- WM (iShares Russell 2000 Index): +14.57%
- QQQ (Invesco Large-Cap Growth): +29.84%
- ARK Invest (ARKK): -23.08%
- My Moonshot Growth Slice: +2.4%
This is where the issue hits me with my portfolio. During the construction of my Moonshot Growth portfolio, I stole a lot of ideas of individual holdings from the individual stocks held by Cathy Wood in her ARKK fund. This isn’t necessarily a bad thing, but what it did is it tied this section of my portfolio more closely to the performance of ARKK than I originally intended. Given that ARKK is down over 20% compared to the S&P 500’s performance of +30%, the stocks I picked in this slice have badly hindered my portfolio’s overall return.
Overall – 42% of the names in my Moonshot Growth portfolio slice were included in the ARKK fund at some point this year. Here are the specific names and their allocations to this slice in my portfolio.
- Tesla: 10%
- Unity Software: 3%
- Repligen Corp: 3%
- PagerDuty: 3%
- Block Holdings (Square): 3%
- Crispr Therapeutics: 3%
- Splunk: 3%
- Okta: 3%
- Liveperson: 3%
- Xilinx: 3%
- Teladoc: 3%
- Zscaler: 2%
- Zillow: 2%
That explains a lot of it. 42% of my Moonshot Growth portfolio slice came from ARK Invest. Given how massively that fund trailed the market this year, it’s no wonder this portion of my portfolio was the worst performing and only hurt my overall performance against the market.
What lesson have I learned for next year? I’ve learned to not get any of my investment portfolio ideas from any specific fund, especially a fund that has run up significantly already. The Moonshot Growth portfolio slice represents about 20% of my overall Roth IRA portfolio. Given almost half of the weighting in this slice came from ARK invest picks, about 8% of my overall Roth IRA portfolio is represented by ARKK or former ARKK stocks.
Reminder that none of this article is intended to portray investment advice, please seek out a professional for questions about your individual situation. I’m looking forward to revealing my ROTH IRA portfolio construction for next year using the same methodology, but I will be sure to diversify my holdings into stock picks that I choose myself for no reason other than my research and beliefs about the market.
How did you all do investing this year? Did you beat the market or no? Until next time!
Roth and Roll Finance 