Results Dec 2019: -0.39% Active Return vs S&P 500

US Portfolio Performance

Because Dec 2019 saw a weak market, the yearly returns for the 12 months ending 31 December 2019 are somewhat misleading. Nevertheless, for our US portfolio we now have data for 3 years since we decided to share our experiences with investing in US equities.

We didn't quite achieve the same return for the twelve months ending 31 Dec 2019, falling short by -0.39% compared to the S&P 500. However, a gain of 28.49% is still impressive in our view.

Looking at the performance over two and three years, the results are quite satisfactory, too: +10.59% per year since 31 Dec 2017 and +14.81% per year since 31 Dec 2016. All of these numbers are after taxes and fees. The following table summarizes these results:

	1 year	2 years	3 years
Optarix US	+28.49%	+10.59%	+14.81%
S&P 500	+28.88%	+9.93%	+13.00%
Optarix US Active Return	-0.39%	+0.66%	+1.81%

Values are annualized for periods longer than 1 year.

Here are the updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from December 2018 to December 2019.

Please note that past performance is no guarantee for future performance.

In Other Developments

With the killing of an Iranian general in Iraq by a US-american drone, tension in the middle east have increased. Although at the moment it appears that both sides try to dial back their threats and responses, there is no gurantee this conflict is over yet.

Meanwhile the Brexit, the trade wars and the reduced economic outlook for many economies and the world as a whole will keep a lid on markets. We believe it is very unlikely that 2020 will see returns similar to 2019. Later this year, we'll also start seeing the influence of pools and election results in the United States.

At least the Brexit has become a bit clearer. The United Kingdom will leave the US by end of January 2020. Then a transition phase starts that is scheduled to end 31 December 2020. It remains an open question if both sides, the EU and the UK, will be able to negotiate a free trade agreement by then. As this matter evolves, its impact on financial markets may increase again.

Changes in our Portfolio

In December we reduced our position in Microsoft (MSFT). We increased our positions in Franklin Resources (BEN), Federal Real Estate (FRT), Automatic Data Processing (ADP), Wallgreens Boots Alliance (WBA) and Aflac (AFL).

Suggestions for Your Own Portfolio

Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.

Increase

With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.

1. Cardinal Health (CAH)
2. Franklin Resources (BEN)
3. People's United Financial Inc (PBCT)
4. AT&T Inc (T)
5. Wallgreens Boots Alliance (WBA)

Decrease

Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.

1. Becton Dickinson and Company (BDX)
2. The Sherwin-Williams Company (SHW)
3. Abbott Laboratories (ABT)
4. Brown-Forman Class B (BF.B)
5. S&P Global (SPGI)

As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.

Disclosure

We hold positions in all of the companies mentioned in this post. We also intend to add to our position in CVX in the next 3 trading days. We have no intentions to change any of our other positions.