Holly's Blog: The Boring Money Fund scores are in!

By Mike Narouei, Content Producer at Boring Money

2 July, 2021

Bit of a mixed bag this week. The Boring Money fund, who’s doing the best – and going gaga and jolly old life insurance. Such fun!

Hi all

Bit of a mixed bag this week. The Boring Money fund, who’s doing the best – and going gaga and jolly old life insurance. Such fun!

How have markets done in the first 6 months of the year?

We can now see how well our Boring Money Fund did in the first 6 months of the year. Last December some 400 of our readers told us how they would allocate a portfolio for growth. We asked you to tell us which asset classes, sectors and regions to back – and how much should go into sustainable variants where possible.

We decided to access most of these using ‘ETFs’ (Exchange Traded Funds (https://emailboringmoney.co.uk/t/4QZH-J18H-DEQJU-FO8N2-1/c.aspx))– a single investment which behaves like a share, and which gives you access to a whole market, or sector or region in one go. Or index funds where available as transaction fees are lower for funds which is important when you have a small portfolio. A £10 trading fee for a share really eats into smaller investments.

So for example think of the FTSE 100 ETF as a sort of “Now That’s What I Call UK Shares” album. One album, one purchase, loads of tunes. They are easy. And they are passively run by computers not humans, so they are cheap. I opened an account on AJ Bell Youinvest (https://emailboringmoney.co.uk/t/4QZH-J18H-DEQJU-FO8N3-1/c.aspx) to manage this as it’s a low-cost platform for smaller accounts such as ours, decent at trading, with quite a broad range of investments available including some of the more esoteric stuff.

And then my friends, I took a leap of faith and invested £2,000 according to your collective instructions. As at 30 June 2021, I am delighted to report that you lovely lot have made me some money! A princely ninety-eight pounds and 45 pence! We are up 4.9% over the 6 months. YAY. However – and not to rain on anyone’s parade - this is a little lacklustre…. According to ARC – a group which tracks and reports the average performance after fees of over 100 UK discretionary wealth managers – the average return year to date on shares-based private client portfolios has been 7.9%.

What’s been good?

In a nutshell, our fund has benefitted from the UK, the US and the ESG variants of developed and global indices. Over the last 6 months the best returns came from :

  • Invesco S&P 500 ESG Index – up 15%

  • HSBC American Index Fund – up 13.1%

  • iShares MSCI World ESG Screened UCITS ETF USD (Acc) – up 12%

  • L&G Future World ESG UK Index Fund – up 11.8%

And what’s bitten us on the bum?

The portfolio howler so far has been the iShares Clean Energy ETF which has shed an impressive 18.5% in 6 months. And the only other thing to have gone down is the HSBC MSCI China UCITS ETF (GBP), down -0.03%. You can see the full list of funds and ETFs we hold below.

Boring Money Fund as at 2 July 2021 – underlying funds held

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And here are the specific top 10 investments which lie under the bonnet. Interesting to see at the moment how tech-heavy a non-tech fund is, based on exposure to the US and China!

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Ladies rock

Now it’s time to add a little soupçon of competition to the mix. When we collected your portfolio allocation, we asked a little about you, including gender. Had we just created the Boring Money Women’s Fund, we would have been up by 8.3% compared to the guys whose returns were almost half at 4.6% 😲. There wasn’t much in it between the youngies and the oldies.

Boring Money Ladies – take a bow! You have outperformed the average UK discretionary wealth manager in the UK by 0.4% 😏

Women made up less than one-third of respondents so their 6 month genius was unfortunately diluted. Digging into the why they did better, the main difference was that women were more keen on the S&P 500 which has been a major contributor of returns. It’s genuinely interesting to see the impact that just a few % points allocation difference in some key asset classes which are going gangbusters can have on a portfolio’s overall returns.

My challenge

Right people, this is your digital and remote Asset Allocation Committee Meeting. We are trailing the Vanguard LifeStrategy 100% equity fund which returned 11% over 6 months. And as a collective, sniffing at the heels of the Discretionary Mahogany Boardroom Wealth Managers. Bah! So this is my rallying call, our chance to redeem ourselves. Ladies – your chance to increase the lead. How should we rebalance our portfolio (https://emailboringmoney.co.uk/t/4QZH-J18H-DEQJU-FO8N5-1/c.aspx) for the last 6 months of this most glorious of years?!?

(Disclaimer: I will say before the grumpies email me en masse that 6 months is not long enough to determine skill, you need a longer track record, past performance is no indicator of future performance, etc and blah and yadda).

And now the miserable final chapter for the week…

On a more serious note, this week many financial advisers have been up in arms about a rather misleading article in the Sunday Times which questioned the benefits of life insurance. The slightly odd argument was that you could make more money by investing the cost of the insurance premiums into the stock market over your lifetime, and it was all a massive trap, rinsing people. I don’t agree.

I have adopted that approach with my pet insurance – at £35 a month for a hound I’ll take my chances! - but this is life cover. As someone once said to me, pet insurance is not actually about insuring your pet. It’s about insuring yourself against the worry of an unforeseen payment of £2,000 to fix Mog’s paw. But life cover is about providing peace of mind for your family and dependants who might need a mortgage paying off. It’s not money you spend for you!

Life cover is – for most of us – essential and a fundamental part of any sensible financial plan. And it doesn’t have to be complicated or hard. Check your employment contract – is it included with your job? I also did a quick search online yesterday. I could buy £250,000 of life insurance to cover me for the next 20 years, for £37 a month from various solid big brands. And now for this week’s climax of fun!!! Whilst I was in the fun palace, I also hopped online to investigate a Lasting Power of Attorney – giving permission to someone you trust to make decisions for you if you become incapacitated. Something I always tell people to do in articles but (fess up time!) I hadn’t done myself. I now have. (Hey Dad, congrats! Good luck wading through my 30 test investment accounts. You’re welcome. ) Took me 10 minutes and cost £82. A small thing to do which could save dependants hours and hours of headaches if anything horrible happens to you. We’ve written a longer piece here (https://emailboringmoney.co.uk/t/4QZH-J18H-DEQJU-FO8N6-1/c.aspx).

Right. On that cheery note it’s over and out from me.

Have a lovely weekend everyone.

Holly