Portfolio Update December 2023
A year of cautious navigation through persistent inflation and crypto upheaval, resulting in steady portfolio growth and a strategic shift toward bonds.
As 2023 draws to a close, the financial markets have taken us on a remarkable journey, ending the year on a strong note after enduring a challenging fourth quarter. This resilience in the market has been a beacon of optimism amidst a year riddled with economic uncertainties.
🌍 The Macro Backdrop
Globally, inflation continued to be a stubborn adversary. Despite aggressive interest rate hikes in countries like Australia and the United States, the anticipated slowdown in inflation remained elusive. This persistent inflationary pressure undeniably shaped investment strategies and economic outlooks worldwide.
📊 Portfolio Performance
📈 Despite these challenges, the portfolio weathered the storm quite effectively. It was a year of cautious navigation, resulting in a modest yet encouraging 9.47% growth after fees, with net worth growing at 6.73% for the year. A significant part of this success can be attributed to a strategic reallocation with a focus on bond ETFs. This move not only helped in hitting my target allocation but also in building a more resilient portfolio, better equipped to handle market fluctuations.
👋 The Crypto Exit
⚠️ The year also marked a significant shift in the cryptocurrency landscape. The implosions of major players like FTX and Binance signalled the end of the post-COVID crypto craze. Witnessing these events, I made the decision to liquidate my entire crypto portfolio, opting to harvest the capital losses. This decision, while painful, underscores the importance of adaptability and risk management in investment strategies.
🎯 Current Allocation
| Asset Class | Allocation | Target |
|---|---|---|
| Australia | 28.40% | 30.00% |
| Emerging Markets | 4.26% | 4.00% |
| US | 26.96% | 28.00% |
| International (non-US) | 13.58% | 14.00% |
| REIT | 1.46% | 0.00% |
| Bonds | 14.34% | 13.00% |
| Gold | 6.76% | 7.00% |
| Cash | 4.24% | 4.00% |
The overall split stands at 75% equities and 25% fixed income plus cash. Excluding cash, that adjusts to 78% equities and 22% fixed income.
🔮 Looking Ahead to 2024
Looking ahead, the aim is to maintain this allocation balance, implementing rebalancing strategies as appropriate to align with market conditions and investment goals across both superannuation and non-superannuation accounts.
💡 As we step into 2024, I remain cautiously optimistic. The lessons of the past year have been invaluable, shaping a strategy that is both resilient and adaptable — ready to embrace whatever challenges and opportunities the new year may bring.