CIS Portfolio Update

CIS Portfolio Performance Update.

1/10/2016

This was another month of recovery for the market and CIS Portfolio as it ended the month to the close on 30th September with a total return of +1.82% which compared to a total return on the FTSE All share of +1.12% for a more modest outperformance of 0.7% this month. Thus it was a strong quarter for the CIS with a total return of 13.7% for an outperformance of 6% as it bounced back from the BREXIT induced crash in June.

This leaves the CIS with a total return of -0.5% year to date which is 12.4% behind the index in 2016 to date, but it is still ahead by 8% since inception in April 2015 as it has produced +15.4% total returns versus +7.4% for the All Share since then. One of the top performers was Powerflute (POWR) which as mentioned on the Blog benefited from a bid which looks like a done deal, so I will be replacing that in this months round of transactions. On the downside another stock which featured in the blog, Character Group (CCT), was one of the bigger fallers as it reacted badly to an in line trading update. As flagged in the blog it continues to Score well and looks good value so it will remain in the portfolio.

Rather than highlighting the other winners and losers here subscribers to the CIS Portfolio should check their e-mail as I have attached a spreadsheet detailing the performance of all the stocks over 1,3,6 & 12 months plus some other statistics. There are also two other tabs showing the first showing the Stockopedia Stock Ranks & the QVM factors as well as the full portfolio in the third tab which I hope subscribers will find useful.

Finally, for subscribers and non subscribers I have, as promised in the blog last month, added a drop down item for the CIS Performance under the Portfolio heading on the site.
If you click on this it will take you to a sheet showing the full performance history of the CIS Portfolio since inception in April 2015.

3 Comments

Paul Hawkins

4/10/2016 07:37:08 am

Hi,
Very much enjoy your updates, so thank you!
One thing that I've been pondering the last few days regards the measurement of performance and your post made me consider how you measure performance.

I wonder if you could share with us how you calculate your monthly total return? I have been using a hybrid version of that from bogleheads with an adjustment for dividends. However I'm not convinced it is the right method to compare.
FYI I use this calculation for my total return each month:
TR = (end val- (net contributions - dividends)/2) / (start val +(net conts - dividends)/2)-1))
I'd be grateful for any information you can share.
Regards
Paul

Jamie link

4/10/2016 10:10:57 am

Hi thanks for you comment. Calculating investment performance can be a messy business & I'm sure the way I do it is not GIPs compliant as that usually involves something called the Modified Dietz Method. See - https://en.wikipedia.org/wiki/Modified_Dietz_method

Obviously cash flows in & out complicate the picture and there is a Simple Dietz Method which assumes this happens half way through the time period which is probably similar to what you are doing.
see - https://en.wikipedia.org/wiki/Simple_Dietz_method

Since cash flows have been limited to just annual contributions in the case of the CIS I use a True Time Weighted Rate of return where each months returns are compounded together to give geometric returns which are generally preferred to simple compounding. See - https://en.wikipedia.org/wiki/Time-weighted_return#Linked_Returns_Methods

This keeps it simple and you just have to rebase the calculation for each years inflow. On dividends I account for these on an XD basis as the dividend comes off the price at the time and that is the method used for the FT total return index that I'm comparing to.
I don't tend to worry too much about the timing of the dividends and therefore just take the end of month value + divs and divide that by the previous months figure / indexed value to get the monthly total return. These are then multiplied / compounded together to give the annual & since inception figures.

Alternatively you can use a spreadsheet and the XIRR function which I have done on the CIS to and it comes out within 0.1% of my TTWRR figure. So I guess at the end of the day it depends how precise and accurate you want to be or if you really need to be GIPs compliant.

I hope this helps and thanks for your interest in the CIS Portfolio. You could always subscribe to the portfolio and get access to the sheet and the underlying calculations & use it as a template for your own portfolio if you wanted. In any event I hope you enjoy many decent returns however you choose to calculate them!

Regards
Jamie

6/10/2016 08:16:03 am

Hi Jamie, Thanks for the comprehensive explanation, which is extremely helpful.
I think I'm going to do some research in all the methods you mention.
I will have a look into subscribing as I'm sure there will be plenty of other useful stuff.
Thanks again and happy investing.
Paul

CIS Portfolio Performance Update.

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