What have we actually invested in?

Before I start this post I just want to quickly note that we’ve launched a Facebook page for the blog. So please like and follow so you can easily see when a new post is up each week.

Every month in our net worth update I list a category named Sharesies and tell you how much the value of our portfolio is that month. But I don’t think I’ve ever gone into much detail about exactly what’s in that portfolio. So I’ll do that tonight. Once you see our portfolio laid bare you’ll probably spot the basic mistakes we’ve made so I’ll explain how we’re working on those as well 🙂

First up, let’s get straight to the breakdown of what we’re invested in:

Asia Pacific Fund$110.784.22%
Australian Mid Cap Fund$74.572.84%
Australian Top 20 Fund$101.183.85%
Emerging Markets Fund$108.004.11%
Europe Fund$111.744.26%
Global Bond Fund$82.723.15%
NZ Bond Fund$27.901.06%
NZ Mid Cap Fund$464.7417.70%
NZ Property Fund$224.118.54%
NZ Top 50 Fund$519.7119.79%
US 500$558.5021.27%
Sky TV (SKT)$22.540.86%
Auckland Airport (AIA)$67.412.57%
Napier Port (NPH)$141.765.40%

If you’re doing the maths, you’ll notice it doesn’t quite add up as there’s $10 in our Sharesies “Wallet” that I haven’t bothered to list there.

When we started investing in funds, it was very much a “play” exercise. There are a lot of funds available to invest in and the general advice out there is that you really only need two or three to be well diversified and I agree. Half of the funds we’re invested in are really mostly out of curiosity and for fun and we have very little money invested in them and won’t be investing any more money in them.

The really interesting story is in the companies we’ve invested in. Again, these are really mostly for play, we won’t be investing any more in them, but still made some dumb moves. We bought Sky TV when their shares were $1, thinking “how much more can they drop?”. Well, let me tell you, they lost another 50% of their value even before the covid-19 situation hit 😀

I’ve talked before about our investment in Auckland Airport. And it was looking like a good play until the global aviation industry got shut down basically overnight. But that kind of unpredictable stuff is exactly why it’s important to invest in funds, not individual companies folks. Everyone can predict what’s going to happen until they can’t. Although, notably I did mention in that post from July 2019:

Antibiotic resistance could cause a global pandemic and shut down international aviation for an unspecified period of time. 

Mr R2A, July 2019

Ok so I didn’t quite get the cause right but it’s eerie now reading it nearly a year later! I completely forgot that I said that until I re-read the post just now. I thought I was over-exaggerating to make a point at the time and now here we are.

Napier Port has worked out great for us. Relatively speaking that is. It’s basically worth what we paid for it after jumping up 40% and then heading back down again with the rest of the stock market. We bought those shares about a day after the port went public. Not being Hawkes Bay residents we weren’t eligible for the IPO.

Anyway, I digress. The main issue we have is that too much of our investments are “play money”. I’ve talked about the funds and companies we’ve invested in just for a bit of curiosity, but those funds and companies make up 25% of everything we have in Sharesies. That’s too much! Our play money should be around 5% of what we have invested, at most. This is our ideal portfolio structure, giving the play money a back seat:

Asia Pacific Fund$1000.5%
Australian Mid Cap Fund$1,0005.0%
Australian Top 20 Fund$1000.5%
Emerging Markets Fund$1000.5%
Europe Fund$1000.5%
Global Bond Fund$2,00010.0%
NZ Bond Fund$2,00010.0%
NZ Mid Cap Fund$1,0005.0%
NZ Property Fund$1,0005.0%
NZ Top 50 Fund$6,00030.0%
US 500$6,00030.0%
Sky TV (SKT)$2001.0%
Auckland Airport (AIA)$2001.0%
Napier Port (NPH)$2001.0%

As you can see, we’re going to have to get our total Sharesies balance up to around $20,000 in order to get the proportion of “play money” down to that 5% target! Definitely likely over the next couple of years. It would be much simpler to just sell some funds and companies and simplify, but I’m stubborn, I like having play money, and now’s not really a good time to sell anyway hehe.

So we’ll keep investing into our actual investment funds instead. As you can see, the NZ 50 and US 500 will be our main funds, supported by some riskier Mid Cap funds that should over time deliver similar or better returns than the standard funds, and we really need to get more into bonds just to balance things out a bit as well.

We’ll also aim for 5% in the NZ Property fund just for a bit of diversification. We don’t need a lot of diversification into property because we already own residential property that is by far and away the majority of our net worth. But having a little bit in a commercial property fund means we have at least some investments that are not shares and are also not residential property either, which is a nice-to-have.

So, this has been a long post! Hopefully it explains what we’ve invested in and why and how we’re going to dig ourselves out of this structure and into a better one. And may I never be right about a global pandemic ever again!

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