With June behind us it is once again time for the obligatory performance review. The first half of 2015 delivered a solid double-digit return and thanks to Greece’s troubles earlier this week I actually managed to beat the benchmark once again. At one point this year I was underperforming the benchmark by ~10%, mainly because the MSCI ACWI has a huge allocation to US stocks and as results profits more than my portfolio when the euro weakens. Foreign FX gains accounted in the first half of 2015 for approximately 33% of my return while it accounted for roughly 63% of ACWI’s return. This is after the EUR/USD moving back from ~1.05 to ~1.11.
* Return in euro’s after transaction costs, dividend withholding taxes and other expenses
** Benchmark is the MSCI ACWI (All Country World Index) net total return index in euro’s
The MSCI ACWI isn’t really a good benchmark for my portfolio, but I don’t think there is a better alternative since the majority of my portfolio consists of securities that aren’t part of any index, or if they are they don’t share that index with the other constituents of my portfolio. Because of that the MSCI ACWI should be viewed more as a reference point instead of a true benchmark. The reason that I use it is the fact that it is well-known, globally diversified and I aim to take roughly the same amount of risk as a diversified 100% equities portfolio
In the first half of 2015 special situations generated a large part of my profits, and I expect that this trend will continue in the second half of 2015 since I’m currently invested in a large number of special situations. MCGC is, of course, one of these and I’ll expect to write-up another idea later this week since I Invested in a Chinese merger arb once again. Currently, 28% of my portfolio is allocated to special situations as can be seen in the graph below:
The 28% allocation to special situations is a new all-time high, simply driven by the lucky circumstance that I’m finding a lot of interesting situations this year while I’m at the same time not finding many attractive long-term value stocks. Short positions that (partly) hedge my exposure in various special situations are however not visible in this diagram. My portfolio is currently 97.2% long and 13.5% short for a net long exposure of just 83.8%: pretty conservative. I actually target a higher net long exposure, but when you enter a long/short trade where both the long and short leg consists of non-marginable securities there is not a lot you can do.
Long everything in the portfolio overview