Beating the FTSE 100 and the S&P 500 is not the objective of The Value Investor Report‘s Model Portfolio.
But it’s nice when it happens 🙂
The Value Investor Report Model Portfolio (TVIR) has gotten off to a superb start.
Here are the numbers for the first month of investing:
In it’s inaugural month (August) TVIR returned 2.41% whilst the FTSE 100 returned minus 6.71% and the S&P 500 returned minus 6.23%.
Not a bad start.
For those new to the blog The Model Portfolio follows a long-term value orientated strategy.
In plain English it means that weekly, monthly and sometimes quarterly results have little impact on the projected long-term performance.
This is why beating the FTSE 100 and the S&P 500 is not the objective of The Model Portfolio.
Instead and in no particular order, here are the top 3 objectives of the Model Portfolio:
- To provide a detailed and transparent value investing strategy in real-time
- To adhere to and implement an absolute return strategy
- To provide private investors with an alternative solution to the mainstream financial services
Value investing in real-time is a measured but profitable exercise. Think Mo Farah rather than Usain Bolt.
Why Absolute Returns?
Bench marking is ingrained into the financial services community because it allows private investors to compare the value of investment products they’ve bought against a seemingly legitimate ‘standard’.
The simplest example of this is to compare your own pension returns against the FTSE 100 or S&P 500; your expectation should be that over time your pension provider will beat the FTSE or S&P.
It has been well documented for decades that UK pension net returns to investors have actually underperformed the FTSE 100 over time due primarily to the fees charged by pension fund providers.
The advantage of absolute returns is that I’m free to pursue out-sized returns from investing in stocks without the bind of tying progress to a benchmark which is fraught with problems.
For example many of the stocks I invest in do not resemble anything like a typical FTSE 100 stock.
But the true advantage of an absolute returns mindset is psychological – the freedom to pursue a long-term value-orientated strategy without regard to the ups and downs of the stock market as a whole.
Here’s to many more months of capitals gains.