Copycat portfolio update

This is the end of the second year of my copycat portfolio experiment. So far it’s performed well but not outstandingly. Over the past year it returned 25.2%, which compares favourably to the FTSE (11.3%) and S&P 500 (23.1%) and my actual portfolio (21%). Over two years the copycat portfolio has returned 46.9% compared to FTSE (-1.61%) and S&P 500 (45%) and my portfolio (45%).

I set out the rationale for this benchmark portfolio in the initial post. Broadly speaking, the unashamed goal of this strategy is to free-ride off the best ideas of a rashly-assembled sample other investors while expending as little effort as possible. This is a strategy that you can implement in under an hour.

Someone commented on the copycat update last year that it was a bizarre goal to invest money while being lazy as possible. This is an understandable sentiment, so I thought I should clarify that this just meant to be a hypothetical portfolio – an experiment I am conducting just to see how well it does. That said, I disagree with the premise that effort is a necessary prerequisite for investing, or even that more effort correlates with success. In some cases effort is rewarded but only if it is well-directed – this is the real challenge. It is dangerous to see effort either as something for which reward is necessarily deserved or, worse, as some sort of safety net. All that matters in the end is if you end up picking the right stocks and avoiding the duds, not how you got there. Simple ideas like this one often outperform hours, weeks and months of toil. This may be a little dispiriting if like me you are someone who spends a lot of time pondering about investments and trying to optimise your portfolio, but unfortunately the reality is that most of this is a waste of time. I continue in the hope that over time I figure out more about how to actually add value but until then, like most investors, most of my efforts are generating more heat than light.

Here are last year’s constituents with their performances (ignoring dividends):

  1. SDI 136%
  2. Sesa 99.3%
  3. Future 94.8%
  4. Tesla 87.3%
  5. YouGov 68.3%
  6. Liontrust Asset Management 65.6%
  7. Sartorius Stedim Biotech 63.9%
  8. Somero 62.4%
  9. Lowes 59.9%
  10. Microsoft 52.7%
  11. eBay 32.2%
  12. Endor 30.3%
  13. Netflix 22.4%
  14. Gamma Communications 8.52%
  15. Amazon 6.95%
  16. Royal Unibrew 3.82%
  17. Fevertree 3.76%
  18. Burberry -1.86%
  19. Games Workshop -2.53%
  20. MasterCard -9.62%
  21. Prosus -26.9%
  22. Best-of-the-Best -46.8%
  23. Arcontech -53%
  24. Alibaba -53.6%
  25. THG -73.6%

Overall the portfolio has done pretty well, though with quite a few big losers as well as winners. I don’t think I could have predicted at all which ones the winners were going to be and think this highlights the importance of diversification.

The new portfolio

For the new portfolio, I’m following the same approach of selecting the largest positions of the best investors I can identify without expending effort. As I did last year I’ve spent about half an hour selecting 20 professional fund managers (mostly based on performance rankings) and 5 private investors. Most are the same as last time.

  1. Amazon
  2. Brickability
  3. Diageo
  4. eBay
  5. Future
  6. Games Workshop
  7. Harvia OyJ
  8. IMCD
  9. Kainos
  10. Liontrust Asset Management
  11. Lonza Group
  12. Macfarlane
  13. Maxcyte
  14. Meta Platforms
  15. Microsoft
  16. Netflix
  17. Next Fifteen Communications
  18. Nvidia
  19. Sabre
  20. Sartorius Stedim Biotech
  21. S&U
  22. Tesla
  23. Victoria Carpets
  24. Volex
  25. Western Alliance Bancorp

As for the previous portfolios many of the selections are already in my watchlist and some I have considered but discounted. However, there are also quite a few that I know little about and seem worthy of further investigation: Sabre, IMCD, Western Alliance, Harvia OyJ and Victoria Carpets.

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