My investment fund

After two years of investing for fun, I was troubled because neither the ING internet banking tool nor Google Finance enabled me to correctly monitor the profitability of our investments.

  • Google Finance shows each new addition of capital as an increase of assets (price) in the same way as if a particular stock had increased its market price. So after a year our portfolio showed an increase of 97%… but most of it was due to new additions of capital.
  • While with ING, each time we added some cash it lowered the profitability as it went directly to the denominator of the equation (the same happens with Google Finance “gain”).

I discussed this with Luca, read a little bit and then I found out that the best way would be to treat ourselves as a mutual open-ended fund (fondo de inversión). I had to define a net asset value per share (valor liquidativo de la participación) at the beginning of the period and then treat each addition of capital as an issue of new shares to ourselves.

After spending sometime digging in the files and emails of the past two years, reading a bit about how to treat these values, etc., from now on we can readily compare at any moment our “J&L investment fund” with any other fund, stock or index. So did I…

If we had a commercial mutual fund we would announce ourselves with something like:

  • In the year 2010 the gains of the fund were +22.8% compared to
    • S&P 500 ~ +13% (target index)
    • Dow Jones ~ +11%
    • NASDAQ ~ +17%
    • IBEX 35 ~ -17%
    • Euro Stoxx 50 ~ -10%
  • The gains of the fund since its creation in January 2009 have been +86.6%, with a compounded annual gain of +37.6%.

Not bad.

Nevertheless, if we compare it to the leading Spanish value investing fund managers from Bestinver, in 2010:

  • Bestinfond ~ +19%;
  • Bestinver Internacional ~ +26%;
  • Bestinver Bolsa ~ +5%

Since January 2009 both Bestinfond and Bestinver Internacional have fared better than “J&L”, though not Bestinver Bolsa.

Today, now that is already defined, the net asset value per share is 57.19€… however “J&L fund” is not yet that open-ended: it’s open to our own additions to the fund but not to third-party capital… maybe in a couple of years we go and set up an investment club or fund :-).

After reading Ben Graham’s book “Intelligent Investor” I wanted to give it a try with investing, this is why I invest in stocks myself, but, clearly, if you are tempted to follow third-party advice, rumours, tips, etc., you’ll be better off just investing in a low-cost index fund (a strategy described by Burton G. Malkiel’s book “A Random Walk Down Wall Street”) or take a look at the above-mentioned value investing managers.

NOTE: “J&L fund” numbers are pre-tax of capital gains, include dividends (after-tax) and are net of transaction costs & commissions.

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10 Comments

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10 responses to “My investment fund

  1. Pingback: Tweets that mention My investment fund | The Blog by Javier -- Topsy.com

  2. Impressive figures, J&L. I’m quite far from those figures… :-/ Consider opening it to the public.

    (Let’s see if this comment passes the filter…)

    • … well, you started a bit before the crisis, that is one reason.

      It may also happen to you the same distortion of the figures due to adding up more capital, what I commented at the beginning of the post, which is what triggered the making of whole calculation and post. Try to recalculate your figures in that way, it won’t take “long”.

      I do consider opening to the public, but the terms will be as unfriendly as W. Buffett partnership back in the 60’s 🙂

      (It did pass the filter…)

  3. Luca

    I vote for calling it L&J Fund!

    • Trust me: I thought of calling it like that out of politeness, but then I thought it sounded much better “J&L”, doesn’t it? (like P&L… it takes effort to say L&J).

      • Luca

        I don’t think LLCoolJ would accept your argument. :-p

        However, I admit that J&L sounds kind of catchy and really, I am already relieved it’s not called something like A400M-fan-fund!

  4. Maria Angelica

    hehe definitely J&L sounds good! Javi & Luca, both of you are an example of perseverance and hard-work. Congratulations!

  5. Pingback: Our investment fund in 2011 | The Blog by Javier

  6. Pingback: Our investment fund in 2013 | The Blog by Javier

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