Portfolio Update 2020 (Year in Review)
Welcome to my Portfolio Update for the full year 2020!
Where we will go over my 2020 progress including my total portfolio value, my portfolio holdings and, most important of all, the total passive income I earned in 2020!
If you’re not already aware, as a European investor, I track my investment portfolio primarily in euros but my portfolio is diversified and many (most) of the holdings are USD denominated and listed in the US.
So if you’re not from the EU, don’t click away just yet! I consider my portfolio to be a global one, albeit with an EU investing twist.
Its main objective, generate (relatively) passive income that increases every year. This is Here Income after all.
Wherever you are reading from, I hope you that you will find my 2020 portfolio update useful.
And with that said, let’s look at some numbers.
Portfolio review and total portfolio value
Here is high-level view of my portfolio at closing on 31/12/2020:
2020 was a record year in terms of funneling cash into my brokerage accounts, mostly due to the extra cash I put in during the depth of the pandemic.
In total, I added €84,000 (just over $100K for those of you who prefer dealing in USD), hitting and surpassing €200,000 in total cash deposited in investment accounts milestone.
In terms of portfolio value, 2020 was also the year in which I breached the €250,000 mark (or $300,000) for the first time.
From the performance perspective, my total portfolio gain percentage accelerated significantly in the second half of the year, reaching a total gain of around 14%.
While this underperformed tech and growth heavy portfolios and indices, I’m very happy with the progress.
Especially since I do have quite a high allocation to income investments which tend to favor stable income generation over capital gains, as we will see when we go over my asset allocation.
I also had to overcome headwinds in the USD/EUR exchange rate, since the majority of my portfolio is exposed to a USD that has materially weakened against the EUR this year.
The chart below clearly shows this, source x-rates.com (chart shows dollars for 1 euro):
My performance in euro terms would have been much higher had the EUR/USD exchange rate remained stable, but I digress.
What’s important to me is that I’m slowly making progress toward my longer term target of having €500,000 euros of total cash funneled into investments and I’ll be happy if that coincides with a total portfolio value of 650,000 to €750,000 euros.
Being value and income focused, I’m adopting the slow and steady, “it’s a marathon not a sprint”, approach to my portfolio. But yes, in hindsight, everything should have gone into Tesla, SPACs or virtually any loss making growth tech stock (only half kidding).
But I’ve set goals for myself that take into account my conservative approach.
If I can reach my goals by being conservative and staying true to my investment style and “circle of competence”, then this is what I will continue to do.
Having said that, I did see first-hand the potential of high growth stocks in 2020 and I definitely won’t hesitate to sprinkle in a few additional core growth holdings during the next market pullback.
2020 was a crazy year in many ways, but not least in the way the financial markets have continued their upward trajectory despite the precarious economic environment that we’re in.
I’ve used the 2020 mega bull market as an opportunity to rotate my investments into higher quality blue-chips and ramping up investments into less volatile, income focused, asset classes such as preferred shares.
I also reinforced my portfolio in 2020 by starting a gold allocation in a physical gold ETF, which I will aim to maintain at around 5% of my total portfolio value.
Another way in which I reduced risk is by drawing down on my European Peer to Peer lending portfolio despite the very juicy yields of above 10% that I’ve been consistently obtaining ever since I started investing in the space (over 5 years ago).
Overall, I’m happy with the steps I have taken to position my portfolio for the long term.
Hope for the best, prepare for the worst! This rings true more than ever today.
And, with that said, let’s go over my portfolio holdings.
My Portfolio holdings
As you probably know by now, I try my best to diversify my investments (within reason) into different types of assets. Each presents unique characteristics and most of them are tailored to delivering a relatively high income to investors.
My portfolio is comprised of the following types of investments:
- Exchange Traded Funds (ETFs) – as a European Investor, I’m limited to EU listed ETFs. I invest in both accumulating (to reduce tax impact) and distributing ETFs, across providers.
- Individual stocks – mainly in high yield dividend stocks and dividend growth stocks in the US but I also have EUR stocks and GBP stocks. I also hold some non-dividend paying stocks.
- Real Estate Investment Trusts (REITs) – primarily invest in the US but also in European REITs
- Preferred Shares –in the US and Canada. I invest primarily, in REITs preferred shares
- Closed-End Funds – exclusively in the US and I primarily target less accessible fixed income investments such as mortgages, loans, bonds and preferred shares
- Bonds – exclusively in the US due to higher prevailing USD interest rates.
- P2P Lending – exclusively in EUR, across two platforms in the Baltics
- Gold – through a physical gold ETF, listed in Switzerland (for extra safety).
Equities and Funds (Listed Securities)
The table below lists my ETFs, individual stocks, REITs, Preferred Shares and Closed-End Funds. In fact, all my investments that can be bought on a stock exchange.
They reflect closing prices and holdings as of the 31st of December 2020.
|Ticker||Company||Shares||Cost basis||Market Value||Gain/Loss||Type||Currency|
|ITW||Illinois Tool Works||22||$2,939.97||$4,485.36||52.57%||Stock||USD|
|RPT-D||RPT Realty Pref. Series D||90||$2,996.30||$4,485.60||49.70%||Preferred||USD|
|CCI||Crown Castle International||25||$2,723.06||$3,979.75||46.15%||REIT||USD|
|MAA||Mid-America Apartment Communities||16||$1,508.62||$2,027.04||34.36%||REIT||USD|
|BAM||Brookfield Asset Management||150||$4,786.05||$6,190.50||29.34%||Stock||USD|
|MNR||Monmouth Real Estate Investment||125||$1,739.94||$2,165.00||24.43%||REIT||USD|
|UTF||Cohen & Steers Infrastructure Fund||160||$3,330.99||$4,131.20||24.02%||CEF||USD|
|AMS:VWRL||Vanguard FTSE All-World UCITS ETF||243||€16,946.41||€21,017.07||24.02%||ETF||EUR|
|RLJ-A||RLJ Lodging Trust Pref. Series A||351||$7,505.88||$8,915.40||18.78%||Preferred||USD|
|AMS:EMIM||iShares Core MSCI Emerging Markets ETF||383||€9,560.38||€11,202.75||17.18%||ETF||EUR|
|FFC||Flaherty & Crumrine Preferred Securities||100||$2,010.00||$2,343.00||16.57%||CEF||USD|
|DLR||Digital Realty Trust||20||$2,394.51||$2,790.20||16.52%||REIT||USD|
|DLR-L||Digital Realty Trust Pref. Series L||84||$2,039.76||$2,293.20||12.42%||Preferred||USD|
|PTY||Pimco Corporate & Income Opportunity Fund||125||$1,990.88||$2,231.25||12.07%||CEF||USD|
|REXR-C||Rexford Industrial Realty Pref. Series C||45||$1,091.80||$1,212.30||11.04%||Preferred||USD|
|AMS:VFEM||Vanguard FTSE Emerging Markets ETF||97||€4,917.18||€5,443.64||10.71%||ETF||EUR|
|FRA:H4ZJ||HSBC MSCI World UCITS ETF||670||€13,197.44||€14,585.90||10.52%||ETF||EUR|
|NLY-I||Annaly Capital Management Pref. Series I||150||$3,489.00||$3,838.50||10.02%||Preferred||USD|
|PCI||Pimco Dynamic Credit and Mortgage Income Fund||106||$2,050.04||$2,247.20||9.62%||CEF||USD|
|NZF||Nuveen Municipal Credit Income Fund||375||$5,640.03||$6,045.00||7.18%||CEF||USD|
|AMS:IWDA||iShares Core MSCI World ETF||274||€15,482.10||€16,327.66||5.46%||ETF||EUR|
|BHK||Blackrock Core Bond Trust||280||$4,331.25||$4,564.00||5.37%||CEF||USD|
|LON:LGEN||Legal and General Group||1,480||£3,738.97||£3,939.76||5.37%||Stock||GBP|
|EFR||Eaton Vance Senior Floating-Rate Trust||170||$2,057.60||$2,164.10||5.18%||CEF||USD|
|AMS:VEUR||Vanguard FTSE Developed Europe ETF||255||€7,554.86||€7,866.75||4.13%||ETF||EUR|
|WPC||WP Carey Inc||40||$2,742.66||$2,823.20||2.94%||REIT||USD|
|HPI||John Hancock Preferred Income Fund||200||$3,831.37||$3,936.00||2.73%||CEF||USD|
|GNL-B||Global Net Lease Pref. Series B||120||$2,984.40||$3,048.00||2.13%||Preferred||USD|
|SWX:AUUSI-USD||UBS ETF (CH) - Gold (USD) A-dis||189||$11,689.06||$11,878.65||1.62%||Gold||USD|
|TSE:BAM.PF.H||Brookfield Asset Management Pref. Series 44||123||$3,113.90||$3,122.97||0.29%||Preferred||CAD|
|MNR-C||Monmouth REIT Pref. Series C||120||$3,009.90||$3,012.00||0.07%||Preferred||USD|
|MAIN||Main Street Capital||140||$4,974.04||$4,516.40||-9.20%||Stock||USD|
|LON:RDSB||Royal Dutch Shell||227||£3,971.83||£2,858.84||-28.02%||Stock||GBP|
Let’s go over a few of the highlights related to my portfolio holdings.
Overall Best Performer
My overall best performer in 2020 was Apple, rising a whopping 80.75% during 2020 and bringing my overall gain up to 218.49%.
I sold enough to recoup my initial investment at around the 200% gain mark and I am now holding on to the remainder.
If only I had invested more, hindsight really is 20/20.
Overall Worst Performer
The worst performer in my portfolio, and the perennial thorn in my side for a few years now, was and is Unibail Rodamco Westfield, dropping a massive 54.08% in 2020 alone.
This European shopping center real estate company, which also has exposure to the U.S. following it’s Westfield acquisition, has been decimated by investor sentiment in the retail space and the holistic closures of shopping centers due to the pandemic.
Unfortunately, I’ve caught the proverbial falling knife on this one, having invested several times on the way down.
I’m waiting for an opportune time to exit (at a lower loss) because I do think that there will be a decent recovery in the stock once the pandemic subsides.
The investment I am most proud of is my investment in the preferred shares (Series D) of open-air shopping centre REIT RPT Realty.
2020 was the year I really got into preferred shares and I feel that RPT Realty Series D really validated my preferred share investment strategy.
RPT Realty Series D, my 5th best performer in terms of overall gains at 49.70%, delivered these gains in a very short period of time, and even better, I acquired the shares when they were yielding over 10%!
High income with high capital gains is an income investor’s dream and RPT Realty delivered incredibly well on both fronts.
And who said preferred shares were just boring income investments with no growth potential?
At the other hand of the spectrum, there’s my biggest fail. And I’m not sure why I’ve decided to remind myself of this.
And no, it’s not related to not having sold everything and putting it into Tesla and Bitcoin at the beginning of the year.
While I’ve had a few failures (most obvious being my worst performer Unibail Rodamco, or even dividend decimator Shell), I would say that my biggest fail this year was selling Disney when it cut its measly dividend at the onset of the pandemic.
I had bought at just over $100 per share two years ago to get in early on the Disney+ wave before it was reflected in the price. As soon as I heard they were working on Disney+ I was sure they were going to crush it.
This was incredible foresight because the price eventually rose to around the $140 mark and I was feeling very proud of myself.
Then during the pandemic, the price tanked all the way back and beyond my initial purchase price.
While I was still confident in the growth of Disney+, the second wave of the pandemic was starting and I was well aware that parks, movie theaters and live sports broadcasting were Disney’s main revenue sources.
When I saw that it would it take a very long time for these revenues to come back to pre-pandemic levels, and that Disney was now loss making, cutting its dividend and taking on debt, I quickly fled for the exits at around my purchase price.
Disney is at $168 at the time of writing.
And on this positive note, let’s continue with the review of my non-listed holdings.
As a reminder, I track my bonds at their face value and not current market prices because I intend to hold them until maturity. I currently own two REIT bonds with a face value of 8,000 USD, which is what I will get when they both mature sometime in 2023.
I have bought these bonds at a discount, 7,170 USD to be exact, so I will also get a nice capital gain upon maturity in addition to the enhanced yield that I get for buying them at a lower price.
I’m really looking to add to my individual bond holdings but it’s been very hard to find opportunities in this interest rate environment. Maybe I’ll have more luck in 2021.
As a reminder, I’m invested in what I consider to be the best European platforms, Mintos and EstateGuru.
During the year, having seen quite a few European platforms and loan originators go bust and many borrowers defaulting on their commitments, I decided to reduce my allocation to the space.
I’ve also been concerned about the long term viability of the P2P Lending business model.
Below is an overview of my P2P lending portfolio as of the 31st of December 2020:
As part of my annual portfolio review, I’ve decided that I will completely divest my loans on EstateGuru because I’ve noticed an increase in delays and defaults.
It’s also mostly a good opportunity to simplify my life a bit given that my allocation to EstateGuru doesn’t really move the needle.
Finally, here are the cash holdings in my brokerage accounts (this does not include my emergency fund and other cash that I have in savings accounts).
Quite a bit in there so I’ll need to put it to work once I find some enticing opportunities, either in my existing portfolio or in new investments.
I need to make sure my portfolio remains manageable though it’s important to note that only my individual stocks and REITs require quarterly monitoring.
For the rest, I kind of let them run and take a deeper look if there’s a huge jump or fall in price.
OK, having gone over my holdings, let’s now take look at my portfolio diversification.
There are many different ways to assess your portfolio diversification levels. I choose to do it by investment vehicle because that’s how I look at it right now and I feel that the characteristics of the vehicle dominates other factors such as market cap, region, etc.
Now let’s see my portfolio diversification at the end of December 2020:
As I track my portfolio value in euros, all numbers are adjusted to euros at the interest rate of the time the snapshot was taken.
Now let’s see it visually, in percentages:
ETFs as largest allocation, check, no over exaggeration on my REITs, Preferred shares and Closed End Funds, check. Cash in brokerages, need to keep looking for those opportunities!
Now let’s see my diversified portfolio from the currency perspective:
Now, let’s adjust the USD, GBP and CAD values to EUR and compare them:
Quite a big exposure to USD and this is not even representative of my real underlying exposure. For example, my ETFs listed in EUR have a very significant USD allocation and many of my stocks have global currency exposure.
My large USD exposure does not concern me because I’ve already got huge exposure to the EU and its economy, just by being based there. My job, my savings, my pension and the equity in my home, all in the EU.
While the USD exchange rate did not work in my favor in 2020, I take solace in the fact that I continued to invest a large portion of my savings in USD denominated assets, while the euro has been strengthening.
This bodes very well for the moment in which exchange rate trends will reverse. It is only a matter of time before this headwind becomes a tailwind.
My Passive Income for the Full Year 2020
Saving the best for last, this is Here Income after all, I present you the breakdown of my Passive Income for the Full Year 2020 and how my average monthly income compares to 2019:
Wow! 510.30 euros per month on average. I’ve reached my target of averaging at 500 euros per month!
I did not expect it to be this much over my monthly passive income of 348 euros in 2019, 42.5% greater in fact.
I can start to feel the compounding machine of new money and reinvested dividends / interest is starting to take hold. Generating a steady and reliable passive income from investments takes time and discipline.
I think I’ll aim to be at 625 euros per month in 2021, bring it on!