2020 Portfolio Review

Last year my main brokerage account had a total return of 8.97% (6.75% capital gain, 2.22% income). As usual I will compare to VOO, Vanguard's S&P 500 ETF, which returned 17.98% (16.19% capital gain, 1.79% income).  So I lagged the market by 9.01% which is a substantial amount especially considering that almost half of my portfolio was invested in VOO.

The main reason for my underperformance was that the steady dividend paying stocks that I prefer were out of favor (at least in a relative sense) last year.  At the beginning of the year I had 29.45% of my portfolio in individual stocks and 11.49% in ETFs (other than VOO).  The individual stocks returned 2.49% (-.53% capital gain, 3.02% income) accounting for 4.56% of under performance and the ETFs returned -6.15% (-9.49% capital gain, 3.34% income) accounting for another 2.77% of underperformance.  

A secondary reason for my underperformance was that I was not fully invested.  I started the year with 12.23% in cash (the remaining 46.83% was in VOO). During the year I invested 1.75% of this cash.  The remaining 10.49% in cash only returned about .51% in interest accounting for 1.83% of underperformance.

On March 18 I bought Fortis (FTS) a Canadian utility and added to VPU, Vanguard's utility ETF.  This was good timing as the market bottom (with respect to VOO) was on March 23.  However I would have done better buying VOO which returned about 60% from March 18 as opposed to about 33% for FTS and about 19% for VPU.  Still because of the good timing this portion of my portfolio outperformed by .16%.  This all adds up to 9% of underperformance in reasonable agreement with the actual 9.01%.

Only 2 of my individual stocks (BLK and TGT) beat the market by more than 10%.  Another 4 (BBL, CAT, NSC and UNH) were within 10% of the market return.  The remaining 15 (ALL, BNS, CM, ED, CVS, XOM, INTC, IBM, JPM, MET, PEG, SOUHY, TD, WFC and WBK) trailed by more than 10%. And all of my ETFs (except VOO) trailed VOO over the whole year by more than 10%.

When I started doing these reviews I only had one brokerage account which was funded with the IBM stock I had acquired over many years through their employee stock purchase program and which my new employer required me to mostly sell. I also owned some stock received by gift or inheritance in certificate or book entry form. Starting in 2018 I moved some of this stock as well as some cash and my Value Line mutual fund into a second brokerage account. In 2020 this motley collection returned 13.07%.