July 2019 Quarterly Rebalance: More Vanguard and Continued Outperformance

July 2019 Quarterly Rebalance: More Vanguard and Continued Outperformance

The ‘SW Top 10 Members’ is an index comprised of the top 20 stocks, held by the top 10 best performing portfolios. That’s the top 10 of over 60,000 portfolios! Needless to say, to be in the top 10 you’ve got to be a consistent performer.


The index is rebalanced quarterly, so we’re checking back in since the April rebalance.


In short, it continues to outperform the market at 833 bps over 24 months until the end of June 2019. An annualised return of 11.61% over four years, compared to the ASX200 at 8.48%.


How Does an Investor Make It Into the Top 10?

The question that everyone always asks. The WealthCheck score is SelfWealth’s proprietary measurement used to rank an investor against the Community. It takes into account:


  1. An investor’s time-weighted performance over a 12-month period, which itself is broken down further into different periods and is compared to the rest of the community. This counts for 50% of the score.
  2. Next, we look at the diversity of their portfolio, which is 40% of the WealtCheck score.
  3. Then the final 10% is made up by a Refinitiv (previously Thomson Reuters) valuation of the portfolio.


The WealthCheck is then represented as a letter, starting from A+ and bottoming out at F. Note that you can be a high performer, but have a low WealthCheck score, due to your performance coming from one stock. A portfolio like this would not make it into the top 20 performers.


But Aren’t You Just Chasing a Bolted Horse?

This is the biggest criticism received of the community portfolios, which is based on the phenomena of the Wisdom of the Crowd. The criticism states that the performance of individuals is based on historical performance and the value has already been taken from the rise of that stock. I.e. “The system picks stocks that have performed well in the past and have run their course!”


This is why we use a variety of time periods, not just 6 months or 30 days, combined with diversity and valuation of stocks, to pick the best investors not the best stocks. Once we find the best investors, the system pulls out the stocks they hold and equally weights them into the index you find here.


At the end of the day, this index along with many others in the SelfWealth platform has years of data behind them and over long periods have shown outperformance. The numbers talk for themselves.


What’s in the Index?

This is what you’re really here for! Note: the coloured dots represent overvaluation (red), fair valuation (yellow), undervaluation (green) or no valuation given (black) by Refinitiv as at 11th July 2019.



Betashares’ A200 — no surprise!

Betashares’ ASX200 index-tracking ETF (ASX:A200) launched in May this year with an unbelievable management fee of 0.07%. Betashares’ closest rival for ASX200 ETFs, Vanguard, has since lowered its fees in response. Presumably there was a lot of outflow going from Vanguard to Betashares in the previous quarter. Although Betashares isn’t known for low-cost ETFs, Australian investors are happy with this new product either way.



The SelfWealth community has got behind Australian KYC platform and public unicorn iSignThis (ASX:ISX) and included it in the top 20. Some may say recent gains can’t be repeated but that was also said when the community included Afterpay at around $17.


Vanguard Increases Share… Again.

The last rebalance we highlighted the large share of the top 20 that Vanguard held. Now it’s even bigger, at 40% of the portfolio weighting. Granted, these ETFs represent a large swathe of companies and markets, the high performers continue to believe in low-cost index trackers. The remaining 60% of the portfolio is a mix of ETFs and individual companies.


Afterpay Still There!

It’s survived so long, top investors picking that it still has a way to go? What are your thoughts? Tweet at us @_selfwealth or comment on our Facebook post.


How Do You Access This Index?

Simply create a SelfWealth account and sign up to Premium – you get three months for free upon sign up. It’s then $20 per month, which also gives you unlimited Refinitiv articles, live pricing on the stock analysis page as well as free-market depth. Want to follow this index? We’ve got a mechanism called ‘target portfolio’ that lets you align your portfolio to this index with a few clicks.


Any questions or if you need help with your account, get in touch at members@selfwealth.com.au or on live chat during business hours.


If you’ve already got an account, you can view all SelfWealth indexes via the left-hand side menu once logged in, by clicking Members > Index.


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