Review of our 3-fund portfolio

Last year, I shared about the 3-fund portfolio that my partner and I created as a means to grow our combined savings. It has been 1.5 years since the inception of this portfolio and it’s about time I review the performance of this portfolio.

Recap: What’s in the portfolio

At construction, our portfolio consisted of the 2 ETFs and 1 unit trust in the following allocation:

Changes

The strategy for this portfolio was a passive (read: lazy) one. The idea was to contribute a fixed amount every month to this portfolio and rebalance when required. No need for much monitoring or active trading or changes to the ETFs within.

Unfortunately, we had to make one major change to our portfolio a couple of months ago which wasn’t by choice, that is to replace the Vanguard Total China Index ETF (HKEX:3169) with Invesco China Technology ETF (NYSE:CQQQ). Reason being 3169 ceased trading and was delisted from the HKEX. As such, we needed to find another ETF that can maintain the Chinese exposure in our portfolio. Thankfully our “forced exit” was a profitable one and we were able to close that position in the green. In terms of what ETF to take the place of the fallen 3169, the fiancé is pro technology and thus proposed CQQQ to capture both the growth of the Chinese economy and that of tech stocks.

Sounded like a win-win situation to kill two birds with one stone right? Sadly the timing of our entry and what followed with the crackdown on Chinese companies was not too kind on us and we are currently down 17% on this ETF.

Performance

Despite the unplanned change in our portfolio composition, our portfolio’s time-weighted rate of return is +15.95% after one year. It did not outperform the S&P500 index, but it did exceed the returns that we would otherwise have gotten if we left the amount in our joint savings account which is our mandate for this portfolio.

The current portfolio breakdown and returns is as follows:

The weightage of VOO is heavier than CQQQ, but the overall still stands at 70% so we did not see a need to rebalance to 35% each. We did purchase more CQQQ one time but it was not enough to bring rebalance as the price of VOO continued to rise steadily while CQQQ dipped.

Thoughts and action plan for the future

Although the returns of this portfolio aren’t fantastic per se, it was a pleasant surprise to realise at the end of a year that on top of our own aggressive contributions to our individual portfolios, we had managed to set aside even more funds for our future. It is quite a satisfying achievement for us as a couple!

Moving forward, we will continue to contribute a fixed lump sum to this portfolio monthly as it has been serving its purpose thus far. We will have to keep a closer eye on CQQQ and rebalance the portfolio perhaps quarterly to ensure that the allocation remains as planned.

Building wealth is a slow process for most individuals and thank god I am not alone on this journey. Two is better than one in this case and I am thankful that my partner is here to grind with me towards personal freedom!

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