Smart Index vs Fund16/02/2015
The corresponding returns and performance between the Smart Index and the Smart Fund is a good demonstration of the difference between active investing and only occasional re-balancing. For the smart index the portfolio is constructed from the best available companies as known at on point in the year and with a view of the possible return for each investement over the next year. It is not possible therefore the react to any adverse event, invest more in a well performing investment or indeed to introduce new members to the porfolio.
On the other hand the Smart fund is able to re-balance and keep a focus in increasing the value of the portfolio or to remove and poor investments whenever the occassion arises. Provided we have the right investments and account for risk we are confident that the price will continue to catch up with the potential value of our portfolio.
For the past 6 months we have remained over-invested. This is due to the strong view that the current postfolio was both under valued and showing strong support. This view has proven corrent so far with the current 1 year return (at 16/2/2015) showing a result of over 29%.
We would only consider holding a cash position if there was no opportunity in the market and so far this has not been the case.