13 Jan 2014 How the iTrade Fantasy League portfolio outperformed the JSE All Share Index
In what was probably a world first, Sanlam iTrade asked Facebook fans to choose 20 shares and manage the portfolio for nine months. We invested R1m in the shares chosen and the portfolio outperformed the JSE All Share Index! The JSE Index increased by 13% from March to November and the iTrade Fantasy League portfolio profit was 17.6%. The JSE Index does not include dividends, but also no costs, while all costs are included in our profit.
We grouped the Top 100 shares in four sectors: Resources, Financials, Retailers and Industrials. The sector selection was intentionally made to reduce our portfolio’s exposure to Resources, a saving grace in the end. Facebook fans had to like or unlike shares and the top 5 in each sector were included in the portfolio, thus 20 shares in total. Cash was also an option if the market was perceived to be overheated. The fans voted continuously to get shares in or out of the actual portfolio. Every month changes were made to the Portfolio based on these votes.
Soon after we invested the R1m, the JSE Index fell 7%. Because our portfolio had a much smaller exposure to Resources and a big exposure to other Rand hedges, we were a lot better off. The JSE recovered to a new high in May, but saw a sharp correction of 10% in June. Again the saying of “sell in May and go away” seemed to be correct. This time you had to get back quickly though as the JSE made new highs in August. The rest of the year saw the JSE continue to make new all-time highs and the iTrade Fantasy League Portfolio profit soon exceeded R100,000.
The worst performers in the Portfolio were resources like Kumba and Exxaro which were eventually voted out. The move to rather include the Satrix 40 ETF proved a much better choice. The only two shares in the final portfolio with negative returns were Anglos and African Rainbow Minerals. We lost more than R6,000 with Anglos which stayed in the portfolio for the whole 9 months.
The best performers with profits of more than R30,000 each were Aspen, Coronation and Naspers. We invested about R45,000 in each share. Richemont and Mondi recorded profits of more than R20,000 and Sasol was the one star in the Resources sector with a profit of R14,000 plus some good dividends as well.
In the end the major reasons for the excellent performance was the low exposure to resources and the selection of some very good Rand hedges in our Portfolio. The profit of R167,000 were shared by the three winners in the Predict-the-Portfolio competition with 10% going to CHOC, the Childhood Cancer organization. With more than R100,000 going to the winner, some Sanlam iTrade Facebook fans had a great December. It was a great learning experience for all of us and we will continue this year.
Head – Sanlam iTrade