January 9th, 2019
For the fourth quarter of 2018, Shaperfunds generated a total return of -7.32%, versus a -13.97% return for the Standard and Poor’s 500 Index. The out-performance in the quarter was, in large part, due to the out-performance of the largest holding, Tesla Inc (TSLA), which was not always the case in 2018. Shaperfunds generated a -3.51% return for the full year 2018, versus a -4.75% return for the index (dividends included).
Since the beginning of 2015, Shaperfunds generated a 46.3% return, versus a 32.17% return for the Standard and Poor’s 500 Index.
Future expected returns are a function of current valuations. Right now, valuations across different world regions are telling an interesting story:
S&P 500 Index Price/Earnings Ratio: 19.55
FTSE Developed ex US Index Price/Earnings Ratio: 12.6
FTSE Emerging Markets Index Price/Earnings Ratio: 12.2
Foreign stocks, which historically have similar price/earnings ratios as the U.S., are clearly out of favor. Emerging markets have higher growth, better demographics and more opportunity to create wealth. Despite this, there’s a major discount in most markets outside North America.
Right now, our split between US and foreign stocks is 68:32. I’m looking for opportunities to move that split closer to 50:50 throughout 2019.
Shaperfunds holdings and percentage of portfolio, as of close on 1/7/18:
Tesla Inc 19.56%
Schwab Intl Equity ETF 11.17%
Schwab Emerging Markets ETF 10.98%
Apple Inc 5.53%
JPMorgan Chase & Co 5.41%
BlackRock, Inc 4.59%
Activision Blizzard, Inc 4.21%
Amazon.com, Inc 3.81%
Facebook, Inc 3.55%
General Electric Company 3.55%
Tencent Holdings 3.44%
Spotify Technology 2.79%
Alphabet Inc 2.5%
Charlotte’s Web Holdings Inc 2.21%
Twitter Inc 2.05%
AT&T Inc 2.02%
Scotts Miracle-Gro Co 2%
salesforce.com, inc 1.99%
Constellation Brands, Inc 1.99%
Hain Celestial Group Inc 1.83%
Gilead Sciences, Inc 1.76%
American Express Company 1.6%
Baozun Inc 1.47%