Is It The Winning Or The Taking Part That Counts?

It’s not the winning, but the taking part that counts.

No, that wasn’t a quote from Warren Buffett or Neil Woodford. That was a quote from me, at the end of the iShares Fund Frenzy challenge – the fantasy football league of exchange traded funds that has now come to an end – when I realised I hadn't quite won the £20,000 charity prize.

I ended up in position 275, with 137.19 points. But that’s hardly a bad result, considering I’m a hack.

It turns out the competition was pretty tight, with an awful lot of investors squeezed between that mark and the winning score of 162.86 – a somewhat begrudging congratulations is due to team “Alpha Generators”.

What does that tell us? That if investors are simply trying to capture market exposure, there will never be much of a difference in returns, especially if we’re all piling into the mainstream markets like the FTSE 100 or the S&P 500. Slightly ironic, then, if you consider the winning team’s name.

Most of us, after all, would be happy to simply beat inflation and get a real return from their ISA. Or even just open an ISA, to make ourselves feel better.

But there are certain reasons I did better than anyone who scored less than 137.19 points since 5 May. Equally, there are reasons why team Alpha Generators are merrily swigging champagne.

But let’s focus on my positive choices, eh?

China large caps

The first is my China large cap equity captain, who automatically scores double points under the iShares rules. This ETF may be far off its highs of November/December 2013, but during the run of the game it perked up a bit and delivered 9.68 percent over the last month. To emphasise the point, the same ETF is down 2.04 percent year to date.

Russian equities

And who would have guessed it: my Russian equity ETF delivered positive returns (10.23 percent over one month) despite the escalating violence between Russia and Ukraine.

But that is only because the game started at the right point. Russia has since clawed back all losses since the temporary market worry over the intervention in Ukraine, so it seems like that buying opportunity has already come and gone. The analysts’ consensus of the Russian problem being “contained” was correct – this time.

UK and US

Things are healthy-ish in the UK and the U.S, with rising inflation, improving industrial data and falling unemployment. These ETFs have been the so-called vanilla, building block exposures in my portfolio, and they have also been on an upwards trajectory since the start of the year – I would have been a fool to miss out on these two funds. (I swapped them in half way through).

But when it comes to the FTSE 100 and S&P 500, there have also been problems along the way.

The FTSE 100 ETF has delivered 4.08 percent year to date, and the S&P 500 ETF has returned 8.39 percent. The road hasn’t been a straight line, by any means, but volatility has generally been low.

These indices are like a Monet painting – the picture is prettier the further you stand back.

Spanish government bonds

Out of all the fixed income funds, of which there were very few to choose from, my iShares Spain Government Bond UCITS ETF fared rather well. In the game, it generated 5.73 points. In “real life” the ETF has rallied since 22 May, and has returned 1.71 percent over the last month.

That doesn’t sound like a major boost to my portfolio, but consider the fate of this ETF two years ago when investors were worried about the collapse of the Eurozone and the yield on ten year bonds peaked at over 7 percent.

That yield is down to 2.64 percent today, partly due to European Central Bank action to loosen monetary policy. If the game had gone on longer, I wonder how this ETF would fare in the case of ECB money printing.

Oh, the benefit of hindsight!

I stick to my investment guns – it is the taking part that counts, and not everyone can guess / make the right informed choices in a month to beat the champagne-swirling Alpha Generators.

I’m almost relieved the game is over. Tactical investing is surely not for everyone.