Static Mutual Fund Portfolio the Last 2 Years Up 43 Percent - Svendsen Tech
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Static and Passive Mutual Fund Portfolio

Have you ever wondered what would happen if you could travel 2-3 years back in time and invest in some passive index funds? In this blog post I describe a, for the last two years, (almost) "static" portfolio, consisting of mutual index funds with low costs (0.3%-0.4%, no buy/sell costs). The investments were distributed as even shares of 500 NOK per fund in six funds. The funds are index funds for emerging markets, Denmark, Finland, global, Norway and Sweden.

The net yield is 43 % since October 26, 2018. I'm writing this on the evening of October 27, 2021. To me it's somewhat interesting to see how I fared in this account where I did not actively manage my investments. I'm sad to say that the passive approach has beaten my managed approach in recent years, except for in my "casino portfolio stunt" where I struck luck and went up 70 % in an account over the course of a few months(!). Over 2.9 in Sharpe ratio for the last year. 0.5 Sharpe ratio for the last three years. Bumpy ride.

The Graph of the Last Three Years

Static and Passive Mutual Fund Portfolio for 2 Years

The Minor Exceptions

On December 3, 2019, I bought the funds. There are a few exceptions. I bought KLP AksjeFremvoksende Markeder Indeks II on 2020-02-24. On February 10 and 11, 2021, I sold "DNB Teknologi" for 651 kroner and bought "Nordnet Indeksfond Global ESG NOK" for 500 kroner. I had made 151 kroner, 23 %, on DNB Teknologi, and kept that as cash. Now that I'm preparing to share this little nugget of information, I regret not staying truly static since that would have made describing it a lot easier, and the value of the information better.

The second exception is that when markets turned sour a few months ago, I decided to increase my market share for some healthy, contrarian fun, and bought some pseudorandom choices among mutual funds. These purchases were made between July 30 and September 10, 2021. These silly investments are currently down. This portfolio is public on "Shareville", something I used many years ago, a social finance networking website, so I figured I would let people scratch their heads about my choices. The choices are, in fact, close to random.

Here you can see the minor recent activity (negative value means buying, positive value selling). The impact on the portfolio's development is mostly negligible still. It will impact more as time passes.
The Minor Activity

I used even amounts when buying. All the invested capital in each fund started as 500 kroner/NOK, except for the last 5 purchases in the screenshot, which were for 100 NOK each. It does not take a particularly sharp observer to see that the invested amount in this account is small, but you could in theory add 3 zeroes and get (almost) the same result, only on a larger scale (presumably these index funds and actively managed funds are large enough to not take notice of 5 million NOK much more than my 5000 NOK).

In the last 3 months, the portfolio is down 3.9 %.
The Last 3 Months

If we look at the six largest shares of funds that all started out at 500 kroner each, we get a decent picture of where the best and worst development was for the last two years. These six funds:

Development in NOK and percent, sorted by highest growth:
Fund NameStart Value (NOK)Current Value (NOK)Development in percent
Nordnet Indeksfond Danmark B (since 2019-12-03)50090580.91
Nordnet Indeksfond Sverige (since 2019-12-03)50076152.25
Nordnet Indeksirahasto Suomi (since 2019-12-03)50069639.31
Nordnet Indeksfond Norge (since 2019-12-03)50066532.98
Nordnet Indeksfond Global ESG - NOK (since 2021-02-11)50056713.46
KLP AksjeFremvoksende Markeder II (since 2020-02-24)50055310.67

I notice the emerging markets fund is up less than the global fund (the latter heavy on technology), even though the emerging markets fund was bought a year earlier. The emerging markets have apparently not developed as much as the rest of the markets lately. Among the four nordic index funds that have a two year history in the account, the growth is between 33 % and 80 % for Norway and Denmark respectively. This is just from a random starting point in time, of course (December 2019).

Given this, there can be no doubt: All in emerging markets! To be serious, I actually don't have many thoughts about it, beyond "hindsight is 20-20". If I could go back I could have gotten on average 51.4 % from these four nordic funds in just two years. That is acceptable for a modest (I try, at least, with a few deviations) man such as myself.

I worry about tapering of QE and the debt spiral we're caught in. But I am remaining invested for better or worse at this point. Selling can be the instinct when prices go down. This has the downside that buying when prices go back up means that you have just sold cheaply and bought at a higher price. Unless you can somehow magically time it correctly, with the 2-5-day delay there is with mutual funds in play.

Given my penchant for mutual funds, you might think I fear volatility staying away from stocks (and currently even ETFs, but that could change at some point), but I have about 15-20 % of my investments in Bitcoin (mostly such a high percentage because of its success) where the volatility can be pretty wild. I am not an experienced crypto investor, I just bought some back in the days and am holding (a minor "hodler"!). If you wonder why Bitcoin has value, you can read my thoughts about it the other day here ("Bitcoin - and Why It Has Value")

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