The Big Deal Fantasy Portfolio game starts this Monday and I am looking forward to the competition but perhaps not in the traditional sense. There are several layers of competition in this game; individual (you versus all the other players), private league (we have a SK private league), company v company (our private league versus other private leagues). The overall winner of this type of competition normally requires some outlandish high risk punts and/or regular momentum trading, neither of which I have the time or the inclination for. I have decided to add another layer of internal competition by splitting my portfolio into two competing strategies; partly as an experiment to see which strategy is most successful over the year (note – the competition finishes on 31st May but I will track both portfolios until the end of 2014) and also to develop my portfolio management skills.
My overall aim is to create a portfolio that is low maintenance, balanced risk, and reliable growth that can be measured in relative terms by whether (and to what extent) it outperforms the FTSE All Share index and in absolute terms, I will be looking at a stretch measurement of trying to achieve an overall annual return of 25% or higher with minimal tinkering. Moreover, I will be looking to see if 75% or more of shares produce a gain and conduct both a quantitative and qualitative analysis of how each strategy performs.
Strategy #1 – The Share Knowledge Segment (starting capital £50k)
I have decided to label the first segment ‘Share Knowledge’ as it will be based on my current approach to growth investing. As regular readers will know this involves identifying transitioning or transformational growth shares through in-depth research. The former category are companies transitioning into profit for the first time, the early stages of growing profits or recovering back into profit following a previous disaster or blip. The latter category are companies I believe are about to explode onto the scene – the gems that I think I have spotted before most other people catch on.
I will start with the 5 existing shares I selected for this year’s virtual growth portfolio (IOF, IAE, OPM, IDM, HAWK) and possibly make occasional in/out trades during the year with constituents from my watch list or other candidates that I identify along the way.
