Fund Performance Update August 2018 – Frankie Flies Ahead (Finally!)

Fear not dear Fully-Franked-Followers – I AM ALIVE!

Indexing Ian was so distraught when he discovered the Fully Franked Fund performance was about to blast past his Index Investments, that he kidnapped me!!  I was attacked from behind, blindfolded, thrown into a van and taken on a wild drive to an abandoned warehouse in the middle of nowhere.  When the blindfold came off, there was Ian, grinning at me manically while I was tied to a chair, telling me my official August 2018 results would never see the light of day.

After many days with little food or water, I realised I was going to have to outwit him to ever escape alive.  “Hey Ian”, I said, “how do you feel about that increase to the Management Fee on your VAS index fund of 0.03%?”

“What increase!?!” he said, “Are you kidding me!?  I’m going to march into those Vanguard offices right now and sort this out!  There’s no way they are charging me an extra 0.03% just for following an index!  Don’t they know who I am? I’m INDEXING IAN damn it!”

It was shortly after he left when I made my daring escape, found the nearest computer and wifi connection, and finally released this post….…

Picking the ‘I’s out of the Index

OK Frankie – you’ve woken me from my slumber.

One of your 7 stocks has single-handedly launched your portfolio ahead of mine – for only the first time since we began 6 months ago by the way – and cast a shadow over my simple index investing approach.

I may never see such a huge move in my investments, but I sleep very easy at night.

It’s very easy to forget that I don’t just have two investments in VAS and VSO – I actually own hundreds of individual stocks.

Let’s start with VAS – the Vanguard Australian Shares Index ETF. This holds every stock in the S&P ASX 300 Index, i.e. the biggest 300 (give or take) companies in Australia.  As at 1 August 2018, there are 297 separate companies I effectively own a piece of:

Fund Performance Update July 2018 – Frankie Fights Back!

We’re already 10 days into August, and I’m finally here to share the Fully Franked Fund performance for July 2018.

But the timing is actually Fantastic, as one of the Fund members has EXPLODED today – in a good way! More on that soon…

I also have two new stocks in the Fund as I shared in the last post – IOOF and Platinum Asset Management, but they won’t show up until the August 2018 results are presented.

But let’s look at where things stood at the end of July 2018…

Current Portfolio


The end of July marked three months in a row with no purchases – until our recent look at 6 suffering stocks, two of which have since been added to the fund post 31 July 2018.

As usual, another $2,000 of cash has gone in, increasing the cash balance to $21,485, and the share portfolio has increased by $1,126, sitting at $41,421.

Individual Stock Returns


 The tide appears to be turning – we now have three stocks in the green.

Baby Bunting has been the big mover this month, adding $740 to the Fund to go from red to green (but wait until you hear about what it’s done today!)…

“Sufferin’ Stock-o-tash!” – 6 promising stocks that have been pummeled

I’ve said it many times before already – I’m a sucker for a suffering stock.

They provide great opportunities to buy a collection of assets for a great price, as long as the potential is there for the market to get excited about the business again – and bestow a premium valuation on it once more.

There are hundreds of ways to look for new investment ideas, but one of my favourites is to look at those where the stock price has been hit hard.  If that is combined with a cheap valuation and solid long-term prospects – and you can avoid the perilous value-trap – it’s a path to potentially big returns.

With that in mind, here are 6 new stock ideas I’ve had my eyes on which have been hammered recently.  You might notice a bit of a Financial Services Flavour to the First Four……

The Global Stocks That Got Away

As a guiding principle with investing, being patient, and even doing nothing, are very good traits to live by.

Unfortunately for value-based investors like me and Frankie, those traits can also mean missing out on great opportunities from time to time.

And so it goes with my first shortlists of US based stock ideas.

You may recall the three stock ideas I was considering back on 10 June 2018, some 43 days ago now:

I was a little slow in making the decision, so Frankie had a look at these about two weeks later, speculating on how the changes in share prices over that period might affect my decision to invest in any of these stocks.  The question was whether I would be ‘anchored’ to the prices on the date of my original analysis, and / or whether I had set a price ‘threshold’ under which I would buy:…

Fund Performance Update June 2018 – Frankie Flailing Despite Wonderful Woodside

OK – you know the drill by now.

I review my monthly portfolio performance.  I glance over and see how much further ahead Indexing Ian is.

I remind myself that it’s very early days still.  My unloved stocks will come through eventually and leave Indexing Ian eating my dirt.

I wait patiently.

And so the same story goes this month…

Current Portfolio

The end of June makes two quiet months with no purchases.

Another $2,000 of cash has gone in, increasing the cash balance to $19,485, and the share portfolio has increased by $328, sitting at $40,295.…

What Does It Take To Change Your Mind?

Well – either Gary is REALLY working hard to build the suspense for his next global investment selection, or he’s been far too busy at his regular day job to give us an update (I suspect it’s the latter).

In the meantime, seeing his three potential investment ideas, and having had a couple of weeks go by since, has provoked another interesting thought experiment:

“How much would the stock price movements over the last couple of weeks affect his decision to select one over the other?”

I believe Gary had pretty much decided which stock he wanted to buy, but hasn’t as yet made the purchase.  I’m wondering whether movements over the 11 trading days since his previous post have impacted his thought process – and whether they would also impact yours?

Stock price movements

Here’s how the stock prices for all three of Gary’s Global Fund candidates have moved since 8 June 2018:

There are three interesting questions that come to mind from looking at this:…

Global Gary’s First International Stock Idea Shortlist


Disney was the first international stock holding to make it into the Global Fund a few weeks ago.

Since then, I’ve been itching to add the next quality international business to the portfolio. I’ve been perusing a heap of other financial and investment blogs out there, and my list of stock ideas is growing ridiculously fast as a result!

I’m starting in the USA for now, where most of the best companies in the world reside. I’ve picked out 3 of these ideas as a shortlist for the next investment in the Global Fund.

Let’s have a quick look at each, as well as some insights from the other bloggers and investors who’ve been researching and investing in them…

1) Pepsico

Fund Performance Update May 2018 – A Bounce from Baby Bunting, but Trumped by Telstra Trouble

Well if this was the NBA finals series, Indexing Ian would have taken the title in a clean sweep.  And nowhere near as exciting a contest as the Cavs vs Warriors Game 1 in overtime!

0 from 4 months now Ian has been ahead. And it pains me to say that as of the end of May, he’s never had such a commanding lead since we started.

Let me share the gory details with you for this month…

Current Portfolio

May has been a quiet month with no purchases.

An extra $2,000 of cash has gone in, increasing the cash balance to $17,485 (including dividends), but the share portfolio has gone backwards this month by $715, sitting at $39,967.

That puts the cash balance at just over 30% of the total portfolio – definitely time to find another opportunity to put some of that cash to work.

And speaking of work – many of the current Fund constituents certainly have some work to do……

Transaction Costs – Part 2: TAX

It’s been a couple of months now since Frankie last gave me the limelight.  My last post before exploring the wide world of ETFs was a detailed look at the tipping point on transaction costs – specifically brokerage costs – and the potential impact this has on your returns.

I promised a follow up to that analysis on the other big transaction cost – TAX.  So here it is!

Not only does every brokerage transaction fee you pay chip away at your portfolio, but for every sell transaction, you also have the tax man (or woman) waiting to take a piece of your gains away.

Tax can be even more insidious than transaction costs. When you buy or sell shares, you can clearly see the brokerage fee on every transaction statement.  But nowhere are you presented with the specific tax costs.

It’s not until it comes time to do your tax return, when you need to add up all the gains you’ve made, that you’ll know how much of those gains you need to pay away in tax.

But even then it’s not necessarily that transparent – especially if you don’t do the tax returns yourself.  You (or your accountant) pull together all your financial information for the year, do a bit of maths, and finally come up with a single figure that will either be paid by you to the tax office, or vice versa.

Unless you pay attention to the detail, the tax consequences of your investment decisions can blend into the background.

So the first step for us here is to make very clear what tax you might pay whenever you sell shares.…