Ann: IOOF divests its holding in Ord Minnett, page-19

"...."Of course, if the government tomorrow suddenly decreed the end of capital gains tax, and I was forced to build a concentrated portfolio from scratch - a portfolio which was constrained to between, say, less than 15 stocks - then I suspect it would look something like this (starting weightings in parentheses):IFL: 15%VEA: 10%NHF: 10%CGF: 7.5%LYL: 7.5%AUB (or SDF): 7.5%IRI: 7.5%AGL: 5%CAR: 5%MND: 5%SDI: 5%KOV: 5%TME: 5%ZNT: 5%" 9/8/18 on IRI thread re portfolio allocation.

Hi Adam, you posted a snapshot above in 2018 re IFL being a top position hold. Id be very int to know your thoughts now and if you've topped up at these distressed prices . Many thanks as usual for your generous sharing to us all."


@Dejavoo,

[Apologies for replying only now, but I have been out of circulation for a few weeks.]

I have been acquiring more shares in IFL over the past 9 months, but that has been merely to roughly maintain my portfolio weighting. I think that should I meaningfully add to my holdings with conviction, it will be after the sticker shock (if any is warranted) at whatever the final remediation expense will be.

I have to concede that I made a fundamental investing error with IFL, by failing to appreciate the step-function change in margin pressure driven by the lack of pricing discipline on the part of competitors, most of whom were exiting the wealth management space in a decidedly indiscriminate manner.


My position now is not whether or not IFL have a viable business going forward - viability is not the concern; I have certainly at no point seen any existential business threat. Rather, what prevents me from adding to my overall portfolio allocation in % terms, is that I am uncertain where the new sustainable earnings base of the company ends up being.



PS. Thanks for putting up the listing of stocks I was recommending around this time last year. There is nothing like being held to account when it comes to putting one's views out there (!), so I thought I'd do the exercise justice by seeing how such a model portfolio performed.

Not that spectacularly, as it happens, basically in line the broader market:




But when I reflect on the return attribution of that portfolio, the one key takeaway I'm left with is the sheer wealth-creating beauty of buying and owning publicly-listed companies.

Because, if there is a key message from this exercise then I think it is this:

If one is reasonably sensible about how one goes about it, then one can cobble together a collection of shares which - even if some of the biggest positions in that portfolio end up being absolute disasters (in this case, CGF and IFL which were, I feel, poor performers for reasons that should encountered only very infrequently in the course of one's investing career) - then one can still generate acceptable investment returns.

Given that these sorts of torpedoes don't strike very often, their avoidance will, self-evidently, lead to very attractive investment outcomes.

While the overall portfolio performance doesn't exactly cover its architect in glory, I think it does serve as a very good advertisement about the value of the share market as a wealth creating vehicle, because even if you get a few wrong (horribly wrong, in this case), you can still do quite fine.

How good is that?

.