It’s fair to say it’s been a terrible year for the FTSE 100 index so far. As a result of the coronavirus, the index has fallen about 20% year to date. Many Footsie stocks have done much worse.
I own a number of FTSE 100 stocks that have taken a beating this year. For example, I own Shell (LON:RDSa), which is down about 52%. I also own Lloyds Bank, which is down about 56%
Yet, overall, my share portfolio is up in 2020. It’s outperformed the FTSE 100 by a wide margin. And I’ve achieved this without doing anything complicated.
Interested to learn how I’ve beaten the UK’s main stock market index? Read on and I’ll tell you.
International stocks have helped me beat the FTSE 100 One thing that’s helped me beat the FTSE 100 this year is international diversification. This is something I was stressing the importance of last year.
The UK has plenty of world-class companies. But a fully-diversified portfolio should have exposure to companies listed internationally as well. My exposure to top companies listed overseas has made a huge difference to my returns this year.
For example, my largest portfolio holding (and Warren Buffett’s largest), Apple (NASDAQ:AAPL), is up over 60% this year. Meanwhile, Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) (Google), two companies I have decent-sized stakes in, are up about 30% and 15% respectively.
My global equity funds and investment trusts have also done well this year. Fundsmith, Blue Whale Growth, and Polar Capital Global Technology are all up for the year. Meanwhile, Scottish Mortgage Investment Trust has soared higher.
Overall, this international exposure has really enhanced my returns.
Top UK shares But it’s not just about my international holdings. Another thing that’s led to outperformance is my exposure to UK mid-cap and small-cap companies. Many of these have outperformed the FTSE 100 by a wide margin in 2020.
For example, video game company Keywords Studios is up over 40% this year. Digital marketing specialist dotDigital is up about 35%. FTSE 250 technology company Softcat, which is benefitting from the work-from-home trend, is up about 10%.
Having these kinds of under-the-radar growth stocks in my portfolio has boosted my returns significantly.
Stock market crash Finally, buying stocks during the stock market crash has also helped me outperform the FTSE 100.
You see, one thing I always do is keep some cash on the sidelines in preparation for a stock market pullback. Going into the stock market crash, around 20% of my portfolio was in cash. And when stocks crashed, I bought big. This has paid off.
For example, I bought ASOS (LON:ASOS) shares at around 1,100p. They’re now near 5,000p. I bought JD Sports Fashion shares at 320p. They’re now near 670p. And I bought Hargreaves Lansdown (LON:HRGV) at about 1,275p. They’re now at near 1,700p.
These kinds of gains have powered my portfolio higher in 2020.
Simple strategy Overall, there’s nothing complicated about my investment strategy. I simply diversified my portfolio and bought stocks when other investors were panicking. With a very simple investment strategy, I’ve outperformed the FTSE 100 by a wide margin.
The post While the FTSE 100 has fallen 20% in 2020 my portfolio has increased in value. Here’s what I did appeared first on The Motley Fool UK.
Edward Sheldon owns shares in Royal Dutch Shell, Lloyds Banking Group (LON:LLOY), Apple, Microsoft, Alphabet, Softcat, dotDigital, ASOS, Keywords Studios, Hargreaves Lansdown, and JD Sports Fashion, and Scottish Mortgage Investment Trust and has holdings in Fundsmith, Blue Whale Growth, Polar Capital Global Technology. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn (NYSE:LNKD), a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Apple, and Microsoft. The Motley Fool UK has recommended ASOS, dotDigital Group, Hargreaves Lansdown, Keywords Studios, Lloyds Banking Group, and Softcat and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020
First published on The Motley Fool
