Father vs Son 2020

Thought I would compare my son’s 2020 investment performance to mine.

I’m up +16.9%:

He’s up 26.9%.

My son is under 18 and I manage his pension on his behalf. I say ‘manage’, but the reality is I barely think about it. His pot is small and I run a concentrated portfolio based mostly on the shares I own – although this year I made a bold thematic bet, which has worked out well so far. But if everything does go wrong, at least my son has 40-plus years to claw it all back.

This is how his portfolio started 2020:

And this is how it finished 2020:

CNX1 is the iShares FTSE 100 Nasdaq 100 ETF and KLWD is the WisdomTree Cloud Computing ETF.

Between late March and the Autumn, I drip fed the proceeds from the Daejan (DJAN) sale and the portfolio’s existing cash into both of these funds.

I did debate putting the whole lot into CNX1 in late March, but decided upon a less bold approach.

My reasoning for CNX1 was very simple – essentially the world-wide lockdowns would be good (or at least not bad) for IT firms. Case in point: I set up this forum in March and started paying more money to Amazon AWS. I reckoned others would be using more tech services, too. The Nasdaq was (and still is) dominated by the likes of Apple, Amazon, Microsoft, Google etc, so CNX1 seemed a good option.

The KLWD idea came from fundhunter.co (a fund website of which I am a member), and this ETF holds faster-growing tech names such as Slack, Cloudflare and Zoom. I am reasonably familiar with such outfits and so took a punt on this fund, too.

The CNX1 and KLWD investments now combine to represent 32% of my son’s portfolio after performing strongly during the year:

My son’s portfolio and its subsequent performance have caused me to think about how I invest.

I have always been a stock-picker and liked looking at the finer details…

…but these CNX1/KLWD investments were made with no thought other than ‘demand for online services should accelerate because of the pandemic, which should be good for tech stocks’…

…and this guesswork has paid off handsomely. I did spend part of the summer then wondering whether stock-picking was worth it.

“Very early results are uncomfortable for my own stock-picking.”

I may use my son’s pension to dabble with other interesting ETFs with long-term growth themes. But I am not sure what I will do if he continues to earn better returns than me with less effort and perhaps lower risk!

Maynard

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