ACCRE mid-month report

As usual, I devote the mid-month report to discuss some of the diversification metrics for ACCRE, which continues to outperform the other indices and continues to enjoy superior risk-hedged returns.  Most of the time, I focus on the Sharpe Ratio, the average daily return, minus the risk-free return, all divided by the standard deviation of those daily returns.  Generally, the greater the Sharpe Ratio, the more attractive the risk-adjusted returns.

In our case, ACCRE consistently dominates the S&P 500.  Measured since the inception of the find, the Sharpe Ratio for ACCRE is 0.06% (this is a daily return) versus 0.02% for the S&P.  Recall that this takes volatility into account, as is shown in the following graphic of monthly returns:

Mid-month 11 19

ACCRE, the blue line near the middle of the graphic, has been the slow-and-steady performer for the past two and a half years, while the S&P and the S&P Property Index have been all over the map.

By the way, ACCRE as part of a diversified portfolio should have a low correlation with the S&P.  Since inception, ACCRE’s correlation has averaged 42%, and was only about 29% for the month of October.

We’ll keep you posted.  As usual, subscribers receive notifications of trades and portfolio percentages.  We’ve gone a few weeks without a trade, and I suspect some portfolio rebalancing is soon in order.

ACCRE October Report

ACCRE continues on a winning streak, with a positive October.  We benefitted from overall gains in the market — the S&P had a super return, and this spilled over both to the property sector in general and to ACCRE.  As of the end of the month, a dollar invested in ACCRE at the inception (April 1, 2017) would be worth $1.64 today, for an average annual return of 24.3%.  For comparison, during that same period, the average annual return for the S&P was 12.9%.

ACCRE October 2019

We’ll be back mid-month with other metrics, and of course our premium subscribers will receive notification of any trades. Have a great November!

ACCRE Mid-Month Update

So-far, so good for the month.  ACCRE is up about 1.5% as of today, compared to about 0.8% for the S&P.  That’s the sort of performance we like to report every month.

Mid-month is usually the time we talk about the Sharpe Ratio and other correlation statistics.  As faithful readers know, a well-curated portfolio of real estate is not only a great investment, but also provides diversification.  One way we measure this is with the Sharpe Ratio, which indicates the excess return (return over and above what we would have earned in T-Bills) adjusted for risk (measured by portfolio standard deviation).  A higher Sharpe Ratio means we’re doing well after accounting for risk.

ACCRE’s Sharpe Ratio consistently beats the S&P, in no small part because ACCRE has far less volatility.  September was no exception.  ACCRE’s Sharpe Ratio was 0.06% (that’s daily excess return) compared to the S&P’s 0.02%.  In other words, we’re beating the S&P by three times on a risk-adjusted basis.

One other important point — the correlation coefficient stands at 42.43% as of the end of September.  This means that overall, ACCRE provides a very high degree of diversification in a broad securities portfolio.

As always, subscribers are provided monthly updates on the actual components of the ACCRE portfolio, as well as e-mail alerts when we make a trade.

 

We’re back!

Whew!

As many of you know, our web site was “down” for a week.  We had a glitch with some third-party software (essentially, the software got old and stopped working) and it literally took a week to get the darned problem solve.  Please be aware that this had NOTHING to do with the actual trades themselves or the portfolio management, which is handled on a separate account with a FINRA-licensed (and SIPC-insured) brokerage.

Fortunately, I had a list of all of our subscribers (on a separate sheet) and sent an e-mail to each of them about our trade announcement and our September monthly update.  For the rest of you readers, who might not be on our subscribers list, following is the text of the September update:

The S&P 500 had a spectacular month (up 1.72%), but that barely makes up for its dismal performance in August (down 1.81%). Conversely, ACCRE had a slight down month (-0.4%) but August was one of our best months ever (up 3.6%). As such, we continue to lead the S&P (and the S&P REIT index) in total returns since inception.ACCRE September 2019

One other item caught my attention this week. News reports noted that this was the first time in a while that the S&P 500 had three consecutive “up” quarters, which is indeed great news for the market. However, with that bit of info, I wanted to compare the S&P’s performance to ACCRE’s for the past three quarters. The chart following “normalizes” both indices to 1 as of January 1, and the rest speaks for itself:

2019 Normalized

I’ve long noted that real estate returns should be examined with a long-term horizon. The chart notes that for most of the year, ACCRE tracked the S&P nicely, albeit with considerably less volatility. However, starting about mid-summer, we really took off compared to the S&P. I suggested this may be a flight to safety, and indeed the real shift occurred when the S&P suffered its summer melt-down. That said, ACCRE ends the first three quarters of the year up 23%, while the S&P is up 18.6% for that same period.

I will almost certainly be making some portfolio shifts this month. As always, subscribers will be informed when I make such trades, and the new portfolio makeup after those trades are made. Y’all have a great October!

Mid-month ACCRE notes

I wanted to focus once again on the diversification ACCRE provides in a well-managed portfolio.  As previously, we measure this with the Sharpe Ratio (the average daily excess returns) and the correlation with the S&P.  Both of these metrics continue to be solid — ACCRE’s Sharpe Ratio is 0.07% compared to the S&P’s 0.02%.  This is the average daily return over and above what you would have earned had you simply invested in the T-bill rate, divided by the standard deviation.  It means that not only are ACCRE’s returns superior to the S&P, but we also do that without taking on excess risk.  By the way, the correlation with the S&P continues to be great — 43.2%.

This month, I wanted to look at ACCRE from another perspective.  Like most of you, I have other investments, and like most of you should be, I’m concerned.  One simple way of looking at this is to compare these investments to their 200 day moving averages and 50 day moving averages.   Conventional wisdom suggests that when these two cross or diverge, we have buying or selling signals.  (The charting logic is somewhat more complex than this, but I’m over-simplifying on purpose.)

Mid Month Sept 2019

For comparison sake, I’ve normalized both ACCRE and the S&P =1 as of the date we started (April 1, 2017) and graphed both together.  As you can see, ACCRE really “took off” after early 2018.  More to the point, ACCRE has a solidly up-trending 200 day moving average (the black dotted line) while the S&P is somewhat flat-lined right now (the solid black line).  However, for both, the 50-day moving averages (the thinner dotted and solid lines) are both in “bull” territory right now.  Note that the crossing of the S&P’s 50- and 200- day averages back in the Winter gave an unambiguous selling signal.  However, the corresponding “buy” signal for the S&P this past Spring  actually lagged the market.  For ACCRE, the signals have been positive throughout, although the peak and trough in the 50-day average for ACCRE last summer and this past Spring were very useful indicators.

We’re not really chartists here at ACCRE, and the old Wall Street adage of “never try to catch a falling knife” is very useful in these situations.  However, in hindsight, these signals tell us a lot about what our more fundamental analysis has shown to be true and useful.