Saturday, January 31, 2015

Returns for January 2015

January was a very good month for the Covered Calls Advisor Portfolio (CCAP).  As shown in the chart below, CCAP outperformed compared with the benchmark Russell 3000 Index by 4.08 percentage points.  In a month when the Russell 3000 declined by 2.72%, the CCAP increased by 1.36%.  

The primary factors contributing to this outperformance were:             
1.  Overweighted technology and underweighted energy and financials
2.  Overweighted international stocks (especially China and Germany), which outperformed U.S.-based companies
3.  Establishing conservative in-the-money covered calls which provided greater downside protection in the down market during January; and 
4.  Obtained additional protection against a downside move in the market by purchasing an inverse ETF on the S&P 500.

As a reminder, the Covered Calls Advisor Portfolio is not identical to the advisor's personal portfolio. However, it does provide a comparable overall portfolio return result since all equities in the CCAP are also held in this advisor's personal portfolio. To ensure comparability, all transaction dates and transaction prices herein are identical to those that were established in the Covered Calls Advisor's personal portfolio. The primary difference between the two accounts is the total number of shares held for each equity. This approach is used to preserve the confidentiality of the total value of the Covered Call Advisor's personal portfolio.

The Covered Calls Advisor uses a bottom-line performance measure to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent'. Here's an example to aid understanding of how the overall portfolio performance is determined: If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.

If you have any comments or questions, please email me at the address shown in the right sidebar of this blog site.

Regards and Godspeed,