As shown in the chart below, the Covered Calls Advisor Portfolio (CCAP) outperformed the benchmark Russell 3000 Index by 1.97 percentage points for January 2016. In a month when the Russell 3000 declined by 5.72%, the CCAP declined by 3.75%.
The primary factors contributing to this outperformance were:
1. Established conservative in-the-money covered calls which provided greater downside protection in the down market during January; and
2. Maintained an abnormally high cash balance average of about 40% in the portfolio during January.
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. Of course, the actual 'Total Account Value Return Percent' shown also includes the value of any deposits and withdrawals made each month.
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Regards and Godspeed,