Sunday 9 June 2013

Update on the personalized index fund II: Mai 2013

PIF, DAX, index

As maybe some of you can remember I was thinking about how to make a personalised index fund from DAX for old blog please see here. I created an excel-sheet with all the companies and I was thinking about how to arrange the fund by calculating five year P/Es etc. etc. etc.

In the end I took a very easy approach which is not based in any sense on the P/E but purely based on performance on the stock market. I decided that I would put 2000 € into each stock on the DAX and the five worst performers during the last year would be bought for 2500 € and the five best performers would be bought for 1500 € instead of the 2000 €. Once per year this will be recalibrated by selling off the five high performers and by increasing in the five low performers. This would mean that maximum 10 deals would be made per year. Currently I have been making more around 12 deals due to buying stocks each month so I would even decreased the amount of deals done.
I´m thinking about adding an additional aspect which would involve saving of 500 € per month which would then also be pushed into the low performers once per year.

The starting date of the personalised index was 16.04.2013 and already on 04.06.2013 the fund was lagging behind index by almost 4.5%. It is fascinating what 500 € plus and minus in 10 stocks can create for the total result! But I like the experiment that I´ve now started and it will be nice to see if it can beat index in the three years time that I have given myself to do it with common stocks.

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