The Really Boring Portfolio (RBP) compared to the Forever Unless it F's Up (FUFU)

We have recently launched something we call the FUFU Portfolio which complements our ETF or “Really Boring Portfolio” (RBP).

The Really Boring Portfolio is what I would do if I was rich and trying to quietly look after my money without stock picking. The Really Boring Portfolio uses compounding equity market index ETFs to exploit bull markets when they are on.

What we have learned managing our SMAs is that a compounding index ETF in a bull market is almost impossible to beat consistently with stock picking unless you take significant risks and unless you consistently get it right, which I can tell you, almost no-one can.

With ETFs as a tool the Really Boring Portfolio can invest in both the Australian and international equity markets and anything else we think is appropriate as an investment that will exploit a bull market. But what the Really Boring Portfolio is not, is clever. It does not take bets. It is designed to provide a slow-moving, sleep at night, low activity, low cost, compounding investment for people who are more interested in life than the stock market.

The only time this portfolio does anything is when we perceive a precipitous moment in the market, either pending or happening, and we decide to go to some percentage of cash. The cash versus equities debate is the only active part of the portfolio and, outside of that, it is intended to be mostly inactive.

The idea is not to trade. The idea is to occasionally use cash to protect our long-term bull market investments from corrections. From the once every 10 year 50% correction, from the once every three-year 15% corrections, but not from the four times per year 5% correction. We don’t bother about those.

The portfolio is aimed at our Members, the bulk of whom are direct equity investors, but as a sideline, might also provide some benefit to those of you not in direct equities, to those of you with your Super in big, balanced, (really boring) Industry and Retail Super funds with those now fabulous websites that allow you to click a button and change your asset allocation. The Really Boring Portfolio might just help you time the moment to hit “Cash” instead of “Aggressive” on your fund’s mobile App.

The Really Boring Portfolio - For those who are ‘in the market’ for the good times, not all the time.

The other portfolio we have recently launched is the FUFU Portfolio. Apologies to those of you with a sensitive nature but this portfolio is a collection of what we call “Forever stocks”, or “Forever Unless it F’s Up” stocks.

THE FUFU

The FUFU Portfolio is a list (portfolio if you like) of what we consider to be quality, long-term stock picks with an emphasis on quality. That means reliable, often larger stocks, with believable track records and higher ROE, most of which have a history of long-term stock market outperformance. A list of stocks that we monitor on a FUFU basis. Forever unless something goes wrong.

It is not a betting portfolio. It is a “Best big stocks on the ASX” portfolio, designed to be low or no activity unless forced by change and performance to prune and replace. 

For an example of a Forever stock, see this recent article on Livewire.

Macquarie is a good example of a FUFU stock

When you apply the filters, the FUFU Portfolio ends up being a portfolio of mostly industrial, mid-caps and big-caps. The cyclicals and resources rarely make it as “Forever” stocks. They are long duration trading stocks that need timing. Headache stocks. Stocks that regularly behave badly. BHP for instance. It recently fell 34% in 44 days. Headache. You have to time them (we try) but as a rule, they don’t make the list. 

The FUFU Portfolio has a lot more action than the Really Boring Portfolio but between the two of them, they provide a framework for two types of individual investors. Long-term strategy for our sleep at night investors, and long-term stock picking for our slightly more interested, self-directed investor.

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Apart from the Really Boring Portfolio and FUFU Portfolio, the Marcus Today newsletter provides daily monitoring and commentary on a few other portfolios – the Dividends and Franking Portfolio, Small Cap Portfolio, Active ETF Portfolio and a short term Ideas Portfolio.

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