For the first half of 2023, I generated a return of around 16% across my Stocks and Shares ISA and Self-Invested Personal Pension (SIPP) accounts. I think that’s a pretty good performance given that the UK’s FTSE 100 index rose just 1% in H1.
So, how did I do it? And what are some takeaways from this performance?
Technology focus
The strong performance of my portfolio in 2023 has mainly been driven by mega-cap US tech stocks to which I have a lot of exposure.
Currently, my five largest stock holdings are Apple, Microsoft, Alphabet, Amazon, and Nvidia. And all of these shares have outperformed this year, posting returns of between 36% and 189% for H1.
Why have they done so well? Well, there are a few reasons.
One is that they’ve benefited from interest in artificial intelligence (AI), which is set to have a major impact on the world in the years ahead. Nvidia has been the biggest beneficiary here as all the big AI players use its chips. This was reflected in the company’s recent guidance, which was well above Wall Street’s forecasts.
Another is that they all have strong cash flows and balance sheets, as well as significant long-term growth potential. In an environment of low/slowing growth, these attributes are attractive.
A third reason is that after these stocks underperformed last year, many investors were ignoring this area of the market at the start of 2023. Those who were have scrambled to get back in, pushing share prices up.
Top UK shares
It’s not just US tech stocks that have boosted my portfolio this year, however. Some UK tech shares have produced great returns too.
Take FTSE 100 software company Sage, for example. It’s up around 25% this year thanks to better-than-expected trading updates.
Good fund performance
A number of my funds also delivered strong returns for H1.
For example, Blue Whale Growth delivered double-digit gains for the half.
Meanwhile, the Sanlam Global Artificial Intelligence fund – which I own for broad AI exposure – rose more than 20%.
And Fundsmith Equity, my largest fund, produced a return of 8.5% after falling 13.8% last year.
Takeaways
As for the takeaways here, there are a few that come to mind.
One is that it can pay to diversify internationally. If I had only owned UK shares, the chances are my portfolio wouldn’t have done very well over H1 as the UK market has struggled this year.
By taking a global approach, I’ve been able to boost my returns significantly.
Another is that it pays to take a long-term approach to investing and stick to one’s strategy.
Last year, tech stocks slumped. However, instead of selling out of them, I held on as I’m a big believer in these companies.
I also bought more shares at lower prices. For example, when Microsoft and Alphabet were 30% off their highs, I was loading up the truck.
Buying on the dip has helped my portfolio come surging back after a poor performance in 2022 (my ISA was down about 20% last year).
What’s next?
Now, looking ahead I don’t expect the same kind of returns in the second half of 2023.
However, I’m very comfortable with my portfolio right now.
With stocks such as Apple and Microsoft, and funds such as Fundsmith and Blue Whale Growth in my ISA and SIPP, I reckon my portfolio should do well over the long term.
