How Sidekick Flagship fared in 2023
After two years of hard work by the Sidekick team we are thrilled and honoured to announce an important milestone in our journey at Sidekick - the onboarding of our first founding members into our global equity product, Flagship.
For over a year now, the Sidekick Investment team has been honing our global equity strategy. You might wonder why we launched Flagship a year before we onboarded our first customers. Because we wanted to ensure that when we welcomed our first customers, we had a strategy that was deeply researched and battle-tested.
While we ran Flagship initially as a simulated portfolio, it sure didn’t feel like a simulated portfolio to us. We lived and breathed every trade and earnings announcement and we ran our investment process as if we were in a live environment. Now we would like to take a minute and share the results with you.
Please remember, investing should be viewed as longer term. Your capital is at risk — the value of investments can go up and down, and you may get back less than you put in.
Past performance is not a reliable indicator of future returns.
2023 in a nutshell
2023 was a difficult year for active investment managers. The advent of genAI meant that the market rally was basically down to just a handful of large companies, the Magnificent 7. Two companies that stand out, Nvidia and Meta, rallied 200% or more. Generally speaking, when equity market performance is this concentrated, active managers often struggle to keep up with their benchmarks and 2023 was no exception. According to research by the London Stock Exchange, close to 70% of actively managed global equity funds underperformed their respective benchmarks[1].
So how did we stack up?
We’re happy to report that we significantly [2] outperformed not just our benchmark and the SP500 Index but also the majority of the competition. Based on analysis done by the London Stock Exchange, the performance of Flagship over the last year (including the simulated period) exceeded 80% of our competitors. As a reminder, our benchmark is the Bloomberg Global Large and Midcap Developed Markets Index (GBP) - the leftmost column in the graph below. This benchmark represents a low cost passive investment in a global stocks strategy.
What drove our relative outperformance in 2023?
Despite a very challenging investment environment we stuck to our investment process. By combining quantitative risk management, deep fundamental analysis and concentrated positions in our highest conviction ideas, like semiconductor manufacturer Intel and weight loss leader Novo Nordisk, we managed to beat our benchmark by 5.50% after estimated fees.
Now…on to 2024!
We’re not resting on our laurels and are working hard to keep Flagship on track. Our current view is that 2024 will be a very different year for stocks. Tech has had a big 2023 but, going forward, we believe AI companies will have to start delivering on sky high investor expectations. Key risks for 2024 include an escalating conflict in the Middle East, the potential for policy mistakes at major central banks and a pivotal US election in November that could have wide ranging global ramifications.
We have already made some big changes to Flagship to better reflect our evolving investment views and we hope we can deliver another strong year of benchmark beating performance in 2024.
A message from the Sidekick Investment Team
We would like to thank all of our existing investors and look forward to welcoming those who are not yet. I want to assure you we are working hard to deliver not just best-in-class long-term investment results but also a great overall investing experience. We would like to leave you with a quote to consider if/when the market gets a bit choppy in 2024.
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett
Cyril (Chief Investment Officer) and the rest of the Sidekick Team
References
[1] https://www.investmentweek.co.uk/news/4161839/most-active-equity-funds-fail-outperform-benchmarks
[3] Simulated performance calculation methodology: Daily performance has been calculated by Bloomberg using a bottom-up approach to the total return calculation. It calculates the contributed daily return of each of the underlying securities (including any income distributions) and aggregates this on the portfolio level to find the total daily return. This is done for each day throughout the holding period. The daily returns are geometrically linked to obtain the total holding period return. All corporate actions were applied on the trade date and all dividends, net of withholding tax, has been reinvested.
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