Saltydog's Tugboat portfolio feels wash of a speedboat

Saltydog's "Tugboat" portfolio is designed to be "low risk", and preserving capital during downturns is as important as making gains when markets are rising.

It was launched in November 2010 with £40,000 of founding members' money and in the first two years we proved we could avoid serious market falls; in the last few months we have been able to show how our philosophy of active management also allows us to take advantage when conditions improve.

Since launch, our investment has grown by over 23% (9.5% a year). To mimimise the volatility of our portfolio we usually have a significant exposure to the "fixed interest" sectors in our "Slow Ahead" group and this was the case from last September through to the end of January this year. Our best performer was the Invesco Perpetual European High Yield fund which went up over 11% during this period, and when it was sold it accounted for almost 28% of our portfolio. Other funds that made profits for us during this period were Invesco Perpetual Tactical Bond, IFDS Brown Shipley Sterling Bond and Alliance Trust Monthly Income Bond.

Looking at our weekly data on 23 January it was clear that the bond funds were going into decline and by the beginning of February they had all been sold.

We were already holding funds in the Global and UK Equity Income sectors from our "Steady as She Goes" group and added to these. The Chelverton UK Equity Income fund is currently up 15% since mid October and the Baille Gifford Global Discovery fund has made 9% since we first invested in January of this year.

Our current asset allocation is:

• 7% Cash
• 6% Slow Ahead (CF Odey Absolute Return)
• 68% Steady as She Goes (Chelverton UK Equity Income, JO Hambro UK Equity Income, Baillie Gifford Global Discovery, Invesco Perpetual Global Small Companies,and GAM Global Diversified)
• 13% Full Steam Ahead Developed (Standard Life UK Equity Recovery)
• 6% Full Steam Ahead Emerging (Invesco Perpetual Pacific)

"Speedboat" portfolio review

Last August we started our analysis of exchange traded funds (ETFs) and on 23 November we invested more of our own money into the "Speedboat" to show how it could be used. This portfolio is not designed for widows and orphans, or those of a nervous disposition, and operates at the opposite end of the risk spectrum to the "Tugboat".

In less than four months it has gone up by over 20%.

With hindsight it's true to say that market conditions have been favourable, but when we started Greece was struggling to get its bail-out plan approved; France had just lost its AAA credit rating; Germany's growth forecast had been downgraded; and America was perilously close to the edge of the "fiscal cliff" - no one was suggesting that this January would be the best start to a year for over a decade.

When we launched we picked ETFs tracking Turkey, Mexico, the Philippines, and China. The iShares MSCI Turkey fund:fs went up by over 18% before we sold it in the first week of February, and a few weeks later we sold the db X-trackers MSCI Mexico fund:fs making a gain of nearly 12%. The following week we sold the Lyxor Chinese Enterprise fund which had also gone up by around 12%.

If the global economy improves we believe the Association of South-east Asian Nations' (ASEAN) economies could boom. They are conveniently located between China and India; have oil and gas reserves; and a young, cheap labour force. It must be significant that President Obama of the US and Xi Jinping, the Chinese premier, both chose to visit this region in their first overseas trips after retaining or gaining office. The newly elected Prime Minister of Japan, Shinzo Abe, wasn't far behind.

About Saltydog Investor

Saltydog Investor aims to provide the most up-to-date performance data on unit trusts, OEICs, investment trusts and ETFs through our monthly newsletter and weekly online updates.

We sort funds by IMA sector into our unique Saltydog Groups - "Safe Haven", "Slow Ahead", "Steady as She Goes" and "Full Steam Ahead" to help you create portfolios to help match your personal appetite for risk.

Funds investing in this region have always featured in our portfolio. We are still holding the db X-tracker MSCI Philippines fund:fs which is up nearly 20%, we briefly held the db X-tracker FTSE Vietnam fund:fs in which time it went up 3.5%, and we have just bought the HSBC MSCI Indonesia ETF:fs.

Other ETFs currently in the portfolio include iShares S and P Global Timber and Forestry:fs, S and P Listed Private Equity:fs, iShares MSCI Japan Monthly Euro Hedged:fs and iShares MSCI Australia.

Richard Webb is managing director ofSaltydog Investor.