Citrindex One-Year Anniversary
Citrindex One-Year Anniversary
Year In Review & State of the Themes for June 2024
Year In Review
One year ago, I posted the first paid article to CitriniResearch – our Global AI Beneficiaries basket - my highest conviction view at the time.
That basket became the first position in our Core Portfolio - the Citrindex – tracking every basket and position we believe has the potential to outperform, using my own personal approach to portfolio construction. My approach attempts to capture themes and limit risk by utilizing diversification on a security level but concentration on a thematic level.
The 1 Year Performance of the Citrindex is +100.57%.
Interactive Contribution & Momentum Charts
Curious about how that came about? You can drill down on the attribution of our returns at the basket and security level with an interactive chart here:
Some thoughts
Since I started this newsletter, I’ve written in depth outlining my view on what I believe are the most important themes forming today’s market megatrends. I’ve had good and bad calls, but the most interesting part of it has been seeing it all play out.
I was driven to begin this kind of long form writing by a deep deep conviction in a few themes I felt were once in a lifetime – AI, GLP-1s and Fiscal Spending. I’m not going to lie or pretend, it’s been real vindicating to have that conviction and then see it validated in such a public manner.
Hopefully, I’ve lent some of that conviction to readers and perhaps, even, you’ve found it interesting to learn about how I approach portfolio construction, managing risk & playing with exposures to different factors, sectors and themes. This year, at least, it worked extremely well both on a risk-adjusted and absolute return basis.
I know for certain that I’ve certainly derived value from sharing it with all of you – it’s been a genuinely awesome journey to grow this community and has made me a better investor. Being accountable to thousands of people and consistently getting feedback has been wild.
Our three best plays were in completely unrelated areas (Pharma with GLP-1s, Hardware with AI and Macro with core “Rate Hedge Basket” made up of bond options at the end of October 23 that ended up being a 15x by the time we sold). That is something I’m pretty glad about, at least I am keeping it interesting.
Anyway, enough waxing poetic. I’ll just say thank you for being a subscriber and enjoy our (very in depth) review of the first year of the Citrindex and Citrini Research and, more importantly, our forward views and expectations for our themes in the rest of 2024.
This is more like 10 articles than one,
In this article, we’ll update and review our currently allocated themes, similar to our January “State of the Themes” article. There’s also some interactive charts that look at every contributor to the Citrindex and another focused on where the momentum is currently being found within our portfolio.
Without further ado, let’s get into looking at exactly what we did that resulted in a doubling of the portfolio value since May 31st 2023.
Thematic Drivers: Macro vs. Micro, Disruptive vs. Continuation
Our thematic baskets aim to capture the pulse of the market, but not all themes are created equal.
Some are driven by sweeping macro forces, while others are propelled by micro, company-specific factors. For our one-year anniversary, I’ve attempted to visualize where each of our baskets fit within my framework.
Macro drivers (not just macroeconomics) include demographic shifts, geopolitical events, societal attitudes, and widespread adoption of new technologies.
Micro drivers, on the other hand, are more granular, such as innovative products, disruptive business models, and management execution.
But there's another crucial dimension to consider: is the change disruptive or evolutionary (continuation of an existing dynamic)?
Disruptive shifts, like smartphones replacing feature phones or EVs challenging combustion engines, create entirely new markets and priorities. They have the potential for explosive growth but also carry higher risks. Evolutionary trends, like the rise of e-commerce, are steadier and more predictable, building on existing dynamics.
In China, the deleveraging trend faces disruption from supportive policies and shifting attitudes. In the US, continuation of populist and fiscally profligate trends were accelerated by the pandemic, becoming the new norm.
The key is to have a clear framework for assessing thematic opportunities while staying flexible to navigate the nuances of each one. By understanding where a theme lies on the macro-micro and disruptive-evolutionary spectrums, we can make informed decisions about how to gain exposure to it and ride the waves of change.
Basket Level Additions/Deletions
Before we get into any more in-depth updates the Citrindex is updated with all the changes below.
Paid subscribers can access it, as always, by clicking the links on this page.