Time for an update to my little experiment in Pound Cost Averaging (PCA) and a modified version of this investment strategy which, as you will recall, invests more aggressively in a falling market and more cautiously in a rising market. My last update was 6 months ago.
When I started this experiment the FTSE was at 6903 points, on 1st August it was 7424. A rise of 7.54%. Using my modified PCA my ROI is 9.1% which is marginally outperforming a basic PCA and both are out performing the FTSE. The (rounded to the pound) figures show a pretty close match.
- The £1991 total invested for the modified PCA has grown to £2173 (+£182 or 9.14%)
- The £2000 total invested for the standard PCA has grown to £2180 (+£180 or 9%)
I’m surprised that the modified PCA hasn’t really pushed up the growth but in truth the market has been +ve in 11 months and –ve in 9 months so it’s really not seen the kind of prolonged rises and falls that might change this more. I’ve also had some thoughts that if generally the market rises then a strategy which ultimately backs-off on the inclines to the same degree it goes hard on the declines is always going to struggle to beat the average! So, at the end of the year I’m going to tinker with the modifier and go harder on the downhills.
In any event, if you’d put the same investment in a cash ISA over this period, well you’d have about £30.
John Gibbard 