How I Benchmark My Portfolio, Not the Golf Course Way

Comparing my return to a friend's was always the wrong measurement. I built two benchmarks of my own instead, and this year one of them said something I didn't like.

Shek O Golf and Country Club, Hong Kong. April 2026.

I have spent most of my professional life around people with money, and the angriest I ever heard anyone get was over a number that was never theirs to chase.

An investor I knew once vented to me about their return, though the portfolio had not missed the benchmark they had signed off on. Someone at the golf club had made more in absolute terms, and that made the investor look bad.

I call it the Golf Course Benchmark. What that investor had lost sight of was the plan they had agreed with the people running their money. A strategic asset allocation is three things: what the portfolio has to pay out, how much the owner can afford to lose, and a mix of assets built to fit both. The benchmark is just how you measure that portfolio. Whoever runs the money should be judged against that, not against what pals at the golf club earned.

A golf buddy’s number has no standing in it. They may be running a different objective on a different time horizon, with a risk appetite for losing money the investor would never have accepted. Nobody at that club knew what the portfolio was for. By the end of the conversation, neither did the investor.

It's just me at my kitchen table in Hong Kong, running my own money. Nobody else's return means anything next to mine unless we are measured against the same thing, and we never are. There is nothing I can act on in a friend's number. Same with some writer posting returns on Substack. All it does is get in my head.

Recently I caught myself doing the same thing. SK Hynix and Samsung’s memory business rallied hard while I only participated indirectly with my Emerging Markets Asia ETF, and I wrote in Two Years, No Pay Cheque about how it stung. What I left out was why. I had stopped measuring my portfolio against the target I set myself, and started measuring it against a rally I watched from the sidelines. It lasted about a fortnight. I didn't change a thing in the portfolio.

So when readers ask what my return has been the answer is never a number. I can’t give you one without first saying what the portfolio is supposed to do. On its own the number tells you nothing.

What I can share is the two benchmarks I measure myself against, and how I have done against them. I’d have demanded that of any manager running my money, so I hold myself to the same standard. One of them looks good this year. The other does not.

The two jobs my money does, and the benchmark for each

The only benchmark that counts is the one I set out to beat, and it isn’t picked off a shelf. Instead, it mirrors how my money is invested. Someone holding nothing but large US companies might be measured against the S&P 500. My money has an income job and a growth job, so the benchmark follows the same split.

Those jobs are the two sleeves my book runs in, set out in full in Two Years, No Pay Cheque. The income sleeve pays for life. The growth sleeve is supposed to compound over time, with venture at its racier end. Cash sits outside both.

Income first. The sleeve holds investment-grade bonds at the safer end, high-yield bonds and dividend-paying equities at the riskier end. As a result, the benchmark is a blend of the same asset classes in roughly the same proportions. A bond index on its own would be the wrong benchmark.

I manage that sleeve to a cash yield of about 5 per cent, plus 3 per cent from capital appreciation over time. That 3 per cent is my own inflation estimate. Call it an 8 per cent objective, all in. I live on the 5 per cent, though not all of it turns up as cash by itself, which I’ll come to. The other 3 keeps the capital’s buying power intact while I spend the yield.

In 2025 I moved some European bond exposure into European banks, on the view that they were undervalued and that I’d be paid a decent yield while I waited for the gap to close. The only available liquid asset was an accumulating ETF, which reinvests the dividends inside the fund rather than paying them out. So I now hold a position inside the income sleeve that pays me no income. I bought it anyway, because what the banks were paying beat the bonds I sold to fund it and this was the only liquid way to own them. The 5 per cent is measured on the income the holdings generate, not on what turns up in my brokerage account. I look through to what the banks are paying into the fund, count that as income, and sell a slice if I need the cash.

My China book, the one I write about most, is a single regional slice of the income sleeve. Since I turned full-time investor, it returned 13.8 per cent in 2024 and 25.3 per cent in 2025, and it is down 1.7 per cent so far this year, a little over 40 per cent in total. The sleeve target is about 8 per cent a year, and that slice has cleared it. It sits at the more volatile end of the sleeve, though, so clearing the target there is the least I should expect, and it doesn’t tell me the sleeve as a whole is on track. Look at 2026 on its own and the price is slightly negative, while the coupons and dividends arrived every month regardless. I judge my income sleeve over a long-term horizon as well as on the cash it generates.

Growth is easier to describe. The benchmark is what I could have bought instead of doing any work: 85 per cent MSCI World, 15 per cent MSCI China. The dedicated China weight is there because MSCI World underweights China far more than I do, so the benchmark carries the same tilt the sleeve does. If I can’t beat it, I should buy it and spend my time on something else.

Neither benchmark means much without my book behind it, so here are both sleeves by region and asset class. Growth runs a little over 20 per cent China against the 15 per cent I benchmark it to, and Europe at 47 per cent of the income sleeve is where most of the bank yield sits.

So what did my portfolio return in 2026?

The income sleeve is ahead of its benchmark in 2026. Cash turned up when it was supposed to, including in the months when prices were falling. The European and Singapore income equities were the best performing assets while Chinese equities and EU and US bonds were a drag. Bond underperformance is not surprising as rates kept rising over fear of higher inflation due to the Middle East conflict. I find bonds boring, which is why I own them. They are the part of the sleeve I seldom have to form a fresh view on, and this year they were also the part that cost me the most.

Growth is slightly underperforming this year and is slightly behind the 85/15 blend. Europe and the US did reasonably well. The drag is mainly my China growth equities as I wrote about in I Own the Wrong Index, Not the Wrong Businesses. I keep holding those businesses because my investment thesis hasn’t broken. Unfortunately, my benchmark doesn’t care about that. Sitting through volatility is the admission price I wrote about in Volatility Is the Admission Price, Not the Risk, and this is what paying it looks like against my own scoreboard.

The cost of running a structured long-term portfolio runs both ways. The rule that has me sitting through an unloved index, such as Hang Seng in H1 2026, is the same rule that kept me out of the memory-chip rally, because I had not done the work on those names. It cost me the best run of the cycle, which is how I know it’s a real constraint and not something I wrote down to look disciplined.

Why I never move the benchmark to suit the year

My benchmark approach only works if I don’t keep changing it to feel good. Views on individual holdings change once in a while, and swapping one for another inside the portfolio is just ordinary rebalancing. The plan itself I look at about once a year, and so far it has never needed more than a tidy-up. What I don’t do is change the benchmark because I happen to be losing against it this quarter. That is the golf club metaphor again, except now I would be doing it to myself.

Above all of my plans sits one test. Does the portfolio stay ahead of inflation? The measure there is what my own life costs, not a published CPI print. If the portfolio I live off buys less each year, it is failing.

Marking my own homework is the obvious objection to all of this. It is a fair one. A benchmark I set myself and never checked would be worth nothing. So mine gets checked every year: did the cash turn up, and does the money still buy what it bought last year. That includes the bond leg limping along at single digits.

Those checks tell me whether I am hitting 8 per cent for the income sleeve. They tell me nothing about whether 8 per cent was the right number to pick. I picked it myself, before I started tracking my portfolio like I learned at the family office, with no record to justify it. All I can say is that I have never quietly moved it to make a year look better.

The importance of writing the plan down

A benchmark is worthless until I have written down what the portfolio is for. That sounds like a big formal exercise. It is one sentence: what the portfolio must deliver, and by when.

Mine says the portfolio has to produce 120 per cent of my annual budget in income alone. That is the rule the whole income sleeve rests on. Someone else’s line might be a retirement date, or paying for kids’ school fees. Whatever it says, it has to be written down somewhere. Without my own benchmark I would have no way of telling a good year from a bad or lucky one.

I wrote my initial strategic asset allocation down in Turin while transitioning out of my family office role. It took me four versions of the spreadsheet that month. The objective came first, and the benchmarks came with it: roughly 5 per cent cash yield plus about 3 per cent for inflation on the income sleeve, 85 per cent MSCI World and 15 per cent MSCI China on the growth sleeve. That was the family-office discipline applied to my own money from day one. I would not change it if I had to redo the exercise tomorrow. The plan hasn’t made me a single dollar by itself. All it did was make every year since measurable. The numbers in it are mine. Nobody else has my budget, my tax residency, or my sleep pattern.

So far it has held. The one time it cost me anything real was the memory rally, when it kept me out of the best run of the cycle. But hey, there is always a next big thing. No big stupidity to confess yet.

The harder test hasn’t come yet. If I come out the far side of a full boom and bust and missing that memory rally is still the worst thing this plan ever cost me, then it was never much of a constraint. Just a story I told myself.

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As of the date of publication, I hold positions in STOXX Europe 600 Banks ETF and MSCI EM Asia ETF. Positions may change after publication without notice. Cohong Lane is a periodical publication made generally available to the public; this is disclosure of my positions, not a recommendation to buy, sell, or hold any securities. Full disclaimer · About Philip.