How To Get the Church's Stock Returns

And now for something different: Today my attention was drawn to news articles highlighting the Church's U.S. stock holdings (via Ensign Peak Advisors) [1]. To my eye, the articles have a bit of a sensational air to them, intended to impress (and perhaps anger [2]) people who don't pay attention to the stock market and/or have limited financial literacy. So I thought some added context was warranted [3]. Let's take a look.

Ensign bought GameStop in Q4 of 2020, turning $870,000 into about $8.7 million, a 900% gain. Wow, what a profit!

What is $8.7 million in proportion to the size of the portfolio? Answer: 0.019%. On a normal trading day the portfolio fluctuates that much, or more, almost with every heart beat. That's like writing a news story that someone made $20 off of penny stocks as part of their $100K next egg. Also note that it's still an unrealized gain. If GameStop went belly-up tomorrow, the Church would lose all $8.7M...and the portfolio wouldn't even notice. By the way, what is GameStop's weight in the Russell 3000 index? Answer: 0.02%.

Ensign increased its Tesla stake by 39% after growing it 3,500% last year. Wow, the Church really believes in Tesla!

Again, what proportion of the portfolio is that? Answer: 0.93%. Let's compare that to Tesla's weight in the S&P 500: 1.28%. How about in the Russell 3000: 1.07%. So the Church's "agressive" purchase of Tesla brings it to a portfolio weight that is...less than in two of the major U.S. stock indicies. Still impressed?

During a pandemic year the Church's portfolio gained 16.5%, and in the first quarter of this year it has already gained 5.5% Wow, Ensign must employ some real financial whizzes. If only I could get in on the action!

Let's compare the annual and quater-by-quarter performance of Ensign to the S&P 500.

It looks to me like the Church has built a diversified portfolio that more-or-less tracks the S&P 500 [4]. The good news for you is that you don't need the whizzes at Ensign after all [5]. You can easily and cheaply invest your money in the S&P 500 or Russell 3000 using one of a number of ETFs or mutal funds.

Notes:
1. Ensign has been reporting its U.S. stock holdings quarterly to the SEC for just over a year. I assume that Ensign also holds international stocks that are not included in these reports.
2. Some people have strong opinions about how the Church manages its money. I consider it none of my business.
3. All of the analysis, and any errors therein, are mine.
4. We don't know what kind of moves Ensign makes during each quarter, so their actual returns may be more or less than it appears.
5. As a general statement, you shouldn't be trying to match the Church's investments anyway. It is a large institution with long-term goals that will make it's risk profile different than yours. In fact, it's entirely possible that the Church's overall asset allocation is too conservative for what you need.