According to the reports generated from ML, I had 20% in small and mid caps, and I thought they somehow calculated this in some strange way. I only had 2 small cap funds and a few small cap stocks and which represented a total of 7.3% of retirement portfolio . Less than 15% of my taxable portfolio is equities, as this is where I keep virtually all of my bond allocation, so I tend to use the retirement portfolio as a proxy for my equity exposure.
I decided to create a spread sheet using Morningstar’s breakout by style box for all my stocks, funds, etfs and mlps. I was aware that my biotech and tech sector funds had a substantial representation in small and mid caps, but this analysis showed not only do I have 20% of my total portfolio in small/mid but 30% of my retirement portfolio is small/mid. This is despite the fact that 19 of my 22 funds and etfs are categorized as either large value, blend or growth (13 are sector funds, mlp funds or sector etfs). 35% of my stocks are small/midcap too. I also included my international funds as well.
Don’t get me wrong, I have always been a lover of small and midcaps, and many times I get into heated discussions with my FA over her assertion I had too much in small and midcaps. Now I understand why she says that. I always have a small part of my portfolio (or so I thought it was a small part lol) in small cap trading stocks, and have generally done well with them, putting stop losses on the ones that go down and selling the momentum ones when they have exceeded my expectations. Most of my stocks and funds are my core holdings that I plan to trust but verify by watching over the long term.
This changes nothing for me as I am not selling anything just because I have more small/mid than I thought, but as my small cap stocks which are nearing their sell point for me (WWAV, SKX and BEAV), I might just put the proceeds to work in larger caps. I would still be over 15% small/mid if I do.
I have to wonder if other MFO members might be surprised by their actual allocation if they did such a data analysis as I did. Would like to know if you are surprised when you do.
Comments
I general read and follow your post because I enjoy learning what your thinking and perspectives are. I see things a little different than you; but, I also know we each have different goals and perspectives. I like for my portfolio to generate enough income to satisfy my income needs without having to sell assets. So yield is important to me. As long as you are achieving your goals that is what is important as there are more than one way to be successful in investing. No doubt, we all arrive at our destinations through different avenues.
Within my style orientation I strive to keep about 65% in large caps, 25% in mid caps and 10% in small caps. In addition, within my sectors, I like to keep a total of about 25% (all combined) in the minority sectors which consist of basic materials, real estate, communication services and utilities. In market declines, I have found these sectors tend to perform well along with health care and consumer defensive. Note to, some funds that are listed as large caps might, and often do, hold some mid and small cap holdings. I have found it beneficial to do an Instant Xray analysis on my portfolio monthly along with each fund held.
So, I think, keeping 25% to 40% of my equity allocation committed to the small/mid cap space wise. However, we each have different objectives. Being now retired I am tilting my portfolio’s equity allocation towards a more conservative tilt. And, over the next couple years I plan to reduce equities from about 55% to 60% to about 40% to 45% and raise other assets by a like amount. I'll do this in steps at a pace reduction of about 5% per year; but, also allowing space for my occasional special equity spiff.
The markets are forever changing; and, with this, we have to keep tweaking.
Keep posting as I do indeed enjoy reading about what you are thinking, your perspectives and your outlook.
Old_Skeet
Thanks for responding and I make an effort to read all of yours too. I am not overly concerned in generating income from my retirement portfolio right now, since I am using the taxable portfolio, which consists of my 30% muni bond portfolio for almost half my income and will be liquidating that portion over the next 15 years as I add to bond allocation to IRAs along with taking out modest amounts out (less than 4% per year) out of my traditional IRA until RMD hits in 7 years. I plan on a relatively constant 70/30 mix at least for the next 10 years.
I too have a constant allocation in utilities, reits, health care, tech and consumer defensive, all of which gave some very nice returns last year.
@johnChisum,
I was using the breakout in the portfolio sections which divided small, mid and large in value, blend growth for each fund or etf. I am well aware that going by their general categories can be muddled at best. I recently dropped their premium service in part because of that. ML was Merrill Lynch in case you misunderstood that reference. Thanks for responding.