Hi guys!
Some personal information to start. I live in PA, newly retired with pension and social security. Mrs. Pudd works at the Post Office. Our son, a college grad, has moved out and is working in his profession. So, it's just us and the Dukester.
The economy is booming in our neck of the woods. Everybody's working and spending from the looks of things. Now, to the good stuff:
cash - 30%
Asset Allocation
BTBFX
VWINX - 24% - done!
Large Caps
DSENX
PRBLX - 4%
FUSVX - 3%
PARWX - 2%
Sector
RAANX
FSPHX - 5% - done!
Mid Caps
PARMX
UMBMX - 2%
Bonds - will wait 'til rates rise further to add.
PONDX - 7% - done!
GIBLX
PTIAX
Overseas
FTIPX - 5.5%
FMIJX - 4%
GLFOX - 6.5%
Hot Money
FSRFX - will be sold before 2018.
FJSCX - 4% - will be sold but don't know when yet.
Those funds not marked with a percentage (%) have small holdings, as you can guess by now.
Again, this is a portfolio under construction due to a rollover to an IRA from a 401 account.
Must go now --- why? One word........leaves!
God bless
the Pudd
Comments
Hi Pud,
Got my leaves up yesterday. Many more to follow.
Below is my take on your portfolio.
From an Instant Xray analysis indicates you are about 116% long and 16% short with the following being your net allocation of Cash 30%, U S Stocks 26%, Foreign Stocks 13%, Bonds 31% and other assets 1%. This puts you at a overall net allocation of about 40% equities & 60% fixed and would bubble as a conserative allocation. Interestingly, your current equity position is at the low range within my own asset allocation for equities. My top allocation to equities would be about 60%. Also, Xray indicates your expense ratio is 0.63% (good job). I am also seeing the portfolio has a P/E Ratio of about 19.1%. Were you aware of this?
I could continue with this ... but, I not sure it would be meaningful (such you indicate the portfolio is under construction) although I pretty much see how you are currently position based upon your opening. I did not input your holdings into portfolio manager. If I had done this I could have gotten a read on performance. If my time permits this might be someting of interest for me to do. Then, we could see how you bubble against the Lipper Balanced Index which is my boggey.
Now for a couple questions: What do you use, if anything, to determine what you have and how do you monitor your portfolio? Do you have a cap on how much of a given fund you will hold? And, How many accounts make up this portfolio? And, lastly, any additional comments come to mind that you'd like to share about where you are looking to position? If so, what would they be? From an annual total return perspective what are your expectations?
Thanks.
Old_Skeet
Good investing to all,
Derf
I guess I'm more curious how people interpret their portfolio structure rather than the actual funds themselves, but that is just me.
Derf
I have a couple of overriding principles for my portfolio that will help explain some of my allocations. First, I believe that emerging markets, especially in Asia, are the future. I want to be overweight. I'm also a believer in healthcare. Considering the world's demographics are getting older and the developed world's demographics even more so, I want to be overweight. In general I want to be equal weight the US and underweight developed international markets because the demographics are the worst there and they are pretty highly correlated with the US in the large cap space. If I want to make currency bets, which I've done before, I'd rather do it in the futures market. I want most of my exposure to developed international markets to be small cap. Finally, other than healthcare, I'm generally sector agnostic. I don't target any specific allocations but I do monitor them compared to the S&P 500 to make sure I know and am comfortable with the opinions my sector allocations are expressing.
My portfolio currently has two parts and a third part is being reduced. The first is a collection of funds that I rebalance or adjust at irregular intervals but mostly doesn't change. The second is what I'd call a modified risk parity portfolio of my own making that trades monthly based mostly on momentum. The part being reduced is made up of individual stocks that I picked based on a newsletter I used to subscribe to or stocks that M* identified as undervalued. That didn't work very well for me. The stocks currently represent about 12.5%. I plan to keep 2 stocks, which are uranium stocks that I'm still comfortable/happy with. They make up 6% of my portfolio and will stay, so a little less than half of my total stocks.
I normally don't count cash as part of my portfolio except in my IRA and the cash there represents 3% of what I consider my portfolio.
Mutual funds
I'll indicate the current allocation as well as my planned allocation once I eliminate the stocks I hold with a comment or two where relevant.
GPIIX 9.65--->8.5 I would have preferred Global Opportunities to International Opportunities but the original intention was to pair International with their intended US fund, which hasn't come yet, and to manage the allocation myself. At the time I wasn't thinking about hard closes that make managing an allocation difficult so if I ever had the chance to switch this for GPGIX I would.
POAGX 8.75--->8.5
GPEIX 7.75--->8.5
SBIO 3--->2
HQL 2.9--->2
OBIOX 2.75--->3.5
MAPIX 2.5--->2
PRHSX 2.25--->2
IWIRX 2.15--->2
MEASX 1.6--->2
QUSOX 1.45--->2
ARTGX 1.4--->0 I don't dislike the fund, just decided I'd prefer OAKWX
MSCFX 1.4--->2
OAKWX 1.35--->2
PRNHX 1.35--->2
TVRVX 1.3--->2
DSEEX 1.3--->2
PTSGX 1.3--->1
SFGIX 1.3--->2
FSCRX 1.25--->0 This fund was great for me but with Chuck Myers leaving I started switching to the Mairs & Power fund.
KGGAX 1.2--->2
GPMCX 0.8--->2 This won't happen by year-end because of the limited annual contributions they allow but I'll get there.
Trading
The holdings currently make up 25.7% of my portfolio and includes EWX, IJH, IJK and VBR. I expect it will be 34% at year-end. I started this approach 18 months ago because I was concerned about valuations and wanted something that would hopefully protect me when things eventually go south but hopefully participate in most of the upside as long as it continues.
I track my overall portfolio as well as each "bucket" against 12 benchmarks on a monthly basis. Broadly speaking those benchmarks include a few all equity options (like the S&P 500 and a total world etf), a few balanced options that are all 60/40 but with different equity options, and a few risk parity portfolios like @hank's Permanent Portfolio, Faber's Ivy Portfolio and David Swenson's Yale portfolio.
For the individual funds I mostly watch category rankings. I do see 1, 3, 5 and 10 year returns in my M* portfolio but I don't use them to make any decisions. I don't change funds very much but manager changes usually worry me and I occasionally change for something I believe will be better. For instance, I used to hold a number of Wasatch funds that I eliminated and bought Grandeur Peak funds and I'm replacing FSCRX with MSCFX because of a manager change.
There are a few funds I'd be happy to own if they open again one day. They are VVPSX and TDVFX. I know I can buy the Towle Fund direct and I may do that at some point but I'd prefer to keep it in my brokerage account if possible. As mentioned I'll buy Grandeur Peak's US fund whenever it launches.
A portfolio X-ray will show you that I'm around 80% small and mid cap stocks. I understand most people would be uncomfortable with that. One third of that is the risk parity trading I do and that will be into other asset classes when the momentum changes. Nonetheless, I've never been uncomfortable with volatility and I don't tend to make emotional decisions. The risk parity idea was specifically designed to make me comfortable with whatever volatility occurs in the mutual funds. X-ray will also show I'm a little more than 20% emerging markets and overweight healthcare but I'll be pretty close to equal weight healthcare at year-end. This is something I want to keep an eye on because I don't want to end up underweight healthcare. I'm actually underweight the US at about 43-44% but that's okay for now because I'm somewhat, less than many but still somewhat concerned about valuations in the US. And I'm significantly underweight developed international markets except for Asia. I think that's mostly because M* calls Taiwan and South Korea developed while MSCI doesn't.
Oh, one last thing, how could I forget, I have no bonds and haven't for a few years. Friends have argued that I either should already regret that or I certainly will in the future. They may be right but I'm well aware of the bet I'm making and I'm more concerned now about getting hurt in bonds than hurt in equities. Time will tell.
Thanks in advance for your feedback.
Jim
Thanks for the x-ray. The 40% stocks will rise as money is added. As for the PE of 19.1.....no, I'm surprised it's so high. I have been buying things with low PE which is why overseas has grown so quickly. It is something I look at when buying or adding. As to how I monitor the portfolio, Fidelity has screens to do this. Think of it as a lower class of Morningstar. Also use Yahoo. There are no caps on a position. I try to move where there is value. But saying that, no more will the S&P index be 30% of my portfolio.....nor healthcare, as it once was. I'm less of a gunslinger now.....after all, I'm retired. This portfolio is just my IRA, taxable money is in CDs with Ally and MDISX. Mrs. Pudd's 401 is in TSP (Thrift Savings Plan). We will roll that into an IRA upon her retirement. Where I am positioning looking for value.....I will say most new money will go overseas right now. What would I share? How hard it is to wait for value (i.e., pullback or, better yet, a correction!) to add new money in a market that has parts overvalued, I believe. Returns? I want more than 4% for sure. I did do a primitive back test, but I'm not sure I remember the number, so I won't say.
Hi Derf!
Yeah, it's hard. Value is driving where I'm adding so it's mostly overseas. PARWX was still reasonable at about PE 15 a while back. I started in 7-12-17 with over 50% cash, so it's a journey. Right now, I'm pausing to get some coverage on my buys before adding again.....where is a correction when you want one? lol......
MikeM,
I see what you're saying. But, as I'm adding, things are getting skewed because of where value is. I will say this: the funds that have "done" next to them are core: VWINX, PONDX, FSPHX. These following funds are a core wrap around.....they would have to stumble badly to be sold: PRBLX, PARWX, GIBLX, FMIJX, GLFOX.
Art,
Yeah, you're right. Small caps were sold after the Trump Bump as they then started to deteriorate. In January, I thought them overpriced and still do, as with other parts of the market. As far as real estate, that fund is not typical in its holdings. That's why I like it....but that's just me.
God bless
the Pudd
Great post! I don't know if you get the magazine, The Economist, but the November 4th issue has a great article on finance and economics....about household debt with some rather stunning facts I find fascinating.
Thanks for the questions, guys!
God bless
the Pudd
I'd also point out, however, that I would differentiate between Grandeur Peak and a lot of the fund families I own compared to a Fidelity or T Rowe Price and I'd also differentiate between an active fund and a passive one.
In the same vein I have multiple bank accounts and taxable brokerage accounts, not because I want to make sure everything is insured but because if anything ever goes wrong I don't want to lose access to everything for however long it takes the insurance to get worked out. I'm sure I'm overly conservative but there was a time in the early '90s when I worked on teams that shut some of the savings & loans down, I saw their customers and it affected me. I'm much less concerned about retirement accounts because there's no time sensitivity for me yet and I only make sure I don't exceed any insurance limits.