Howdy,
A thank you to all who post the links, start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week.
NOTE: For those who visit MFO, this portfolio is designed for near retirement, capital preservation and to stay ahead of inflation creep. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around.....Five years ago this week, exactly on Trick or Treat day, found our mix of investments at that time, to arrive at its high value. Our house recalls the trading days going into the end of the year and the large swings in pricing, which continued into 2008. Not that any of this matters today; but for this house, caused much head scratching and eventually protective sells of equities in June, 2008.
Busy at this house with pre-winter cleanup outside; as the night temps are already below freezing. But, a brief look backwards into the first 10 months of 2012. We held about 20% of our mix in equity funds at the beginning of the year; which were sold in mid-May. Doing some fast math finds that all funds sold have gains to date between +.52 & +15%. Calculating the gains of the funds to which the monies were moved finds that our current mix would be worth about 1% more on this date, had we retained all of the equity funds. An, oh well; and perhaps this will work out by year end.
The data/numbers below have been updated.
As to sector rotations below (Fidelity funds); for the past week: (Note: any given fund in any of these sectors will have varing degrees of performance based upon where the manager(s) choose to be invested and will not directly reflect upon your particular fund holdings from other vendors.) Sidenote: The average weekly return of 200 combined Fidelity retail funds across all sectors (week avg = + .31%, YTD + 11.76%).
--- U.S. equity - .45% through + 1.3%, week avg. = + .37% YTD = + 14.4%
--- Int'l equity - .21% through + 3.55%, week avg. = + .65% YTD = + 13.3%
--- Select eq. sectors - 2.8% through + 3.8%, week avg. = + .35% YTD = + 13.7%
--- U.S./Int'l bonds - .68% through + 0.3%, week avg. = + .07% YTD = + 3.9%
--- HY bonds - .00% through - .32%, week avg. = - .10% YTD = + 11.9%
A Decent Overview, M* 1 Month through 5 Year, Multiple Indexes
You may consider our portfolio to be quite boring, but you may be assured that it moves and bends each and every day; from forces beyond our control.
I have added a few blips related to our portfolio and market observations at the below SELLs/BUYs and Portfolio Thoughts.
SELLs/BUYs THIS PAST WEEK: = NONE.
Portfolio Thoughts:
Our holdings had a + .35 % move this past week. Our portfolio return for October was about +.47%, as a notable slowing of capital appreciation exists at this time within most of our bond holdings. Some of this gain came from several bond fund distributions on Oct. 31. Tempted with the housing and building sector; but will wait for post election and anything else of special note; political or otherwise. We'll continue to watch; but do not have plans at this time, to enter into equity areas.
b> Still plodding along, and we will retain the below write from previous weeks; as what we are watching, still applies. --- commodity pricing, especially the energy and base materials areas; copper and related.
--- the $US broad basket value, and in particular against the Euro and Aussie dollar (EU zone and China/Asia uncertainties).
--- price directions of U.S. treasury's, German bunds, U.K. gilts, Japanese bonds; and continued monitoring of Spanish/Italian bond pricing/yield.
--- what we are watching to help understand the money flows: SHY, IEF, TLT, TIPZ, STPZ, LTPZ, LQD, EMB, HYG, IWM, IYT & VWO; all of which offer insights reflected from the big traders as to the quality/risk, or lack of quality/risk; in various bond sectors.
The Funds Boat is at anchor, riding in the small waves, watching the weather and behind the breakwater barrier. To the high praise of MFO and the members, it is very difficult to find a topic to note here that has not been placed into the discussion boards. Excellence, as usual.
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
The first two links to Bloomberg are for their list of balanced/flexible funds; although I don't always agree with the placement of fund styles in their categories.
Bloomberg BalancedBloomberg FlexibleThese next two links are for conservative and moderate fund leaders YTD, per MSN.
Conservative AllocationModerate AllocationA reflection upon the links above. We attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 5 funds (below) we watch for psuedo benchmarking are the following:
***Note: these week/YTD's per M*
VWINX .... + .25% week, YTD = + 9.54%
PRPFX .... - .51% week, YTD = + 5.51%
SIRRX ..... + .33% week, YTD = + 6.46%
TRRFX .... + .16% week, YTD = + 9.66%
VTENX ... + .21% week, YTD = + 8.65%Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh? Hey, I probably forgot something; and hopefully the words make some sense. Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
---Below is what M* x-ray has attempted to sort for our portfolio, as of Nov. 1, 2012 ---
From what I find, M* has a difficult time sorting out the holdings with bond funds.
U.S./Foreign Stocks 1.9%
Bonds 93.9% ***
Other 4.2%
Not Classified 0.00%
Avg yield = 3.99%
Avg expense = .57%
***about 18% of the bond total are high yield category (equity related cousins)---This % listing is kinda generic, by fund "name"; which doesn't always imply the holdings, eh?
-Investment grade bond funds 28.2%
-Diversified bond funds 22.4%
-HY/HI bond funds 14.5%
-Total bond funds 32.4%
-Foreign EM/debt bond funds .6%
-U.S./Int'l equity/speciality funds 1.9%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX.LW Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
ACITX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
LSBDX Loomis Sayles
PONDX Pimco Income fund (steroid version)
PLDDX Pimco Low Duration (domestic/foreign)
---Speciality Funds (sectors or mixed allocation)
FRIFX Fidelity Real Estate Income (bond/equity mix)
---Equity-Domestic/Foreign
NONE outright, with the exception of equities held inside of some of the above funds.
Comments
Looks like you concentrate or, should I say, diversify into four sectors:
-Investment grade bond funds 28.2%
-Diversified bond funds 22.4%
-HY/HI bond funds 14.5%
-Total bond funds 32.4%
You have been honing your portfolio for sometime. At the present time...If you were forced to pick 4-6 funds... what would they be?
I ask because I am trying to simplify my portfolio and would love to hear from others who are trying to diversify while simplifying their portfolio.
Thanks!
Not to put off a reply to you; but I am knee deep in work for several days. I will ponder your question; and perhaps others, too, will offer some of their own choices for such a portfolio.
I will quickly note that our current portfolio and/or any changes have two short periods of consideration; being.............post-election and what the lame duck congress chooses to play with, and again after the inauguration of the president and the beginning of whatever the new congressional composition may be.
Regards,
Catch
Not neccessarily in order of priority:
---PONDX, with their apparent skills/tools to move among the mortgage related issues; with the presumption that the Fed. will continue to play in this sector, too. Although I currently wonder whether most of the zip and zoom has already been played in this area.
--- SUBFX, and a self-imposed butt kick with this fund; as OJ and I discussed this one several months ago; but no money was moved into this fund.
--- FRIFX, a most conservative real estate related fund that has been fairly steady; although one could do a mix and match with this fund and PETDX for a bit more aggressive bet in this area.
--- FNMIX, a well managed emerging mkts. bond fund, with a decent record of returns; although the EM area has lost some juice lately.
--- LSBDX or LSBRX, a real mix of bonds and some equity, too. This fund, though, is not as happy though during a down market cycle in equities.
--- PTTRX or PTTDX, and perhaps BOND as more of a base or core holding bond mix.
The above are obviously set towards the bond side of life. Some equity exposure is obtained with FRIFX, although in a select sector. Further equity exposure (although small ) may be obtained through LSBDX.
The bias of the holdings is relative to what still lies ahead:
--- Mr. Bernanke and Geithner will be gone in the near future.
--- Taxation policy changes at the federal level.
--- The federal budget battle, which may be all encompassing.
--- Concern about any real solutions/agreements between the White House/congress.
--- A lame duck congressional period, which could be a wild child.
--- Europe is still in an economic war among members.
--- Continued unwind of government and personal debt burdens in developed countries.
--- A continued manipulation of true market values in credit markets (being perverted yield rates)
--- Corporate earnings or lack of real earnings from sales; as many companies likely can not further reduce costs by wage or employee cuts. I believe most of the overhead of employee costs is already cut to the bone. Company management will have to be very brilliant in the management of what they have remaining to generate profits; and I believe there are not all that many really brillant folks in the majority of most U.S. companies. Many companies in the "consumer arena" are at risk of the consumer continuing to be in a good mood for spending on more than just the neccessary items.
***While seasonal service sector hiring numbers will likely be highlighted in future employment reports; there continues a reduction in staffing by some companies for fairly high wage earners.....Dow Chemical, Dupont, Hewlett-Packard and others I can not recall. The reductions for each company are not all large numbers, but the total added numbers become large enough. At the same time, Michigan's governor claims there are 10,000 high tech. jobs not filled in the state. A nationwide video ad should be produced about these job openings....."Come on down".
Our current portfolio, or the portfolio above, is as much at risk as many equity sectors. The unknowns and some of the knowns continue to haunt we investors.
Perhaps many investment sectors will continue sideways and sloppy; with sectors here and there in both bonds and equity finding favor for short periods (6 months) of time.
This may read as a doom and gloom; but it is not. For this house, it is different and difficult. Different being, the investment arena is not the 80's or 90's, nor some of the 2000 decade years. Difficult being, what time frame will be needed to attempt a nominal recovery of economies from the damage of 2008; and what are the best areas for investments?
I can not do a scientific study; but find too many variables in the consumer side of life in Michigan. While traveling in the state this past summer, we found many on vacation and spending money. Many local restaurants remain busy, and there are more newer cars and trucks; versus older vehicles. A most complex area to view to attempt to obtain any real patterns.
On this best of days, we have two on our investment staff and sometimes, no one for short periods of time.
Okay, enough blabber from an untrained, and informal economist.
Take care of you and yours,
Catch