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.
The perspectives and investments are based, not upon a formal economic studies background; but from the "School of Hard Knocks & Studies", in which, we are still enrolled. NOTE: This portfolio is designed for 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.....J & E, jealously and envy. What a perfect first week of the equity market year to bring forth and stir these emotions. Neither has to be or have a negative affect upon a person. The cheap and easy advice is to use any such feeling for further insight and study. Poster Ted related to one of these emotions in another post and I blipped a note here to the subject. Good gosh, talk about J & E; who else at this board has started the year in the negative, eh? Even our straight forward 529 account of 50/50, VITPX and VBMPX is at a + 2.55% YTD. Well, our house can't support that VITPX or another broadbased U.S. equity index is on pace for a + 132% year. 'Course the scary part is that we added an equity fund this week (below). Yikes, a short term equity sell signal if there is one, from this action. We'll temper the J & E to the positive side of life, as always, and continue to sort through some of our short list of equity considerations for 2013 (below). We anticipate a reversal in both directions for some bond and equity sectors from the first week of the year moves. Worse case, if we move more monies into other positions; will likely find selling chunks of 1/3 of a given holding (averaging).
As to sector rotations below (Fidelity funds); for the past week: (Note: any given fund in any of these sectors will have varying 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 = +2.9%, YTD +1.8%).
--- U.S. equity + 3.1% through + 6.1%, week avg. = +4 .8% YTD = + ...%
--- Int'l equity + .7% through + 4.1%, week avg. = + 2.4% YTD = + ...%
--- Select eq. sectors + 1.3% through + 7.7%, week avg. = + 4.8% YTD = + ...%
--- U.S./Int'l bonds + .1% through - 3.6%, week avg. = - .67% YTD = - ...%
--- HY bonds - .10% through + .84%, week avg. = + .47% YTD = + ...%
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: = Some of both FBNDX and FINPX were sold, with proceeds moving a new fund; FSHOX and an old friend of FAGIX.
Portfolio Thoughts: Our holdings had a - .05 % move this past week. Bond funds generally ranged as follows for the week: IG, -.50%, TIPs, - 1.0%, Long term gov't, -3.5%, GNMA/MS, +.1% and high yield, +.50%. No losers in equity sectors of consequence. The U.S. equity area strongly outpaced international equity sectors. Although numerous equity sectors had some strength in the last quarter of 2012 and in particular, the last week of 2012; a few sectors are of note, although these may only be trading houses and machine plays going into the new year. Most energy funds returned less than 5% for all of 2012, and this first week of 2013 found these funds returning as much as 7.7%; and most funds reviewed found a larger % return in this first week; than they returned for all of 2012. Perhaps this will be the year of equity value plays or the 2012 dogs, however many there remains. As a group, it appears the overall winner relative to Fido funds was the small cap area.
We'll continue to watch; and do have plans, at this time, to add some equity this year, 2013. Our current short list, not in any order, of equity fund watches include: PAUDX, PAAIX, MAPIX, MACSX, SFGIX, GPGIX, ARTHX, FMIJX, FTIEX, FBALX, FTEMX, FEDDX, FIREX, FJPNX, FSVLX, FLPSX, FGHNX, PMZDX as well as some other Pimco funds, as PSTDX, etc.
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 equity/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 Balanced
Bloomberg Flexible
These next two links are for conservative and moderate fund leaders YTD, per MSN.
Conservative Allocation
Moderate Allocation
A 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 .... + .96% week, YTD = + ...%
PRPFX .... + 1.22% week, YTD = + ...%
SIRRX ..... + .13% week, YTD = + ...%
TRRFX .... + 1.66% week, YTD = + ....%
VTENX ... + 1.33% week, YTD = + ...%
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 2.9%
Bonds 92.9% ***
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 27.2%
-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 2.9%
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
FSHOX Fidelity Select Construction & Housing
Comments
I thought I’d piggy back and link up the post I made on Friday in which you posed a question to me. I am sorry that I was out of pocket most of Friday and I did not respond to your question until Saturday. It is my belief that you have not yet read my answer.
I respect your view and your take on the bond and equity markets. I trust you will respect my take and perhaps come to a better understanding of why I favor equities over bonds in general although I do own some bond funds within my well diversified portfolio.
http://www.mutualfundobserver.com/discussions-3/#/discussion/4952/dividend-growth-soars-22-8-in-q4
And, Catch ... I do enjoy reading your weekly postings.
Respectfully,
Skeeter
Thank you for your thoughts about all of this. As 2012 is in the record book, our bond portfolio was lucky enough to be quite close for return with several broad equity areas for the year. Would one be able to match this again in 2013? I don't know that answer. The individual investor has found a mixed bag of returns for 2010, 2011 and 2012. Perhaps 2013 will be no different.
As to our house; we are "reformed" long time equity investors. Our journey into bondland during the past several years, has been a most useful learning experience. Hopefully, the experience will provide insight into which and where we may choose to retain our bond holdings going forward. While the perverted world of bonds and their yields are in place, from central bank actions; our house also must consider if and what are similar distortions in the equity world, from these same actions.
Are most equity areas at a true relationship to where they may have been in June, 2007; and the state of the economy then; versus the equity evaluations today and today's state of the economy? I don't even know that one can make a proper determination. Charts and graphs, of which; we too review, can not provide all of the answers.
Our house can readily perceive a period in the next several years; given that interest rates would be rising, of causing damage to both the bond and equity sectors. There would not be many safe areas to provide a decent annual return. Most investment areas would be correlated in their declines as the juice from the central banks moves away. The free monetary ride goes, "poof". Perhaps the most crucial aspect is to what would cause interest rates to attain again, some historical average yield curve, be it the 10 year Treasury or other. Are rates increasing because there is a true demand for money to be borrowed for the proper reasons; or are rates increasing from other factors, as in, very few choose to hold the debt of central governments and over leveraged private sector and corporate bond areas. Perhaps 7.5% unemployment is the new long term rate. Wondering how this number is projected into the Fed. Reserves economic modeling programs.
We here, at our house; find a continued sideways move in some bond sectors pricing, and many IG bond funds now have yields below that of many equity funds. We have been watching all of this action for the past 6 months and in particular beginning late July and again in September through the end of 2012. It may be time to allow for some more equity to spread the risk; and at the same time, adding to other unknowns.
Meanwhile, the large trading houses and the algo machines chew away and play with 70% of the investment markets fundamental aspects; however much of this remains.
I am still reviewing many of the posts from late December at MFO. This linked story from Ted provides a very good overall relationships regarding today's investment market.
John Bogle and Catch22
Thank you again, Skeeter. I must now go play snow removal in our delightful winter wonderland.
Take care,
Catch