Hello,
I thought I’d continue the discussion on my portfolio that I started last weekend through opening this new thread and to respond to some of my critics.
In review, last week I wrote about how the income area of my portfolio was configured. It is much like a two wheel drive vehicle that has only two traction wheels that propel the vehicle. One sleeve consists of mostly fixed income funds while the other sleeve consists mostly of hybrid income funds.
The Fixed Income sleeve currently consists of the following funds. They are as follows: LIGRX, LALDX, NEFRX, NEFZX, THIFX and TPINX.
The Hybrid Income sleeve currently consists of the following funds. They are as follows: CAPAX, FKINX, ISFAX, PASAX, PGBAX and NWQAX.
Each sleeve is designed to provide traction for the income area. So if a fund within the sleeve should falter and under perform the others, then the other funds would most likely provide enough traction to continue to propel their respective sleeve. Currently, the only fund I have in the income area that has a negative year-to-date number is NEFRX. Since the other funds have performed well traction remains positive for the sleeve as a whole.
Now the growth area of the portfolio is configured in much the same way except it is much like a four wheel drive vehicle and consists of four sleeves with each sleeve having from three to six funds based upon the desired weighting and desired traction level of each sleeve. When warranted, or desired, it is easy to make adjustments simply by adjusting the number and size of the investment positions held within any sleeve and by adding or deleting ballast funds. Ballast funds are generally special positions that I choose to hold form time-to-time to overweight an area. Since, I have been reducing equities over the past year or so I now hold only a few ballast positions.
The first sleeve consists of international and world stock funds. The funds currently represented in this sleeve are ANWPX, PGROX, THOAX, NEWFX and ODMAX. This sleeve accounts for about 30% of the growth area. No ballast funds are currently held in this sleeve at this time and if held they would become a sixth position.
The second sleeve consists of domestic large and mid cap funds. The funds currently represented in this sleeve are AGTHX, IACLX, SPECX and VADAX. Currently, this sleeve accounts for about 33% of the growth area. This sleeve is where most of my equity ballast has been held in the past. Currently none is being held at this time and any reduction will be form reducing its larger holding(s). I plan to reduce this sleeve down to about 30% and raise each of the below sleeves to about 20% each. This is a slight movement and a reposition of money, a form of rebalance.
The third sleeve consists of domestic small and mid cap funds. The funds currently represented in this sleeve are IIVAX, KSDVX, PCVAX and PMDAX. Currently, this sleeve is about 19% of the growth area. IIVAX serves as a ballast position in this sleeve at the present time but might be retained as a long term position through a rebalance process with the movement of more money into this sleeve along with opening another position, possibly in PCKAX, although I might be coming late to the party in doing this.
The fourth sleeve consists of specialty type funds. The funds currently represented in this sleeve are JCRAX, LPEFX, MFLDX, PAUAX, WASAX and CTFAX. In the near term, I am thinking of removing both WASAX & CTFAX and to start building new positions in CCMAX & TOLLX plus increasing my position in PAUAX. Currently, this sleeve accounts for about 18% of the growth area and is targeted to be raised to about 20% as I move money into and rebalance and reposition this sleeve.
The growth and income area is configured in much the same way as the growth area with four sleeves. The sleeves are as follows: global equity sleeve, global hybrid sleeve, domestic equity sleeve and domestic hybrid sleeve. The global sleeves hold three funds each while the domestic fund sleeves hold six funds each. Each sleeve’s weighting can be adjusted from time-to-time by the number and size of funds held so the desired weighting is achieved. Generally ballast is held in the cash and growth areas although at times it has been held in the other areas as well including this one.
So far, this style of portfolio management has been working well for me. To recap the portfolio consists of four main areas which are a cash area, an income area, a growth & income area and a growth area along with their sleeves that are used to hold the funds which diversify and weight each sleeve and area based on the number and the amount held in each fund. As you can see the size of the sleeve can be easily adjusted thus adjusting the area.
In addition, the portfolio is comprised of four accounts. One is a general taxable account that has a capital representation that dates back to my late great grandfather as I received a distribution from his estate. In addition, I have a self directed IRA account, a health savings account and a 401k account. Being a former credit and risk manager you can see I use management systems that spread my investment risk over a greater number of funds and their management teams just as most companies have chosen to spread their receivable risk over many accounts.
As you can see that even though I have written about the movement of my ballast money frequently thorough investing in special positions I also have the long term positions as well. In today’s investment environment I believe this works well as one can position to take advantage of some shorter term market trends as well as the longer term trends in the achievement of financial goals.
The important thing is that you take action and do something to secure and build your financial future rather than doing nothing.
So, whether you choose to invest utilizing only a few funds or through the use of many as I have … I indeed wish all of you “good investing.”
Skeeter
Comments
I'll also suggest Brookfield Infrastructure Partners (BIP), which is an MLP (so you do get a K-1 at tax time) but is effectively a fund (which can opportunistically buy and sell assets) of private, literal infrastructure around the world - everything from toll roads in Chile to ports in Europe and Australia to energy distribution and more. It is a very pure play on infrastructure globally. The dividend is about 4.3% and, as others have noted, it is not heavily correlated to market movements. Parent company is giant Canadian conglomerate Brookfield Asset Management (http://www.brookfieldinfrastructure.com/, https://www.brookfieldinfrastructure.com/_Global/22/img/content/FEb_13_BIP Investor Presentation February 2013_FINAL.pdf)
BIP has done quite well, but it remains a considerable (and considerably long-term) holding for me.
Given the concerns about the Marisco fund in terms of management change and the company as a whole, I'm curious why you'd switch to that from Ivy Asset.
Otherwise, thank you for continuing to share your thoughts regarding investing - definitely enjoyed reading this detailed post.
Thanks for chiming in. Your input is welcome.
On TOLLX … This is a fund that is available to me commission free as load waived although I do still get whacked with the ongoing 12b1 fees. With it I am able to gain exposure to global infrastructure but perhaps not all areas as you state. I may come in and complement it with ALERX as this would provide the MLP exposure that you reference. In addition, I hold some other funds that provide exposure to the MLP universe although they are not MLP per specific funds.
On WASAX I am thinking this fund has become so large that perhaps it is bloated much like it is said by some about AGTHX. This is one of the reasons I have been trimming back my position in AGTHX. I figure if AGTHX is too large to be nimble perhaps WASAX is too. With the Columbia fund CCMAX I’d be doing a nav exchange form CTFAX into CCMAX. I have been holding off in doing this to see what Columbia might be doing with its relationship with the Marsico people. I have made an inquiry but not much is being said. I recently asked my broker to probe this area for me but have not yet heard anything back. It seems to still be actively managed as it recently reduced its cash position and raised its equity allocation. Your point about this is well taken and be assured I’ll have to have a satisfactory answer before making the move.
Here is a link for the Marsico news story ...
http://www.denverpost.com/business/ci_22149909/money-manager-tom-marsico-mutual-fund-family-have
Thanks again for chiming in.
Skeeter
When I construct my portfolio, I'm thinking as if I'm putting together a fantasy football team, football being one of my passions. I have an equity bucket, the offense specialists, and a fixed income bucket, the defensive specialists. I also have a third bucket of players that can play offense and defense. They are balanced or allocation type funds with all-star management. My forth bucket, which I guess you call ballast (obviously you like ships too), are the players I move more often depending on game conditions (or economic conditions). This 4th bucket of players is more sector type funds, energy, NR, REIT type funds for extra offense or a money market and short bond index fund for extra defense.
I understand your construction and do similar, albeit with less players. Thanks again Skeeter. Make sense to me.
Thanks for stopping buy and adding how you like to approach investing through associating it with the offensive, defensive and other specialty teams found in football.
One of the seasonal strategies that I use to make a special investment in was to move a small part of my portfolio into either cash or a bond fund during mostly the summer months and then back into an equity index fund during the other period. Perhaps you can add this strategy to your playbook. I have linked it below for your review.
http://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp#axzz2L5CEsuXP
It might just be in great fashion this year … and, I am thinking of moving back into it myself with a small ballast position. My late father used it often and found success in it more times than not. However, what concerns me is that the high frequency crowd might drive the market today more than they have in the past and trump the seasonal trend strategies that many have employed off and on through the years, me included.
Thanks again MikeM for stopping by.
Skeeter
Investing in and keeping track of many funds works for me also. I watch over almost 50 funds between my wife and I in addition to my parents. I work with Vanguard, Edward Jones, Merrill Lynch and Fidelity. We have Roth's, IRA's, Inherited IRA's and 401's at work.
Morningstars Premium "Portfolio Manager" helps with keeping track of all the funds.
TOLSX is available NTF at Vanguard so I am using it in accounts we have there. Since my wife and I are still working the emphasis is on growth and not income and while parents are retired they do not need the money to live on so emphasis is just on good funds.
Portfolios have a foreign tilt and more small / mid cap than large.
Keep posting as I am always looking for that one "nugget" of information in the sea of posts.
Atr
Thanks for stopping by.
Through the years you have provided information that I have found to be of good value.
I was starting to post this under Ted's post on MLPs as it might be of value to some. It is an open end fund that invest in MLP's and says its tax reporting is through a 1099 and not a K-1. I not sure I am ready to move on it although it just recently paid out a distribution of $0.162742. I have linked the fact sheet for the fund and its ticker ALERX.
http://www.alpsalerianmlp.com/fundfacts.php?cusip=317612828
Have a great holiday weekend.
Skeeter
Thanks for making comments on ALERX.
I would like to know more about this fund before moving forward with it so I will not being doing anything in the near term with it. However, I think it will be interesting to continue to watch it and see how it performs. No doubt, from my thoughts, it most likely will be getting some press coverage in time.
As I stated earlier I do have some representation in MLPs as they are held by some of the funds that I own; but, I do not own a MLP specific fund.
Thanks again for your comments.
Skeeter