Here is a breakdown of my portfolio including performance, asset allocation, sector allocation and holdings (2% of portfolio minimum) at the end of the day January 15, 2016.
Performance: includes dividends and exchange to Canadian dollars for U.S. account. The allocation helps the portfolio reduce the downdraft compared to fully invested. Of course it means the uplift is lower.
Portfolio S&P 500 USA TSX Canada
2016 -2.56% -7.88% – 7.20%
2015 5.48% 1.36% -11.09%
2014 13.46% 13.52% 7.42%
2013 23.28% 32.15% 9.55%
2012 9.50% 15.89% 4.00%
Average 2012-2015 12.93% 15.03% 2.48%
In the first two years my portfolio was just being developed on a value basis. Still even without full investment I am keeping close to the S&P and beating the TSX. If a major correction were to occur then I would become close to fully invested.
The portfolio success has been most accomplished by currency exchange, hedging, rebalancing and allocation.
Asset Allocation: You will notice allocations are heavy on cash and fixed income. My allocations are attempting to mirror the allocations in the post on managing market risk. I want to have money to invest for a correction so I hold 42% cash fixed income, 2.5% preferred, and another 2% of a short etf for the market giving me 44.5% dry powder from cash fixed income and hedges. This would grow if the market goes down because currently I have two etf’s that would be inverse correlation to the market.
Sector Allocation: Technology and Energy are my two heaviest sectors. This is because tech names like Apple, Corning, and Qualcomm all have lots of cash to cover their debt, trade at low multiples (Apple and Corning at 11 times earnings and Qualcomm at under 15 times earnings).
Energy is growing from the oil crisis. I believe this will be a learning experience and will test my fundamental analysis. I have postions in energy companies Helmerich & Payne (HP), CNOOC (CEO), Transglobe (TSX:TGL) with smaller positions in Chevron (CVX) and Sasol (SSL). My key is the balance sheet while the commodity price is low. Helmrich and Payne, Transglobe and Sasol all have more cash than debt. CNOOC has cash that is 60% of debt. The only ratio not ideal is Chevron at 37% cash of debt.
There is a risk because I do not know when the commodity price will improve but I am buying cheap and hoping the strong balance sheets will help the companies survive. The smallest company is Transglobe (analysis) and the ride has been a wild one. down 25% and up 25% and now down 40% but I intend to buy more averaging down on weakness. My current buy in price is a little over a third of the tangible book value of the company.
Below are the equity holdings 2% or over in the portfolio. Allocation info is above.
StockStory is not a financial advice site and content should not be considered for investment recommendations.
Please Share With Others: