Portfolio Two Updated April 2022

Portfolio Two is 17 1/2 years old.  The trustee contributed $18,200 and the beneficiary $27,000 for a total of $45,200.  The current value is $72,659 for a gain of $27,460 or 60.8%, which is 6.7% / year when adjusted for the timing of cash flows.  Go here or to the link for more details.

This portfolio contains a mix of ETF’s, cash and individual stocks.  The ETF’s mainly track the market and cash is even so let’s talk about some of the stocks, as follows:

  • Meta (FB) and Alibaba (BABA) are down significantly.  Meta has been hit with the tech downturn and Apple privacy changes and Alibaba has been hit by regulatory and tech crackdowns in China
  • Cloudflare (NET) is an innovative tech company with a high valuation (in terms of price to sales, one of the highest for tech companies) and it has been variable recently, although it has bounced back from recent lows
  • Nike (NKE) and L’Oreal (LRLCY) are relatively recent purchases that are in the consumer product space and they are down since we bought them (although not as big as the tech drops)

Portfolio Two Updated October 2021

Portfolio Two is seventeen years old.  The beneficiary contributed $27,000 and the trustee $18,200 for a total of $45,200.  The current value is $79,546 for a gain of $34,346 or 76%, which is 7.6% / year adjusted for the timing of cash flows.  For details go here or to the link on the right.

The portfolio is generally doing well.  There is a core of ETF’s and some individual stocks.  Cloudflare (NET) has been doing well and the others mostly purchased recently.  Alibaba (BABA) is up from recent very low prices caused by Chinese politics and a deferral of the Ant IPO, but we are holding on for now.

This portfolio has over $20,000 in cash and the total bond fund (BND) ETF which reduces risk but also reduces total return opportunities.  1/4 of the fund is invested in cash or low risk equivalents rather than equities. 

Portfolio Two Updated July 2021

Portfolio two is almost 17 years old.  The beneficiary contributed $13,000 and the trustee $17,200 for a total of $30,200.  The current value is $61,439 for a gain of $31,239 or 103%, which is 8.2% / year adjusted for the timing of cash flows.  Go here or to the link on the right for more detail.

The portfolio is doing well overall, with mostly ETF’s and some single name stocks.  BABA is one of the single name stocks that has hit trouble recently with Chinese regulation, but it is a good long term holding.  The portfolio has 23% of assets in  cash, bonds, & gold which reduces risk but also has held down returns that have risen recently after the March 2020 markets scare.

Portfolio Two Updated Feb 2021

Portfolio two is 16 1/2 years old. The beneficiary contributed $13,000 and the trustee $17,200 for a total of $30,200. The current value is $58,216 for a gain of $28,016 or 93%, which is 7.7% / year adjusted for the timing of cash flows. Go here for details or to the link on the right.

There were no sales in 2020 for capital gains purposes. The dividends were $516 and there was $16 in capital gains on the BND fund.

Portfolio Two Updated November 2020

Portfolio 2 is 16 years old.  The beneficiary contributed $13,000 and the trustee $17,200 for a total of $30,200.  The current value is $54,779 for a gain of $24,579 which is 81% or 7% / year when adjusted for the timing of cash flows.  Go here for details or at the link on the right.

The portfolio consists of mostly ETF’s with some recent stock purchases.  The portfolio is doing OK overall but Alibaba (BABA) went down recently due to the deferral of the ANT IPO by China.

Portfolio Two Updated August 2020

Portfolio Two is sixteen years old. The beneficiary contributed $8000 and the trustee $16,200 for a total of $24,200. The value is $46,803 for a gain of $22,603 which is 93% or 7.4% / year when adjusted for the timing of cash flows. See the summary here or at the link.

The portfolio is one of the two that has moved to ETF’s. The portfolio is 28% cash and 11% BND, meaning that almost 40% of the value is out of the market (and also effectively can’t go down). Given that zero interest rate policy (ZIRP) is back, cash is now effectively yielding zero (0.1%) so may consider moving it into BND where it at least makes 2% (with some risk on the principle if rates rise).

Portfolio Three Updated June 2020

Portfolio 3 is 12 1/2 years old.  The beneficiary contributed $6500 and the trustee $13,200 for a total fo $19,700.  The current value is $26,476 for a gain of $6776 or 34%, which is 4.2% / year adjusted for the timing of cash flows.  See the summary here or at the link.

This portfolio, like portfolio 2, switched to ETF’s.  This portfolio has less cash and a higher proportion in BND, which is good since the yield on cash has dropped to a low 0.3% with the return of ZIRP.

Portfolio Two Updated June 2020

Portfolio Two is 15 1/2 years old.  The beneficiary contributed $8000 and the trustee $16,200 for a total of $24,200.  The current value is $44,019 for a gain of $19,819 or 81%, which is 6.7% / year adjusted for the timing of cash flows.  Go here for a summary or click on the link.

Last year we bought ~ $5000 worth of BND and that has returned 9% dividends & share price appreciation (annualized) which is better than the return on cash itself which has dropped from 1.7% a couple of years ago to 0.3% with the (near) return of ZIRP.  May want to move more from cash to BND (or even IAU) with the return of ultra low interest rates and the Fed even buying some debt instruments from corporations.

Portfolio Two Updated February 2020

Portfolio 2 is 15 1/2 years old.  The beneficiary contributed $8000 and the trustee $16,200 for a total of $24,200.  The current value is $46,438 for a gain of $22,438 or 93%, which is 7.3% / year adjusted for the timing of cash flows.  See a summary here or at the link on the side.

The ETF’s in the portfolio are doing well.  We sold the ETF IBB this year for a $200 gain, and had some small gains paid out from the ETF HEFA (Vanguard ETF’s don’t pay out gains or losses) as well as dividends.

There is a lot of cash at $12,799 with $5100 in the bond fund (BND).  May want to consider putting some of it back in the market or in the gold ETF (IAU).

Portfolio Two Updated December, 2019

Portfolio two is over 15 years old.  The beneficiary contributed $8000 and the trustee $16,200 for a total of $24,200.  The current value is $45,377 for a gain of $21,177 or 87%, for an annualized return of 7.1% adjusted for the timing of cash flows.  You can see a summary at the link on the right or here.

This is an ETF portfolio, with 28% in cash, 11% in bonds (the BND ETF), and the remaining in US and worldwide equities.

2019 was a good year for the markets and this portfolio as well.

ETF Portfolios and Fall 2019 Selections

We have two ETF portfolios because it is difficult for these beneficiaries to hold individual stocks because of their professions.  We moved Portfolio 2 to ETF’s several years ago and just sold the individual stocks in Portfolio 3 so that we can invest for Fall 2019 in “ETF mode”.

Portfolio two has the following ETF’s:

  • VTI – the Vanguard all US market ETF
  • VEU – the Vanguard all non-US market ETF
  • HEFA – the “hedged” non-US market (so that it is not exposed to changes in currency rates)
  • IAU – the ETF that tracks the price of gold
  • Cash – the remaining dollars (40%) are in the Vanguard money market (VMMXX), which currently returns 2% / year

The decision for Fall 2019 is whether to keep this high cash allocation or to increase the allocation for equities.

Option One – keep current allocation

Option Two – add a bond ETF.  Bond ETF’s go up when interest rates go down (as they have been doing).  We could put $5000 in BND (Total bond market ETF)

Option Three – add $5000 to VWO which is the Emerging Markets ETF (broad) from Vanguard

Option Four – add an additional $5000 to VTI, which is the US stock market ETF

Options Two – Four can all be done since there is $17,367 in cash.

Portfolio Three:

Portfolio Three has $24,561 in cash.  We need to set up ETF’s for this portfolio and can broadly follow the same model as portfolio two.

Base model:

  • VTI – US market -30% of investment
  • VEU / HEFA – 15% each (non US markets, with half hedged) for a total of 30%
  • IAU – optional, could be 10%
  • Cash or BND – could be 30%

These percentages could be changed as needed.

Portfolio Two Updated May 2019

Portfolio Two is almost 15 years old.  The beneficiary contributed $7500 and the trustee $15,200 for a total of $22,700.  The current value is $40,221 for a gain of $17,521 or 77%, which is 6.9% / year when adjusted for the timing of cash flows.  Go here or to the link on the right for details.

Portfolio two has switched to ETF’s which mostly track the US and world wide markets.  This portfolio also has $12,932 in cash, which is almost 1/3 of the portfolio.

For this portfolio, the NASDAQ biotech index (IBB) is on watch.

Portfolio Two Updated December, 2018

Portfolio Two is over 14 years old.  The beneficiary contributed $7500 and the trustee $15,200 for a total of $22,700.  The current value is $38,227 for a gain of $15,527 or 68%, which is 6.3% / year when adjusted for the timing of cash flows.  Go here or to the link on the right for details.

Portfolio two has switched to ETF’s which mostly track the US and world wide markets.  This portfolio also has $12,568 in cash, which is almost 1/3 of the portfolio.  The portfolio is doing OK in the current market downturn.

Portfolio Two Updated July, 2018

Portfolio two is almost 14 years old.  The beneficiary contributed $7000 and the trustee $14,200 for a total of $21,200.  The current balance is $39,012 for a gain of 84% or ~8% / year when adjusted for the timing of cash flows.  You can see the detail here or at the link on the bottom.

This portfolio is unique because it has moved to ETF’s and ~ 25% cash position.  The ETF’s have been doing well, with a large position in VTI (total US market) and a split between VEU (all world non US) and HEFA (all world non US hedged against the US dollar to get local market performance).  There also is a small biotech position (IBB) and gold ETF position (IAU).

When we moved to ETF’s from individual stocks in 2016, we also purchased a 2 year CD which paid 1.55% interest, because our money market fund was essentially offering “zero” interest on our money and we wanted to keep about $10,000 or so in cash and yet get some sort of return on the money.  This CD recently redeemed into cash in the account.  We could buy a new CD, but we are currently getting 1.85% return in our money market so we can just leave it there because the 2 and 3 year CD’s aren’t offering much more than that, and interest rates seem more likely to go up than down.  Thus we are planning (for now) to just leave cash in the money market instead of buying a CD because the incremental interest is negligible.

I want to have the beneficiary contribute now and have the trustee match, make our investments for summer 2018, have everything clear, then move the fund out of UTMA status and to the beneficiary (like we did with Portfolio One).  Then we can give the (technically former) trustee “agency” capabilities so that we can still take advantage of my free trades (which apply to the accounts that are under me or I have agency capabilities for).

 

Portfolio Two Updated February 2018, and It’s Tax Time

Portfolio Two is our second longest lived portfolio, at 13 1/2 years.  This portfolio is unique because the individual stocks have been sold off and replaced with ETF’s and a CD.  See the details here or at the link on the right.

The beneficiary has invested $7000 and the trustee $14,200 for a total of $21,200.  The current value is $38,428 for a gain of $17,228 or 81%, which is 7.7% a year when adjusted for the time value of cash flows.

Walking through the detailed transactions often helps you to find items you’ve overlook – we noted that the biotech ETF IBB had a stock split (3-1) in December 2017 so I have been understating the value of this portfolio by almost $2000 since that time on my consolidated view.

There were no stock sales last year so the only tax impacted item is dividends which were approximately $632 during 2017.

The portfolio is doing well.  It is interesting to see that the VEO ETF has returned 33% including dividends since we’ve owned it but the HEFA ETF has returned 19% including dividends… the difference is due to the 10% or so fall in the US dollar vs a basket of other world wide currencies.  HEFA is hedged so you get returns in original currencies while VEO also includes the net effect of the dollar on returns (which magnified returns in this case).