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 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.
- 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 Three is almost 12 years old. The beneficiary contributed $6000 and the trusted $12,000 for a total of $18,000. The current value is $22,338 for a gain of $4,338 or 24%, which is 3.3% / year when adjusted for the timing of cash flows. See the details here or go to the links on the left.
We will look at selling Smart Global Holdings (SGH), Nvidia (NVDA) and Baidu (BIDU) prior to making our summer 2019 purchases.
Portfolio Three is 11 years old. The beneficiary contributed $6000 and the trusted $12,000 for a total of $18,000. The current value is $21,710 for a gain of $3,710 or 21%, which is 2.9% / year when adjusted for the timing of cash flows. See the details here or go to the links on the left.
There are a few stocks we are looking at in the current market environment:
- Nvidia (NVDA) – another former high flyer, this chip maker was buoyed by crypto mining and is down about 50% off its 52 week high, although it still has strong cash flow. Will watch, may sell
- Alibaba (BABA) – at about 70% of its 52 week peak, has been hit by slow down in China and also a possible previous over-valuation in software stocks
- Facebook (FB) – it has been a bad year for Facebook and the stock is down about 30% off its highs. Still strong financial performance, will watch
- Baidu (BIDU) – another Chinese internet company down about 30% off its peak. Will watch like Alibaba, above
- ABB (ABB) – European industrial conglomerate which has fallen about 20% since we’ve bought it
Portfolio three is 11 years old. The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500. The current value is $23,170 for a gain of 40% or 5.6% / year adjusted for the timing of cash flows. You can see the data here or at the link on the right.
We have a few stocks that we are considering selling now.
- ABB (ABB) – ABB is a European conglomerate with a new CEO that is well run. Down about 20% from 52 week high but too early to sell (just bought it last year)
- DowDuPont (DWDP) – this chemical company is performing well. We will likely sell it before it splits into 3 stocks in 2019
- Baidu (BIDU) – Baidu is a large internet company in China. It is down about 20% from 52 week high. Will probably keep
- Elbit Systems (ESLT) – Elbit is an Israeli defense contractor. They are doing well operationally but are down about 20% from a recent peak. Probably will hold on to it
- Wal-Mart (WMT) – Wal-Mart is well run but in the fight for its’ life against Amazon. May want to take our winnings and go. Stock recently rallied…
None of these are immediate sells but ones to consider.
Portfolio three is 10 1/2 years old. The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500. The current value is $23,251 for a gain of $6751 or 41%, which is 5.6% / year when adjusted for the timing of cash flows. Click here for details or use the link on the right.
During 2017 there were no sales and there was dividends of approximately $322. The portfolio is generally doing OK and has bounced back from the recent market activity.
Portfolio Three is 10 years old. The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000. Current value is $19,143 for a gain of $4143 or 27%, which is 4% / year across the life of the fund. See the details here or in the links on the right.
We have added some new, central analytics to this portfolio. There are 3 stocks that we are looking at right now for being 80% – 89% of their 52 week high…
- ConocoPhilips (COP) – COP is an oil and gas company with a strong dividend. It is at risk due to continuing low oil and gas prices. We will consider selling it now
- Siemens (SIEGY) – Siemens is a successful European conglomerate with a strong dividend. The stock is not far off 5 year highs, but down about 10-15% off recent peaks. We will likely hold onto this stock
- Exxon (XOM) – Exxon is a lightning-rod political stock. They are a well run company near their 5 year lows, hit by low prices for oil and gas. We will consider selling it, but less likely than COP (above)
Portfolio 3 is 9 1/2 years old. The trustee contributed $5000 and the trustee $10,000 for a total of $15,000. The current value is $17,483 for a gain of $2,483 or 16%, which is about 2.7% / year when adjusted for the timing of cash flows. You can see the detail at the links on the right or go here.
The portfolio is generally doing well. We will consider selling ConocoPhillips (COP) which has been selling off assets to pare down debt and reduced their dividend. Their stock has stabilized but this may not be the best oil play. We are also sticking with ExxonMobil (XOM) which we bought near a high because that company has proven to be well run over the last few decades.
In the new “analytics” tab you can see that this portfolio has a heavy non-US component, with 62% of stocks from non-US countries. We have 2 of the 3 major Chinese internet companies and also 2 large Canadian banks, among others.