Saturday, July 17, 2010

* 2010-Q2 Progress Review

After each quarter-end I review my asset allocation and year-to-date total returns by category. The attached PDF contains my actual asset allocation as of 2010-Q2. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 29.8% 28.0% 1.8%
Equities-Domestic 38.6% 38.0% 0.6%
Equities-International 23.4% 24.0% -0.6%
Employer Equity 8.2% 10.0% -1.8%
Total 100.0% 100.0%
Cash/Fixed Income 29.8% 28.0% 1.8%
Large Cap. 47.2% 48.0% -0.8%
Small/Mid Cap. 14.8% 14.0% 0.8%
Employer Equity 8.2% 10.0% -1.8%
Total 100.0% 100.0%

Asset Allocation

In the second quarter, my asset allocation was reasonably close to my target. What a difference a year makes. For so long, I was over-allocated in my employer's stock. Now I am 1.8% under-allocated in it. None of the variances are above my 2.5% tolerance, so I will adjusted them with future purchases.

2010-Q2 Performance

In the second quarter, my portfolio gave back some of the gains earned in Q1. After trailing the S&P in 2009, this year my income portfolios are out-performing the S&P through June. Below are the YTD performances of various categories along with my S&P 500 benchmark (VFINX):
Portfolio Wtd. Avg. 2010 YTD 2009 2008
Income Stocks 1.9% 2.6% 23.9% -20.4%
Pocket Change (9/08) 9.1% -3.8% 21.1% -7.3%
Income ETFs -1.8% 10.4% 17.6% -27.3%
Asset Allocation 0.0% -5.2% 31.0% -28.4%
Mutual Funds -5.8% -5.8% 26.4% -38.0%
S&P 500 (VFINX) -5.0% -5.6% 26.5% -36.3%
BRK.B -7.2% 23.6% 2.2% -32.1%
Income Stocks vs S&P 7.0% 8.2% -2.6% 15.9%
Income Stocks vs BRK 9.2% -21.0% 21.7% 11.7%
When weighted with 2009 and 2008, all my investments, except mutual funds, out-performed the S&P. As I have previously stated, it is my desire to beat the S&P over the long-run, so I don't pay a lot of attention to short-term performance either positive or negative.

Passive Income

For Q2/2010 my passive income averaged $992/month, up slightly from the $812/month in Q1. The increase resulted from additional investments, dividend growth and from higher income on cash holdings as I moved them from a MMA to short-term bonds. The above amounts include all sources of passive income in my taxable accounts, primarily interest and dividends. It excludes my Roth IRA, 401(k) and blog income (which is not passive).

The next update will be in mid-October. As always, thanks for reading!
(Photo: sanja gjenero)

Cash/Fixed Income 28.0% 27.0% 1.0%
Equities-Domestic 37.9% 39.0% -1.1%
Equities-Internl 23.5% 24.0% -0.5%
Employer Equity 10.6% 10.0% 0.6%
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