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Saturday, July 23, 2011

2011-Q2 Performance 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 2011-Q2. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 28.2% 29.0% -0.8%
Equities-Domestic 44.1% 42.7% 1.4%
Equities-International 23.4% 24.0% -0.6%
Employer Equity 4.3% 4.3% 0.0%
Total 100.0% 100.0%
Cash/Fixed Income 28.2% 29.0% -0.8%
Large Cap. 52.2% 51.7% 0.5%
Small/Mid Cap. 15.3% 15.0% 0.3%
Employer Equity 4.3% 4.3% 0.0%
Total 100.0% 100.0%


Asset Allocation

In the second quarter, my asset allocation was reasonably close to my target. My philosophy is to buy the best dividend stocks available and adjust my allocation using my 401(k) and other investments, when needed. None of the variances are above my 2.5% tolerance, so I will adjusted them with future purchases.


2011-Q2 Performance

After under-performing in the first quarter, my income portfolio and pocket-change-portfolio out-performed the S&P and Berkshire Hathaway (BRK.B) year-to-date through June, while my income ETFs portfolio under-performed the S&P. Below are the YTD performances of various categories along with my S&P 500 (VFINX) and Berkshire Hathaway (BRK.B) benchmarks:

Portfolio Lifetime
Wtd. Avg.
'11 YTD
Income Stocks 6.3% 7.8%
Pocket Change (9/08) 8.4% 6.2%
Income ETFs 2.4% 6.0%
S&P 500 (VFINX) 2.0% 6.1%
BRK.B -2.4% -3.3%
Income Stocks vs S&P 4.2% 1.7%
Income Stocks vs BRK 8.7% 11.1%

When weighted with results from 2008 forward, all my income investments out-performed the S&P and BRK. 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. For more details on the performance of my income portfolios, including year-by-year performance and cumulative chart, please click here.


Passive Income

For Q2/2011 my passive income averaged $1,415/month, up from the $1,284/month in Q1/2011. The increase resulted from additional investments and dividend growth. 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! See a list of all my dividend growth holdings here.

(Photo: sanja gjenero)

10 comments:

  1. Those are great results since 2008. I'm curious, why such a small percentage in small cap stocks?

    ReplyDelete
  2. TJT: My overall investment philosophy is somewhat conservative and geared toward income and stability. Small/mid caps are usually classified as growth/capital appreciation. I have limited my small/mid cap. target allocation to 15%.

    Best Wishes,
    D4L

    ReplyDelete
  3. Hi, I have always wanted to ask. How do you buy your stocks. Do you have DRIPs opened through the company agent(computershare) or do you use a discount broker, if so which one. I am trying to figure out what is a good strategy for buying bunch of stocks you own, but do DCA( dollar cost ave). Thanks

    ReplyDelete
  4. Anon: I don't DRiP. I invest a set amount each month plus any dividends earned into the best available stocks using my D4L-Dashboard. I use Scottrade ($7 commission). I won't buy unless the commission is less than 1%.

    Best Wishes,
    D4L

    ReplyDelete
  5. Dividend Mantra: You have to believe in what you are doing and stick with it. There will be times when things look bad, but these are ultimately the times when the greatest profits are born.

    Best Wishes,
    D4L

    ReplyDelete
  6. If I'm reading it correctly, your asset allocation file shows 49.5% of your 401K is in international equities. Since most foreign stocks have a tax withholding that can't be recouped in a tax deferred account, how do you deal with the tax? I've been avoiding foreign stocks in my 401K because of the wasted withholding.

    ReplyDelete
  7. Hello,

    My question is, how do you measure performance? Are you starting from when your portfolio was created?

    And in terms of your asset allocation, what made you determine such targets?

    Thanks.

    ReplyDelete
  8. Good dividend income. How long have you been doing this and do you have any international exposure?
    Thanks
    Inq

    ReplyDelete
  9. @Anon 1: The tax withheld are on dividends. It is an international growth fund, so the dividends are small.

    @Anon 2: I measure performance from the later of when the portfolio was started or in 2007 when I began providing public updates. Targets were set based on my investing profile and personal needs.

    @INQ: I have been an income investor since around 2003. As noted above, most of my international exposure is in my 401k.

    Best Wishes,
    D4L

    ReplyDelete

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