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Saturday, October 26, 2013

2013-Q3 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 2013-Q3. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 13.56% 13.56% 0.00%
Equities-Domestic 57.24% 57.21% 0.03%
Equities-International 24.97% 25.00% -0.03%
Employer Equity 4.23% 4.23% 0.00%
Total 100.00% 100.0%
Cash/Fixed Income 13.56% 13.56% 0.00%
Large Cap. 60.86% 62.21% -1.35%
Small/Mid Cap. 21.35% 20.00% 1.35%
Employer Equity 4.40% 4.40% 0.0%
Total 100.00% 100.00%


Asset Allocation

Given the unsustainable low interest rates, and the associated future price pressure, I continued to look for ways to lower my overall bond allocation in the third quarter. When rates move up bond prices will be negatively impacted.

At the end of the third 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. I will make needed adjusts with future purchases.

2013-Q3 Performance

After under-performing in 2012 and out performing in Q1/2013, my Dividend Growth Portfolio and the Pocket-Change-Portfolio slightly under-performed the S&P year-to-date through June. Both portfolios underperformed Berkshire Hathaway (BRK.B) during the same time period. 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.
'13 YTD
Div. Growth Stocks 10.1% 17.6%
Pocket Change (9/08) 11.0% 17.2%
S&P 500 (VFINX) 5.0% 20.3%
BRK.B 2.7% 27.7%
Div. Growth vs S&P 5.1% -2.7%
Div. Growth vs BRK 7.4% -10.1%

When weighted with results from 2008 forward, my income portfolios 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 Q3/2013 my passive income averaged $2,766/month, down from the $2,864/month in Q2/2013. The decrease resulted from selling some higher risk investments (outside of my Dividend Growth Portfolio) and buying safer, lower yielding investments. 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 late-January. As always, thanks for reading! See a list of all my dividend growth holdings here.

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(Photo: sanja gjenero)


Tags: [BRK.B] [VINF]

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