Saturday, October 25, 2014

2014-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 2014-Q3. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 12.92% 12.92% 0.00%
Equities-Domestic 59.09% 57.46%  1.63%
Equities-International 23.37% 25.00% -1.63%
Employer Equity 4.62% 4.62% 0.20%
Total 100.00% 100.0%
Cash/Fixed Income 12.92% 12.92% 0.00%
Large Cap. 62.76% 62.46%  0.30%
Small/Mid Cap. 19.70% 20.00% -0.30%
Employer Equity 4.62% 4.62% 0.00%
Total 100.00% 100.00%


Asset Allocation

Given the unsustainable low interest rates, and the associated future price pressure, I continued 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 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. I will make needed adjusts with future purchases.

2014-Q3 Performance

After under-performing in 2013, my Dividend Growth Portfolio and Pocket-Change-Portfolio under-performed the S&P 500 and Berkshire Hathaway (BRK.B) through the third quarter. 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.
'14 YTD
Div. Growth Stocks 11.0% 5.6%
Pocket Change (9/08) 11.6% 3.2%
S&P 500 (VFINX) 7.1% 5.8%
BRK.B 4.7% 10.8%
Div. Growth vs S&P 3.8% -0.2%
Div. Growth vs BRK 6.2% -5.2%

When weighted with results from 2008 forward, my income portfolios continue to 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 Q2/2014 my passive income averaged $3,219/month, up slightly from the $3,179/month in Q1/2014. The increase resulted from higher overall 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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