Saturday, January 22, 2011

2010-Q4 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-Q4. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 27.0% 28.0% -1.0%
Equities-Domestic 43.9% 42.2% 1.7%
Equities-International 23.3% 24.0% -0.7%
Employer Equity 5.8% 5.8% 0.0%
Total 100.0% 100.0%
Cash/Fixed Income 27.0% 28.0% -1.0%
Large Cap. 49.5% 51.2% -1.7%
Small/Mid Cap. 17.5% 15.0% 2.5%
Employer Equity 5.8% 5.8% 0.0%
Total 100.0% 100.0%

Asset Allocation

In the fourth 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.

2010-Q4 Performance

For the year, each of my income portfolios outperformed the S&P, and all underperformed Berkshire Hathaway (BRK.B). Below are the YTD performances of various categories along with my S&P 500 benchmark (VFINX):
Portfolio Wtd. Avg. 2010 YTD
Income Stocks 7.0% 17.6%
Pocket Change (9/08) 15.1% 16.6%
Income ETFs 2.1% 16.1%
S&P 500 (VFINX) 1.7% 14.9%
BRK.B -2.7% 21.9%
Income Stocks vs S&P 5.3% 2.7%
Income Stocks vs BRK 9.7% -4.3%

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

Passive Income

For Q4/2010 my passive income averaged $1,184/month, up slightly from the $1,010/month in Q3. 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-April. As always, thanks for reading!

(Photo: sanja gjenero)