Saturday, April 28, 2012

2012-Q1 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 2012-Q1. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 21.4% 21.4% 0.0%
Equities-Domestic 48.5% 47.5% 1.0%
Equities-International 25.0% 26.0% -1.0%
Employer Equity 5.1% 5.1% 0.0%
Total 100.0% 100.0%
Cash/Fixed Income 21.4% 21.4% 0.0%
Large Cap. 57.2% 56.5% 0.7%
Small/Mid Cap. 16.3% 17.0% -0.7%
Employer Equity 5.1% 5.1% 0.0%
Total 100.0% 100.0%

Asset Allocation

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

At the end of the first 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.

2012-Q1 Performance

After out-performing in 2011, my income portfolio, pocket-change-portfolio and income ETFs portfolio under-performed the S&P, but out-performed Berkshire Hathaway (BRK.B) year-to-date through March. 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.
'12 YTD
Income Stocks 9.4% 8.9%
Pocket Change (9/08) 10.3% 6.0%
Income ETFs 2.0% 8.6%
S&P 500 (VFINX) 1.6% 14.5%
BRK.B -2.8% 7.0%
Income Stocks vs S&P 7.8% -5.6%
Income Stocks vs BRK 12.2% 1.9%

When weighted with results from 2008 forward, all my income investments also 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 Q1/2012 my passive income averaged $1,657/month, up from the $1,605/month in Q4/2011. The increase resulted from higher dividends in all my portfolios, offset by lower interest income from cash 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-July. As always, thanks for reading! See a list of all my dividend growth holdings here.

(Photo: sanja gjenero)

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