[Originally published on Jul 17, 2014.]
Amidst the general market routing of the day, with most sectors down there still exists a glimmer of hope for portfolios in general, at least in the academic sense.
The sort of not so alpha-generative (generally speaking), and kind of fun beta-barricade, of commodity etfs and muni etfs did ok today. Though they have relatively decent dividend yields even for being sort of beta hedges per se, often times muni etfs and commodity etfs may be tempting to sell, particularly if one has some sort of conviction in a particular sector or macro play, however perhaps it's days like these where the stalwart defenders rise to the occasion where other positions fail.
They may not be glorious in so far as their dividend yields are concerned, they may not be daring in so far as positive volatility is concerned, they may not really ever be alluringly trendy, but perhaps when the markets experience their own sort of charge of the light brigade like today, these sort of due diligence-related sort of pro-active defensive beta hedges really shine.
For, while the rest of the market in general is pretty much down, ye old NRK and CFD hold the line, up .46 and .26% for the day respectively. Perhaps when one sometimes may be tempted to go full sort of long-term positive growth/yield it may be helpful to recall days like today as I surely will, which though they don't happen very often, are surely sort of great treatise in portfolio-crafting if one will.
Hence, I hope everybody had a little bit of these unsung champs in their roster or portfolio, these handy praetorians of portfolio planning if one will, and hopefully even if one is a little perturbed by the sea of red that has potentially overtaken one's portfolio, with positions like these, perhaps one can still have faith in the methods inherent to the field of portfolio planning. May your hedges always shine.
Disclosure: Long NRK, CFD.