We continue to search for portfolios that can provide good risk adjusted returns. We have previously reviewed a selection based on Goldman chief U.S. equity strategist David Kostin's list of the 50 stocks that "matter the most" to hedge funds. These are:
Rank | Company | Funds With Stock as Top 10 Holding |
|---|---|---|
| 1 | Apple (Nasdaq: AAPL) | 105 |
| 2 | Google (Nasdaq: GOOG) | 58 |
| 3 | Microsoft (Nasdaq: MSFT) | 50 |
| 4 | JPMorgan Chase (NYSE: JPM) | 31 |
| 5 | Pfizer (NYSE: PFE) | 29 |
| 6 | Qualcomm (Nasdaq: QCOM) | 29 |
| 7 | General Motors (NYSE: GM) | 28 |
| 8 | LyondellBasell Industries (NYSE: LYB) | 24 |
| 9 | Liberty Interactive (Nasdaq: LNTA) | 22 |
| 10 | Baidu (Nasdaq: BIDU) | 21 |
| 11 | Amazon.com (Nasdaq: AMZN) | 20 |
| 12 | Anadarko Petroleum (NYSE: APC) | 20 |
| 13 | Las Vegas Sands (NYSE: LVS) | 20 |
| 14 | Visa (NYSE: V) | 19 |
| 15 | Wells Fargo (NYSE: WFC) | 19 |
| 16 | Cisco Systems (Nasdaq: CSCO) | 18 |
| 17 | ExxonMobil (NYSE: XOM) | 18 |
| 18 | Citigroup (NYSE: C) | 17 |
| 19 | Charter Communications (Nasdaq: CHTR) | 17 |
| 20 | CIT Group (NYSE: CIT) | 17 |
Source: Zero Hedge, citing Lionshare via FactSet, IDC, and Goldman Sachs Global ECS Research.
We noted that this is a very volatile portfolio and not one that is suited to the buy and hold investor. To highlight this I am going to go back to a portfolio of 10 equities that were recommended by SeekingAlpha readers. The funds in this portfolio are:
| Fund in this portfolio | Percentage |
|---|---|
| KO (The Coca-Cola Co) | 9.33% |
| PEP (PepsiCo Inc) | 7.53% |
| PG (Procter and Gamble) | 7.73% |
| MO (Altria Group) | 12.06% |
| JNJ (Johnson Johnson) | 8.33% |
| ABT (Abbott Labs) | 8.42% |
| WMT (Wal-Mart) | 9.26% |
| MCD (McDonald's Corp.) | 14.51% |
| INTC (Intel) | 9.63% |
| PM (Philip Morris International Inc.) | 13.20% |
Note that this selection of equities has the benefit of being dividend bearing, which can be critical for income in these tricky financial times.
As ever, we use our dividend bearing ETF portfolio as a reference.
The dividend bearing ETF portfolio comprises:
| Asset | Fund in this portfolio |
|---|---|
| REAL ESTATE | ICF (iShares Cohen & Steers Realty Majors) |
| CASH | CASH |
| FIXED INCOME | TIP (iShares Barclays TIPS Bond) |
| Emerging Market | VWO (Vanguard Emerging Markets Stock ETF) |
| US EQUITY | DVY (iShares Dow Jones Select Dividend Index) |
| US EQUITY | VIG (Vanguard Dividend Appreciation ETF) |
| INTERNATIONAL EQUITY | IDV (iShares Dow Jones Intl Select Div Idx) |
| High Yield Bond | HYG (iShares iBoxx $ High Yield Corporate Bd) |
| INTERNATIONAL BONDS | EMB (iShares JPMorgan USD Emerg Markets Bond) |
- P Seeking Alpha Readers' Top 10 Dividend Stocks -- Total of $10K invested equally in each stock
- 20 Stocks Hedge Funds Love -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
| Portfolio/Fund Name | YTD Return | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Retirement Income ETFs Tactical Asset Allocation Moderate | 1% | 1% | 14% | 8% | 64% | 8% | 58% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | -0% | -0% | 4% | 12% | 80% | 2% | 7% |
| 20 Stocks Hedge Funds Love | -1% | 2% | 8% | ||||
| P Seeking Alpha Readers Top 10 Dividend Stocks | 12% | 14% | 68% | 13% | 92% |
While the SeekingAlpha Readers' portfolio doesn't have a five-year history, we can see that as far as it goes, it has performed very well against all the other portfolios. We have previously noted that in these stressed times a blue-chip stock with dividends is going to be a very attractive proposition.
Three Month Chart One Year Chart
Three Year Chart
Five Year Chart
Over the longer timeline, the SeekingAlpha portfolio continues to look attractive for a fire and forget selection, which has good performance (relatively) in stressed times, which is going to be of great comfort to those who don't want to be reading the financial section of the papers on a regular basis and making regular changes.
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
