Inside My Portfolio: What I Hold And Why

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Includes: CYS, DX, FCX, FSITX, FSIVX, FSRVX, FSTVX, FUSVX, GOOD, JMI, MO, NNN, O, PM, SCHC, SCHD, SCHF, SCHH, SCHZ, STOR, VNQ, VTI, WMT, XOM
by: ColoradoWealthManagementFund

Summary

I’ll take readers through a look at my personal portfolio.

During late March, I took the opportunity to start selling off my positions in broad domestic equity funds.

Last month I had a goal of opening a position in preferred shares.

That position was opened in March, but I couldn't get close to full execution.

In early April the execution came through.

It's useful for readers to have a solid disclosure about the investing choices of the analysts they follow. Seeing the choices the analyst has personally made and what plans the analyst has for their future investing choices provides other investors the opportunity to better understand the mindset of the analyst and determine how they feel about the quality of the analyst's research.

My individual holdings are a mix of ETFs, stocks, and cash in my accounts with more freedom and mutual funds in employer sponsored accounts. Because the employer sponsored accounts are limited to mutual funds, the amount of overlap in my portfolio is higher than it would otherwise be.

Holdings

The following list contains my current holdings and shares that I am currently considering taking a position in. The list also includes a couple placeholders as I try to pick out the fourth triple net lease REIT I'm interested in. I filled in the third mREIT slot with JMI because I see a solid trading opportunity.

Ticker

Name of Fund

VTI

Vanguard Total Stock Market ETF

FSTVX

Fidelity Spartan® Total Market Index Fund Fidelity Advantage Class

FUSVX

Fidelity Spartan® 500 Index Fund Fidelity Advantage Class

SCHD

Schwab U.S. Dividend Equity ETF

MO

Altria Group

XOM

Exxon Mobil

WMT

Wal-Mart Stores, Inc.

FCX

Freeport-McMoRan

FSRVX

Fidelity Spartan® Real Estate Index Fund Fidelity Advantage® Class

VNQ

Vanguard REIT Index ETF

SCHH

Schwab U.S. REIT ETF

NNN

National Retail Properties

STOR

STORE Capital

O

Realty Income Corp.

Triple Net #4

SCHF

Schwab International Equity ETF

SCHC

Schwab International Small-Cap Equity ETF

FSIVX

Fidelity Spartan® International Index Fund

PM

Phillip Morris International

FSITX

Fidelity Spartan® U.S. Bond Index Fund

SCHZ

Schwab U.S. Aggregate Bond ETF

DX

Dynex Capital

CYS

CYS Investments

JMI

Javelin Mortgage Investment Corp.

CASH

Cash in my investment portfolios

Click to enlarge

From that list, the ones that I'm not currently holding are:

XOM, WMT, O, Triple Net 4, CYS, DX, and JMI.

The Categories

As an American, I'm heavily invested in domestic equities and I classify all foreign investments as international.

Click to enlarge

As I mentioned last month, I'm including mREITs with cash since I'm expecting to make more short-term plays on market pricing failures in the sector. At this point the "mREITs and cash" combination is all cash.

My goal of starting a position in preferred shares is underway, but I could only get a tiny fraction of my intended order size. Due to poor liquidity, preferred shares need to be approached with limit orders. I put mine in and hoped for a full execution on weakness. When the trade confirmation came in I thought it might be a full execution, but sellers were only offering a tiny amount of shares.

March Trades

In late March the domestic index prices became appealing enough that I started selling shares. I'm not selling off all of my domestic equity, but I didn't see a reason to remain overweight on the sector. Instead, I'll use the cash for any opportunities I find with the mREITs and for funding limit orders on preferred shares. My targets tend to be illiquid and I may set price targets that are materially below the normal trading range, so it will require a decent chunk of cash to fund the orders I want to keep active.

Individual Companies / ETFs / Mutual Funds

The next chart breaks down the allocations by the actual ticker.

Click to enlarge

VTI / FSTVX / FUSVX / SCHD

The first four investments offer exposure to the U.S. market while having very low expense ratios. SCHD is making my portfolio just a tiny bit overweight on the established dividend companies, which makes things feel slightly less volatile in a market that has been fairly volatile. FUSVX simply puts an emphasis on the larger companies.

Last time I wrote about my domestic equity position, I indicated a desire to reduce the allocation to this section. Since then, I followed through on the plan. My domestic equity allocation was around 55% and is now under 42%.

VNQ / FSRVX / SCHH

The REIT ETFs and mutual fund exposure give me some fairly heavy diversified exposure to the sector, but I'm reducing the weighting on the ETFs to emphasize individual companies here as well. I sold my position in SCHH previously to free up some cash for another purchase, but I had dividend reinvestment turned on. I'm technically long SCHH, but the position is less than .01% of my total portfolio.

The REIT ETFs had solid rallies again and are moving much closer to convincing me to sell off a portion of my position. I'll probably be selling shares in VNQ rather than FSRVX because I want the proceeds in an account where I have dramatically more flexibility.

Lack of Bonds

At the start of the year my bond exposure was 0% or very close to it. I've moved that up to 5%, though it would've been nice if I had done it sooner. I felt the treasury yields at the start of the year were relatively nice, given the macroeconomic environment, but opted to slowly work my way into the position rather than buying it all immediately.

SCHF / SCHC / PM / FSIVX

Phillip Morris has been a beast for me so far this year. Other investments were up and down quite a bit. I've been debating buying more Phillip Morris. It isn't because I want to follow the trend, it is because I see solid fundamentals, reliable sales, and the dollar has weakened significantly, which improves the amount of cash they can expect to create with foreign sales. Since 100% of their sales are foreign, the exchange rate has a significant impact on sales and profits.

Preferred Shares

I started moving in the right direction, but weak liquidity can be a pain. If I had my order in a couple days earlier, I might have gotten full execution. Since I identified the company I wanted to hold, the shares have moved up a bit. The name of the company was deliberately excluded because the poor liquidity already messed up my ability to get execution on the trade.

Update on Preferred Shares

I prepared this piece over the weekend and was still awaiting execution. While I was putting the finishing touches on it over the next couple days, the execution came in. The tickers for preferred shares can be tricky because several financial systems assign different names. They are the O series for Gladstone Commercial Corp. (NASDAQ:GOOD). The most common ticker I've found for them is GOODO.

Conclusion

I'm happy with the way the portfolio is developing. As indexes move higher, my allocations to cash also move higher due to selling off pieces of my ETF positions. I still like the low-fee index ETFs as a key part of investing, but I see quite a bit of opportunity in being patient and looking for my moments in the mREITs (many of which I believe are currently too expensive). The preferred shares of companies I research looks like another great option for making some solid plays that should increase in the yield on the portfolio and provide it with more stability in value from one month to another.

Disclosure: I am/we are long VTI, FSTVX, FUSVX, SCHB, SCHD, MO, FCX, FSRVX, VNQ, SCHH, NNN, STOR, SCHF, SCHC, FSIVX, PM, FSITX, GOODO, SCHZ.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Information in this article represents the opinion of the analyst. All statements are represented as opinions, rather than facts, and should not be construed as advice to buy or sell a security. This article is prepared solely for publication on Seeking Alpha and any reproduction of it on other sites is unauthorized. Ratings of “outperform” and “underperform” reflect the analyst’s estimation of a divergence between the market value for a security and the price that would be appropriate given the potential for risks and returns relative to other securities. The analyst does not know your particular objectives for returns or constraints upon investing. All investors are encouraged to do their own research before making any investment decision. Information is regularly obtained from Yahoo Finance, Google Finance, and SEC Database. If Yahoo, Google, or the SEC database contained faulty or old information it could be incorporated into my analysis.

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