Retirement: The Future-Proof Portfolio For Young Investors Becomes 7 Months Old, New Position Opened

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Includes: ACGPF, ACNFF, ADM, ADP, AMNF, BASFY, DEO, DIS, DNNGY, ED, ETN, GILD, GLW, HASI, INFY, JNJ, KONE, MDT, MMM, NGG, NVO, O, RHHBY, SGAPY, TCEHY, TSM, UL, UNP, VTR, VWDRY, WPC
by: Giesbers Investment Strategy

Summary

After some ups and downs, the Future-Proof Portfolio for Young Investors is now up more than 6%.

Dividends have been coming in since the beginning of the year and even more dividend increases were announced since our last update.

I opened a new position and added to an existing one, both in Asian stocks.

On the 25th of January this year, I started the future-proof portfolio for young investors to serve as an example of how young investors who are saving for their retirement can choose to distribute their funds. This means that the portfolio recently became 7 months old. Though it is the long term which matters, I like to review the performance of my portfolio every couple of months.

I am not focusing on dividend yield, but on future-proof companies and growth. Of course, this is a subjective exercise and as such, this portfolio will serve as an example of my interpretation of this.

Portfolio

The maximum drawdown of the portfolio has been about 8%. At the time of the last update, in the beginning of June, the portfolio recovered this loss partially but was still 1.67% in the red. Keep these numbers in mind and let us get straight to the current portfolio performance, including dividend payments:

Name Shares Value in € Dividend Weight Gain/Loss
Consumer
Unilever (NYSE:UL) 43 2,153.44 32.07 4.13% 8.42%
Disney (NYSE:DIS) 22 2,123.42 15.79 4.08% 7.99%
Archer Daniels Midland (NYSE:ADM) 57 2,465.41 31.70 4.73% 25.06%
Diageo (NYSE:DEO) 69 2,093.61 19.75 4.02% 5.25%
Accell (OTCPK:ACGPF) 42 750.96 21.00 1.44% -22.61%
Armanino Foods of Distinction (OTCPK:AMNF) 488 1,175.65 18.45 2.26% 19.30%
Amsterdam Commodities (OTC:ACNFF) 40 802.00 44.00 1.54% -15.57%
Industrial
3M (NYSE:MMM) 10 1,795.52 22.59 3.45% -9.90%
BASF (OTCQX:BASFY) 21 1,701.63 65.10 3.27% -12.56%
Union Pacific (NYSE:UNP) 18 2,333.95 22.01 4.48% 14.25%
Kone (OTCPK:KNYJF) 44 2,061.40 72.60 3.96% 5.92%
Eaton (NYSE:ETN) 29 2,077.79 48.57 3.99% 5.76%
Vestas Wind Systems (OTCPK:VWDRY) 35 2,107.51 43.36 4.04% 8.41%
Healthcare
Medtronic (NYSE:MDT) 23 2,202.71 18.43 4.23% 12.61%
Roche (OTCQX:RHHBY) 10 2,123.46 70.94 4.08% 10.21%
Gilead Sciences (NASDAQ:GILD) 15 963.61 14.32 1.85% -1.70%
Johnson & Johnson (NYSE:JNJ) 17 1,957.68 24.58 3.76% 0.87%
Novo Nordisk (NYSE:NVO) 43 1,828.65 45.32 3.51% -6.43%
Utilities
Consolidated Edison (NYSE:ED) 31 2,085.01 36.99 4.00% 5.91%
National Grid (NYSE:NGG) 109 981.60 37.28 1.88% 1.89%
Ørsted (OTCPK:DNNGY) 21 1,150.21 25.37 2.21% 18.96%
Technology
Corning (NYSE:GLW) 72 2,078.40 21.71 3.99% 5.13%
TSM (NYSE:TSM) 54 1,960.65 48.23 3.76% 0.57%
Infosys (NASDAQ:INFY) 67 1,186.17 24.97 2.28% 20.12%
Automatic Data Processing (NASDAQ:ADP) 20 2,466.22 22.03 4.73% 26.24%
Tencent (OTCPK:TCEHY) 20 795.27 1.93 1.53% -18.59%
REITs
Realty Income (NYSE:O) 46 2,329.58 59.28 4.47% 18.20%
Ventas (NYSE:VTR) 44 2,251.68 57.74 4.32% 15.34%
W.P. Carey (NYSE:WPC) 19 1,087.32 32.24 2.09% 10.87%
Hannon Armstrong (NYSE:HASI) 56 1,014.95 30.69 1.95% 5.28%
Total 52,105.46 1,029.04 100.00% 6.25%

The last three months have been excellent! As we can see, the portfolio is now 6.25% in the green. Total dividend payments which we received amount to € 1,029. A couple of companies have been performing really well, especially Archer Daniels Midland and Automatic Data Processing. But most of the companies are showing decent gains, with a couple of exceptions. At the moment, our biggest bleeders are the two Dutch companies Accell and Amsterdam Commodities, German BASF and Chinese Tencent. Interestingly, these 'exotic' investments have dragged down the performance of my portfolio during the first seven months!

A couple of dividend increases

Previous annual payout New annual payout Increase
Union Pacific 2.92 3.20 9.59%
Medtronic 1.84 2.00 8.70%
TSM 0.92 1.04 12.49%

Wait, didn't Union Pacific just increase their dividend this year already? Yes, of course, but this is another raise! Since one year ago, the company increased their quarterly payout from $0.605 to $0.80, amounting to dividend increase of 32.2% over one year. To add, Medtronic and TSM also announced some very healthy dividend increases.

A note about exchange rates

This portfolio was started on the 25th of January 2018, when the EUR/USD exchange rate was about 1.24. Currently, this exchange rate is about 1.17. About 62% of our portfolio is invested in stocks which are traded in US dollars. This means that our performance would be 3.7 percentage points worse if the dollar would be our base currency. So for n US investor who would have this portfolio, the performance from its inception until now would be 6.25 - 3.7 = 2.55%, a whole lot lower than our beautiful 6.25%.

Exchange rates are something which this portfolio ignores. They will continue to fluctuate in the future, but as long as we invest in companies which have a good part of their income in different currencies, this will not matter much. The performance of these companies will be reflected in their share price. The only risk here is when we invest in companies which are mainly active in a specific part of the world. Smaller companies like Armanino Foods or Accell have their production facilities and sales in relatively specific parts of the world, and here exchange rates might have influence on the stock performance for me as a European investor. Even larger companies like Realty Income or Tencent which are still relatively focused on one part of the world might have this risk as well. But by creating a diversified portfolio an investor can make sure this risk is minimized.

A new position and addition to an existing one

I outlined my plan to invest € 3,000 in my portfolio every half year in the previous update. Since then, I bought shares of Singapore Telecommunications (OTCPK:SGAPY) for € 2,000. The other € 1,000 I invested in an existing position which is down but from which I expect a lot in the future: Tencent.

With these changes the future-proof portfolio for young investors currently looks like this:

Name Shares Value in € Weight
Consumer
Unilever 43 2,153.44 3.91%
Disney 22 2,123.42 3.85%
Archer Daniels Midland 57 2,465.41 4.47%
Diageo 69 2,093.61 3.80%
Accell 42 750.96 1.36%
Armanino Foods of Distinction 488 1,175.65 2.13%
Amsterdam Commodities 40 802.00 1.46%
Industrial
3M 10 1,795.52 3.26%
BASF 21 1,701.63 3.09%
Union Pacific 18 2,333.95 4.24%
Kone 44 2,061.40 3.74%
Eaton 29 2,077.79 3.77%
Vestas Wind Systems 35 2,107.51 3.82%
Healthcare
Medtronic 23 2,202.71 4.00%
Roche 10 2,123.46 3.85%
Gilead Sciences 15 963.61 1.75%
Johnson & Johnson 17 1,957.68 3.55%
Novo Nordisk 43 1,828.65 3.32%
Utilities
Consolidated Edison 31 2,085.01 3.78%
National Grid 109 981.60 1.78%
Ørsted 21 1,150.21 2.09%
Technology
Corning 72 2,078.40 3.77%
TSM 54 1,960.65 3.56%
Infosys 67 1,186.17 2.15%
Automatic Data Processing 20 2,466.22 4.48%
Tencent 45 1,789.35 3.25%
Telecom
Singtel 994 2,000.50 3.63%
REITs
Realty Income 46 2,329.58 4.23%
Ventas 44 2,251.68 4.09%
W.P. Carey 19 1,087.32 1.97%
Hannon Armstrong 56 1,014.95 1.84%
Total 55,100.04 100.00%

I would like to end this update with a takeaway which is important for every investor who is investing for his or her retirement, and I cannot stress this enough: Though I provide an update of this portfolio every few months, I am focused on the long term. I am happy with the performance of the portfolio until now, but even the portfolio would have been down 25% I would not worry. In that case, I would be happy to add to my existing positions with a discount. Dividend payments have increased and most companies in which I have invested look to be doing very well. Investing for your retirement is not only about picking decent stocks, it is even more about persistence and sticking to your plan.

Thank you for reading! If you have any ideas about my model portfolio or my watchlist, please let me know in the comment section below!

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Disclosure: I am/we are long ALL STOCKS MENTIONED.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.