My portfolio – June update

The market continued its upward ascent this month and the S&P 500 was up 1.35% since the last portfolio update which can only mean good things for the portfolio.

Q1 earnings season is in the books and the results were quite excellent with the S&P 500 showing 13.9% earnings growth y/y, the highest since Q3 2011. It’s true that a good portion of that was driven by the energy sector which had a pretty easy comparable but even exclusive of that, the growth rate was a solid 9.7%.

According to factset, the expected growth rate for Q2 is 6.6%(down from 8.7% as of March 31 mostly driven by downward revisions in energy) and that bodes well for the stock market. It is good news to finally see growth after a few years of flat earnings. The P/E ratios right now still make the market seem expensive but it sounds like the E part of that equation is finally expanding as well which means good things for investors if it can continue.

Last month’s update showed another 10k+ increase in portfolio size and means that 4 out of the last 6 months have been 10k+ bumps! That’s just amazing to see and shows the impact growth can have on your portfolio once you reach a certain dollar amount.

What’s driving this performance considering my income, not to mention my contributions are way less than 10k per month. It’s the continued growth of the market and some excellent performance from some of my individual stocks.

UNH, one of my biggest holdings continued to rocket this month and was up another 4.22% and is now up over 13% YTD. That combined with a 20% dividend bump this month makes me a happy investor. Apple, another on of my holdings didn’t necessarily kill it this month but is up nearly 30% YTD as well. International shares have been strong performers lately after a few years of middling results that trailed the US markets. One of my main international funds is up 18% YTD and was up over 3% this month.

These are all results that are beating the S&P 500 and have helped my portfolio grow quite a bit over the past year. The constant contributions also certainly help but portfolio growth has been more than 2/3rds of appreciation in these months.

I’m a firm believer in asset allocation and shrewd stock picking being a big part of solid long term results and I’m glad to see the fruits of my labor here. International is a perfect example of having an allocation and sticking to it despite middling results in that area. I kept contributing to my international holdings despite results that lagged the US stocks and am now rewarded with excellent price appreciation as the market finally catches up to the thesis that those stocks and countries were undervalued in relation to their domestic comparable.

Now I’m at a point where other asset classes are below target and am buying those as those are likely undervalued now(or the others are overvalued) against their historical norms. Last month, I was short on bonds and REITs and that will likely be the case again this month due to the strong performance in both the domestic and international markets.

Let’s take a look at my portfolio today and which assets are lagging behind. 

portfolio update, tax-advantaged

The portfolio now sits at $426,278.72!

That’s the 9th straight month of growth and yet another month of growth north of $10,000 dollars which is amazing to see! That’s 5 out of the last 7 months where that’s happened. I’m ecstatic with how my portfolio has done this year. It was only a few months ago that I passed 400k and I’m now halfway to 450k which is awesome!

I know at this portfolio size, 10k+ growth months will be more common as it “only” requires a 2.3% shift in performance but I’m still excited every time I see it because it shows clearly the kind of effect compounding and growth has once a portfolio reaches a certain point. Contributions certainly help as well but nothing beats market returns when it comes to portfolio growth.

I do always think about the other end of the coin flip as well. It’s great to see all these 10k bumps in the last few months but it certainly will suck once we have a dip and my portfolio tanks quite a bit. One certainly wants to make sure they have the right asset allocation and the stomach for any potential falls once you hit a certain dollar amount as the drops can be substantial if the market takes a sudden nosedive.

I think I have the right mind set for that, the right asset allocation, ample cash on the side and the stomach to buy more as values decline but am certainly enjoying the ride up while it happens.

Cash was up 3.8% this month as some of my contributions went into cash and I haven’t had time to distribute them yet. Cash now makes up 7.2% of my portfolio which is below the 10% max I have set for myself.

Taxable accounts were up 3.2% and tax-advantaged accounts were up 2.3% largely driven by performance in my individual stocks and international holdings as mentioned above.

Let’s take a look at my asset allocation and see where I have some holes to fill to keep this boat sailing in the right direction.

asset allocation, REIT, small cap, mid cap, bonds

I was behind on bonds and REITs last month and despite targeting those with my contributions this month, I’m still behind on both.

Here’s a breakdown by each asset class versus target.

  • US Large Cap at 42.68% versus 42.5% target(+0.18%)
  • US Mid Cap at 9.87% versus 10% target(-0.13%)
  • US Small Cap at 9.91% versus 10% target(-0.09%)
  • US REIT at 9.89% versus 10% target(-0.11%)
  • International Developed at 15.33% versus 15% target(+0.33%)
  • International Emerging at 4.99% versus 5% target(-0.01%)
  • US Bonds at 7.33% versus 7.5% target(-0.17%)

US large cap and international developed are above target now due to great performance in both areas.

The highest class is off by 0.33% which isn’t a lot and I don’t plan to sell at this point and would prefer to fix the discrepancies with additional contributions to minimize any tax burden. If the targets do get too out of line, I will make some trades within my tax-advantaged accounts to bring them back in line.

REITs were up 2% this month and I made some contributions there which closed the gap against last month but bonds continue to lag as they will in a good market and are further away than last month despite contributions. I don’t particularly believe bonds are a great investment right now at current yields but have them for diversification purposes. If you’ve followed my blog for a while, you’ve seen my bonds go from over allocated to under in about a year despite no real contributions. I’m at a point now where my bonds are below target and I’m contributing to them again and while I’m not sure that says anything about the valuation of either security, it certainly says a lot about how much stocks have appreciated. If the stock market drops sometime soon, I’ll be glad to have the bonds to cushion the drop a bit and to allow me to purchase stocks at a discounted price once those assets fall below target again.

The plan for next month is as follows.

  • Buy bonds, REITs, mid caps and small caps in that order to fix asset shortfalls
  • Cash pile at 7.2%, look for value in the above areas if possible

That’s it for this month. I’ve been in a good spot with my asset allocation for a couple of months and will continue to make the small fixes needed as I updated each month. This is an asset allocation that started WAY off course when I began this journey so having the highest asset be .33% off target is amazing and will allow me to target my purchases to classes that have gotten less love from the market. I think that’s the benefit of having an asset allocation plan as you’re always buying the stuff that’s a better value which will help in the long run.

That’s it for the month. I’ll be back soon with some updates about the blog(new layout!) and more new posts. How did you portfolio do in May – good results as well?

Thanks for reading and have an excellent Sunday. Now, I’m off to brunch(yay) and to look at engagement rings(yay but less so cause it’s a bit boring for me but exciting for my fiancee!).

2 thoughts on “My portfolio – June update

  1. Terrific month(s)! I let my bonds run off a few years ago (they all got called early) thinking that I would have a little warning if the cycle turned. So far, so good. Your allocation is similar to mine (when swapping Bonds for Small caps) even though I’m all equities and no ETFs or funds. Your international could keep you imbalanced for awhile if the USD continues to slide.

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    1. Yup, I can see international continuing its run up whether it be currency or valuation related. I do like the security blanket of bonds in my portfolio. It’s been rather easy to sleep at night in the past few years since the market has seen almost nothing but growth but if that changes, I’ll be glad to have some bonds in my portfolio even if it limits my growth a little bit.

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