2014 Blended Income Model Portfolio
By: Tim McPartland,
Effective 3/31/2015 we have LIQUIDATED this portfolio. The gain is 13.03% in 15 months. The 2015 portfolio is very similar—go here.
We have wrapped up 2014 with a stellar gain of 9.76% against our 7% goal. This model will continue into 2015 along with a new model to be launched 1/5/2015
Model Constructed 1/2/2014
This is a blended income portfolio made up of only income producing securities (although some covered calls may be written against holdings to generate extra income).
The model is just that – a model – not meant to be anyone’s portfolio, but simply a potential portfolio. We are trying to not trade this portfolio often. It should be observed that the preferreds and exchange traded debt are not investment grade issues at this time. A key 2013 learning is that overall quality of the issuer should not be a large factor in selection and it is likely that junkier issues will outperform in 2014 (assuming no deep recession).
The portfolio is composed of Preferred shares, Exchange Traded Debt, REITs, MLPs, CEF’s, Business Development Companies and dividend paying common stocks. From time to time it may contain a U.S. Royalty Trust issue, although we have had little luck with owning these.
Compared to the 2013 portfolio this model has a larger number of issues and a broader range of issues. Additionally for the first time ever we will start at 100% invested from day 1. We will use Tortoise Energy Infrastructure Preferred (a ‘AA’ rated issue) as our ‘cash equivalent’ storage area–anytime we sell an issue if we are unprepared to reinvest immediately, we will ‘park’ the cash in this security. It is key to be invested as we have given up large chunks of income in the past because we were unable to find the time to get fully invested.
This portfolio starts with a beginning balance of $533,628.31 which is a balance carried forward from previous portfolios.
Below we show the dividends received and those are added into the beginning balance. This portfolio does not show drawdowns as there are no funds withdrawn from the portfolio.
In the portfolio below we have ‘charged’ the account a $8 per transaction fee and will do so in the future when securities are bought and sold.
We have a goal of a 7% return for 2014.
We have added both the S&P500 (ticker:SPY) and Total Bond Fund (ticker:AGG) to the bottom of the spreadsheet–while they are not really benchmarks they are at least a point of reference to compare the model against.