Performance Tracking March 2017

For calculation methodology see this post.

March capped off one of the best quarters for stocks with SPY returning almost 6% YTD. But the strength came in the first two months and March itself saw a gain of only 0.13%. My overall portfolio returned 0.69% for the month, significantly above the 60/40 benchmark which returned a barely-above-flat-line 0.05%. Compared with the myriad of strategies tracked at AllocateSmartly, mine would have ranked 2nd in March which pulled its YTD return of 4.67% into the top quartile. Overall, I’m pleased with the performance and hope it continues climbing out of the hole it dug for itself in 2H’16.

One thing I realized as I poured over these numbers was that I was using “cash basis accounting” for my DGI stocks; i.e. recording the dividends in the month of the pay-date rather than “accrual basis” which would have recorded them in the month of the ex-date. It’s a wash in the long run but in the short run it moves returns from February to March since the 3rd month of the quarter has the highest dividend payouts. I’m making a note of it and will just leave things as they are.

Even though there is only a 9-months history, I am concerned that the DGI performance is lagging that of SPY significantly. As such, I’m taking the opportunity arising from re-jigging my asset location to revamp my DGI stocks. Since they will all occupy taxable space, I’m eschewing current payout for growth. It is consistent with my view of where we are in this bull market.

Active Allocation and Performance Attribution

I have more or less fixed the asset allocation in my active accounts: 15% PMs, 24% fixed income CEFs, 45% DGI stocks and 15% growth stocks – defined as those that don’t pay a dividend. There is an additional 1% that I’ve allocated to alternatives that is currently comprised of options and crypto currencies. I’m dabbling in the latter and will write up my experience in a future post. The allocation being the goal, there is still 12.6% cash waiting to be deployed into CEFs, DGI and growth stocks. My plan is to do so gradually into the names I’ve already picked out, effectively DCA’ing during what I anticipate to be an intermediate correction (see here and here).

In the monthly summary table, I’ve been breaking out the “Passive w/o PM” as the more traditional Boglehead-like 85% slug of the passive portfolio. By inference, it also tracks the PM allocation which is 95% comprised of bullions in the passive portfolio. For the active portfolio, starting from next month, I’ll also track the growth stocks and the FI CEFs in addition to DGI stocks in order to pin-point the sources of over/under-performance. CEFs vs. AGG and the stock picks vs. SPY are the key head-to-head comparisons I’m after.