+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=15)
+--- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=33)
+--- Thread: Diversifying a DGI Portfolio (/showthread.php?tid=376)
Diversifying a DGI Portfolio - Robandcindy2 - 02-03-2014
Thought I'd start a discussion on Diversifying a DGI Portfolio.
What measures do you use to diversify your portfolio?
*******************************************
I found these two tools that allow you to play with various ratios for optimal gains:
Fidelity Sector Portfolio Builder
SPDR Portfolio Builder
Using these two services I have tuned our portfolio to the following ratios:
Sensitive
Energy 5%
Energy MLP's 5%
Industrials 10%
Technology 10%
Communication Services 5%
Cyclical
Basic Materials 5%
Consumer Cyclical 5%
Financial Services 15%
(Financial Services includes)BDC's 2%; Banks/Ins 5%; REITs 4%; Health REITs 4%
Defensive
Consumer Defensive 17%
Health Care 10%
Utilities 10%
Speculative
Company Stock 3%
Sorry if this doesn't format correctly.
Right now this works for us. Using Excel spreadsheet to monitor. Maybe we should have a Spreadsheet Section at our forum with tips and tricks plus downloads???
Cheers,
Rob
RE: Diversifying a DGI Portfolio - CritMass - 02-03-2014
Thanks for sharing the two tools, and your breakdown. This will help me in putting my investment plan together. I've been in the "Ready - Fire - Aim" mode for past year.
RE: Diversifying a DGI Portfolio - Dividend Watcher - 02-03-2014
Rob, I struggle with that also. Part of my plan is to have at least one holding in each of the S&P/GICS 10 industry classifications. I'm short in the Basic Materials sector and cannot settle on which ones to look at -- mining? chemicals? plastics? wood products?
I like your allocations although 15% in Financial Services seems a couple percent higher than I think prudent. Then I look at my portfolio and see I've done the same thing.
Those yields do seem nice.I'm guessing that you're spread out enough, and knowledgeable enough, that actual percentages, even if a few off your goal, are not going to hurt you.
RE: Diversifying a DGI Portfolio - Dexter - 02-04-2014
I think what you have is fine.
In my opinion the best way to diversify a DGI portfolio is to include other asset classes like bonds. I am a big fan of DGI but I do not have the stomach for 100% stocks
RE: Diversifying a DGI Portfolio - Dividend Watcher - 02-04-2014
(02-04-2014, 12:02 AM)Dexter Wrote: I think what you have is fine.
In my opinion the best way to diversify a DGI portfolio is to include other asset classes like bonds. I am a big fan of DGI but I do not have the stomach for 100% stocks
Dexter, I'm just the opposite. After losing a large percentage of principal in long-term bond mutual funds in the 80's, I just cannot justify in my mind buying bond funds ever again. This was during a period of slowly dropping rates so you would logically think I should've at least broke even.
Right now I'm 96% in the market and, with the KO trade this morning, my wife has less than $5 cash in her account.
RE: Diversifying a DGI Portfolio - Dexter - 02-04-2014
(02-04-2014, 12:15 AM)Dividend Watcher Wrote:(02-04-2014, 12:02 AM)Dexter Wrote: I think what you have is fine.
In my opinion the best way to diversify a DGI portfolio is to include other asset classes like bonds. I am a big fan of DGI but I do not have the stomach for 100% stocks
Dexter, I'm just the opposite. After losing a large percentage of principal in long-term bond mutual funds in the 80's, I just cannot justify in my mind buying bond funds ever again. This was during a period of slowly dropping rates so you would logically think I should've at least broke even.
Right now I'm 96% in the market and, with the KO trade this morning, my wife has less than $5 cash in her account.
Yikes, with dropping rates wouldn't the bond funds increase in value?
Note my bond funds took a huge hit last year, but most recovered. My TLT position is finally in the green again.
RE: Diversifying a DGI Portfolio - Dividend Watcher - 02-04-2014
(02-04-2014, 12:18 AM)Dexter Wrote: Yikes, with dropping rates wouldn't the bond funds increase in value?
You would think so. Of course, back then fund management fees were a little higher than today. Also, I'm sure than managers were churning the account positioning the portfolio as rates changed. I don't remember all the details. All I know is that after a couple years of reinvesting, I didn't come out ahead and I swore off bonds -- especially long-term bonds.
RE: Diversifying a DGI Portfolio - Robandcindy2 - 02-04-2014
(02-03-2014, 08:17 AM)Robandcindy2 Wrote: Thought I'd start a discussion on Diversifying a DGI Portfolio.
What measures do you use to diversify your portfolio?
*******************************************
I found these two tools that allow you to play with various ratios for optimal gains:
Fidelity Sector Portfolio Builder
SPDR Portfolio Builder
Using these two services I have tuned our portfolio to the following ratios:
Sensitive
Energy 5%
Energy MLP's 5%
Industrials 10%
Technology 10%
Communication Services 5%
Cyclical
Basic Materials 5%
Consumer Cyclical 5%
Financial Services 15%
(Financial Services includes)BDC's 2%; Banks/Ins 5%; REITs 4%; Health REITs 4%
Defensive
Consumer Defensive 17%
Health Care 10%
Utilities 10%
Speculative
Company Stock 3%
Sorry if this doesn't format correctly.
Right now this works for us. Using Excel spreadsheet to monitor. Maybe we should have a Spreadsheet Section at our forum with tips and tricks plus downloads???
Cheers,
Rob
And just to clarify, this is just how I allocate our stock holdings. We also hold various bond funds (loosely following Rick Ferri's bond diversification) and equity mutual funds/ETFs (because of the structure of our 401K). I do use, and have included in the above ratios, "sector specific" ETF's to assist in diversification where the yield and cost index are favorable in my view.
Regarding equity mutual funds/ETFs: These I make an attempt to diversify our portfolio through the Large, Mid, Small criteria as well. Bond funds are diversified through short, intermediate, long, high yield, international.
I also attempt to track all of our holdings (equities & fixed) with regard to Foreign and Emerging markets.
Hey! A guy needs a hobby when it's too cold to play softball!
RE: Diversifying a DGI Portfolio - Dexter - 02-04-2014
Wow that is super impressive. I should probably put more work into diversifying properly!