Monday, October 21, 2013

Don't Worry, Be Happy Portfolio Mid Oct Updates

As of recently, I have added in positions into the global corporate and high yield positions, which are attractive to me as they have been 5% drawndown from their recent peak, and their historical maximum drawdown is 9% and 7% respectively.

I have also purchased a position into a long duration (7 years) in emerging market debt. Historically, it has had drawdowns off 14% off its peak. It's last major drawdown was 12%, and it is now 10.5% off its recent peak.

For all the above 3 bond funds, I did not even have to pay any sales charge, so 100% of my capital went directly into buying units into these funds. To top that off, the funds also seem to just be recovering from their drawdowns and hopefully price will be steadily increasing after taking that big hit. Therefore I am doing a value play here. However, the ascent of the high yield is looking giddy, so I think it might be a cause of concern.

Lastly, I also have finally ventured into equities, making my first purchase with Fidelity. The main reason here is that I think Fidelity does outperfom DWS, it has a smaller allocation in the US, the payouts are more frequent (better DCA), although this won't be a concern especially if I buy into the hedged non-distributing shares of DWS. The rationale for this purchase is that although the bear inside me is telling me that this isn't a good play in the medium term, it is also telling me that there are short term benefits to be had until the next taper scare. So this is a momentum play for a bit, though it is still underweight in the grand sense of things. Small enough for me to monitor and get a feel of going on, and also small enough that if it implodes, it won't hit my portfolio hard.

I am looking for that gut feeling reversal in internal affairs before I decide to enter the Asia Pac ex Japan equities, as well as looking towards the EM breakout before I get into those equities as well. This is the same for commodities, and I would even say for gold miners. At this point, gold miners will be under the commodities portion because they are technically a leveraged play on gold. But given that miners are so massively drawndown and their valuations are crazy, I don't see how badly it can turn out to be buying something on that deep of a discount.

I'm looking forward to month end to update my portfolio, benchmark as well as publish my factsheet!

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