Tuesday, November 26, 2013

Quarter Rebalancing

Now that almost a quarter of the year has passed by since I started my hedge fund in September, I am looking towards a nice rebalancing in the start of December.

I have let my crazy wild ways run amock with speculation and I have deviated from my initial goal. Understanding that, I will be cutting down on overweight positions, and redistributing my asset allocation accordingly.

The most notable change will be the pump up in portfolio value. I have decided to keep 2 numbers on the table, which is the simple nominal input and it's current return. Since capital is continually being added, this is more of a simple way of keeping track and ensuring that I am growing my wealth, and not just my savings. If I am investing badly, the portfolio value will drop below my inputs, which is really quite terrible.

I will also be keeping track of NAV on a monthly basis, to show myself, and others monthly and yearly performances of the portfolio, especially if comparing to others.

Positions which have been largely chosen by unfounded favourtism will be trimmed down. My high yield portion was almost 17% of my portfolio. After this rebalancing, it will just be shy over 11%. My tactical allocations are largely based on the monthly / weekly research provided by Standard Chartered. Tactical allocations meaning keeping UW positions restricted to 5% of the portfolio, and OW positions meaning juicing things up to 12% of the portfolio.

I'll be juicing up my DM equities, split quite equally weighted. A bit of extra into Asia ex Japan equities, more into commodities given the really shallow downside still possible from here, and cutting down on the High Yield.

I will be removing Gold miners out of my portfolio, honestly it really is more of a speculative play. I don't know how I can adequately add in gold into my portfolio without making the volatility go crazy. This will of course be replaced by a proper Commodities fund which only has 6% in gold, but of course is a better representation of commodities. Gold miners will still not be sold though, I'll be holding on to it because I think in the medium term, it might pretty itself quite well. I will be definitely considering adding to it, given a breakout in Gold along with a buy indicator by iMarketsignals' modified Coppock indicator.

I will be waiting for my Asian Pacific Income fund to recover, and I will liquidate the fund.

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