As most of you know for years (more than 10 years) I have always had ‘Model Portfolios’. These are not ‘real’ portfolios, but typically they mirror my personal investments.
Our intention is to not ‘trade’ the issues in the portfolios – of course sometimes an issue gets redeemed or called and you have to make small changes to replace the issue.
These models are meant to be ‘teaching’ or ‘learning’ portfolios–they are long term ‘what ifs’.
10 months ago we started the “Enhanced High Yield Fixed Income Portfolio“. In general this model contains only issues that would be considered by conservative investors to be pretty aggressive with higher risk. The portfolio was doing just fine until recently, but now is down 4.61% since 1/25/2018.
Newer investors can look at it and see what would have happened if you were to play only in the high yield arena.
In February of 2018 we started the “Medium Duration Income Portfolio“. This model is composed of term preferreds and baby bonds with maturities in the next few years. There are a few other miscellaneous issues in the portfolio. Issues in the model are not investment grade, but with maturities in the next few years it is less volatile and prices generally hold up fairly well. The model has taken some hits in the last month, but now is up 1.74% since 2/8/2018.
So you can see that the more conservative portfolio is 6.35% better than the aggressive portfolio.
While I had invested like the more conservative portfolio until a few months ago when I purchased some perpetual preferreds. With the benefit of 20/20 hindsight we would have been much better off staying with all the short dated maturity issues.