FFG offers a diverse selection of managed portfolios for the different objectives of our clients. In our quarterly investment update, we focus on 3 of our core portfolios; the On Deck Portfolio, the Dividend Portfolio, and our tactically managed portfolio, Survive & Thrive™. The FFG Investment Update is intended to give some insight into our thoughts about recent adjustments in the portfolios and our outlook as we plan ahead.
The On Deck Portfolio
The On Deck Portfolio seeks low volatility while earning a strong income yield.
Given the recent swings in stock prices, the On Deck Portfolio is a welcome safe harbor. It is designed to offer some calm in an otherwise turbulent market environment. The strategy has proven to be exactly that in 2019. While stock prices are moving significantly on a daily basis due to the ongoing trade war with China or the Fed’s management of interest rates, the holdings in the On Deck Portfolio have remained steady. The real estate and private credit funds in the portfolio have not only provided low volatility and stability, but have also produced better than expected returns year to date. Additionally, the short duration bond fund we included in the portfolio at the beginning of the year has given us the extra diversification and liquidity we were looking for. With this in mind, we are not making any major changes to the portfolio at this time. There are currently a few potential holdings that we are continuing to research for future additions, and we will keep you informed as we make any adjustments to better weather the storm.
The Dividend Portfolio
The Dividend Portfolio seeks long term growth primarily using stocks paying strong dividends.
With the stock markets reaching new highs in 2019, there seem to be some mixed views on where we’ll go from here. The bull market we have been experiencing since 2009 has certainly had a long run, and most agree it cannot go on forever. However, there are differing opinions on whether we are settling into a stage of moderate growth or poised for a sharp downturn. The fact is no one knows for sure. Economic indicators are not raising concerns of a recession, but we are seeing the late stages of the market cycle and we expect high quality stock positions to outperform in the second half of 2019. The first half of the 2019 saw the strongest growth in Tech and Small Cap stocks, but we made adjustments this quarter to reallocate some out of Tech and Small Cap stocks and into a new position, The US Quality Shareholder Yield fund (QSY). Overall we are keeping the portfolio over weighted in US stocks vs International, as the US continues to show leadership among global equities. In this environment of uncertainty, the Dividend Portfolio offers reassurance with its consistent income as well as potential growth.
Survive & Thrive™ Portfolio
The Survive & Thrive Portfolio seeks long term growth using tactical movements of cash in a diversified stock portfolio.
The last 90 days have shown us a downward trend in May, followed by a recovery in June and July. In the end, the portfolio ended up close to where it began. There is a consensus on Wall Street that the returns we saw in the 1st half of 2019 will likely be the largest of the year. Uncertainty remains high as the strong, yet slower growth of the economy is often overshadowed by the ongoing trade war and the cautionary approach the Federal Reserve is using to manage interest rates. With that in mind, we made some adjustments to move the allocation away from more volatile stock sectors, Tech and Small/Mid Cap. While these stocks have performed the best year to date, we are shifting more toward less volatile stocks in the Large Cap Value sector. We continue to favor US stocks. While the negative impacts of tariffs could be widespread, we believe the pain will be felt disproportionately by non-U.S. stocks. This reallocation is intended to take advantage of the current state of the markets, however, the cash position in your Survive & Thrive Portfolio continues to act as a good way to take advantage of the next major swing in stock prices.
As always, please do not hesitate to reach out with any questions as we would be happy to discuss any of your investments in further detail.