FFG offers a diverse selection of managed portfolios for the different objectives or 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.
As we continue to navigate the ever-changing landscape of COVID-19, we completed the On Deck portfolio rebalance that was started a few weeks ago. Overall, we remain pleased with the On Deck allocation. Our movements into Treasuries and Agency Bond Funds at the beginning of the year gave the portfolio much needed resilience for our new pandemic driven reality. Additionally, the portfolio’s large allocations in the Janus Short Duration Income ETF (VNLA) and the Blue Rock Total Income Fund (TIPWX) continued to perform as a great shelters from the extreme volatility of the market. However, the private credit interval funds have risen to much higher levels of price volatility since the pandemic began, which has started to shift the risk profile of portfolio. Plus, we remain hyper-focused on adding diversification and liquidity to the On Deck portfolio as we prepare for the next phases of uncertainty in COVID-19. Therefore, we adjusted the allocation to tilt more toward stable, short-term bond ETFs and started reducing exposure to the interval funds invested in private credit and real estate. These adjustments are intended to not only bring confidence during today’s uncertain times, but to also give flexibility to capture a strong rebound in the years ahead.
The Dividend Portfolio
The Dividend Portfolio seeks long term growth primarily using stocks paying strong dividends.
It seems like the world has been turned upside down in the last 90 days. What started off as a solid start to the year immediately turned into the fastest change from bull to bear market in history. COVID-19 arrived, and the markets, the economy, and the entire world reacted. Today, the recent record-breaking volatility in the market has left investors eagerly awaiting some solid data on the full economic impact of the coronavirus once it is contained. Until then, the extraordinary daily price movements we have been witnessing in the markets will probably return. While much is still unknown, there have been trends emerging. The capabilities of today’s technology to help keep the business world running have been astounding. The companies that provide these technologies are not only vital now, but have made the world re-think how business can be done in the future. Additionally, our movement last quarter into the Vanguard Consumer Staples fund performed as expected to dampen the volatility in the portfolio. Therefore, this quarter we are increasing the allocation to the Vanguard Consumer Staples fund and adding an additional Vanguard Information Technology fund to the portfolio. Our overall macro view on the Dividend Portfolio remains the same. We still favor US to international companies, large quality over small/mid-size companies, and emerging markets over developed international companies.
Survive & Thrive™ Portfolio
The Survive & Thrive Portfolio seeks long term growth using tactical movements of cash in a diversified stock portfolio.
This is the type of market environment that Survive & Thrive was built for. The ongoing pandemic has resulted in an opportunity to take advantage of tactical cash movements within the account. While the stock portfolio has gone down with the rest of the market, the cash in the account has remained intact and is perfectly positioned to buy while stock prices are “on sale”. This cash movement allows the Survive & Thrive strategy to better reap the benefits when (not if) the market eventually rebounds. In the near-term, uncertainty remains. We are carefully monitoring how the world is balancing the current health crisis with the continued economic shutdown. Every day (every minute it seems) there are new developments - both positive and negative. As a result, we are managing the stock portfolio more defensively by allocating much more to large, quality, underpriced US stocks. However, we are also seizing opportunities for long-term growth in other sectors. We are adding to our allocation in the Technology sector, and introducing a sub-sector position in medical devices. We view the worldwide focus on the response to the COVID-19 crisis as a structural change that has increased the long-term value proposition in these sectors. Overall, we remain very confident in the long-term growth of the Survive & Thrive portfolio, and we believe that in the years ahead we will look back fondly on these opportunities to buy into an undervalued market.
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.