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.
Our Thoughts:
They say that “slow and steady wins the race”. When it comes to the On Deck Portfolio (and tortoises), we couldn’t agree more. This past quarter has seen the On Deck portfolio continue a slow and steady rise from its lows near the end of March. Market sentiment continues to be cautiously optimistic, with recent surprises in earnings and some signs of economic recovery. However, the continued pandemic and upcoming election aren’t allowing anyone to forget that the second half of 2020 still has plenty of unknowns. While we cannot predict if or when the next crazy headline will cause the market to drop again, we remain confident in our strategy to simultaneously take advantage of an upward trending market while maintaining defensive positions to protect against a downturn. This quarter, we are further implementing this strategy by making some minor adjustments to the On Deck Portfolio. In a move to further open up liquidity and reduce some exposure to real estate, we are allocating some of the portfolio away from 2 interval funds, the Griffin Inst. Access Real Estate Fund (GRIFX) and the Total Income+ Real Estate Fund (TIPWX). Our allocation to private credit interval funds remains steady as they have benefitted the most from last quarter’s recovery and show the most long-term upside potential. In a defensive move, we are slightly increasing the portfolio’s allocation to short term bonds and government agency funds. This low rate environment continues to present a challenge in balancing favorable yields while keeping risk low, but the On Deck Portfolio remains focused on always prioritizing low volatility to help achieve goals within the next 10 years. The tortoise would agree.
The Dividend Portfolio
The Dividend Portfolio seeks long term growth primarily using stocks paying strong dividends.
Our Thoughts:
Sometimes it seems like the more we know, the more we realize we don’t know. The current state of the COVID pandemic has many investors sharing that feeling. As the U.S. continues to reopen the economy, we are reminded daily that the pandemic is far from over and there will certainly be bumps along the way to a full recovery. Although the Dividend Portfolio is still down for the year, it has rebounded significantly from its lows in late March. The move to increase our exposure in Technology stocks proved to be a good decision, as it was by far the best performer last quarter. Additionally, international stocks are starting to show some life as the efforts to stabilize markets in Europe and Asia are beginning to pay off. However, these unprecedented times remind us of the unpredictable nature of the stock market. We remain defensively positioned by continuing to overweight large, U.S. Companies – with a particular focus in the Technology sector. We are also employing a similar strategy with our international positions. We’ve started shifting the international allocation to a quality focused fund that invests in companies with high profitability and low debt. These adjustments reflect our belief that we are not out of the woods yet, and a diversified portfolio of quality companies gives the portfolio strong footing as we continue to navigate the uncertainty of the pandemic.
Survive & Thrive™ Portfolio
The Survive & Thrive Portfolio seeks long term growth using tactical movements of cash in a diversified stock portfolio.
Our Thoughts:
While the world is focused on the COVID pandemic and upcoming election, the stock market has maintained its strong and steady growth over the past 90 days. Much of these gains in Survive & Thrive have been found in emerging markets and the technology sector, as their earnings and growth outlook have proven to be very resilient during the pandemic. Looking more broadly, the stock market in general is benefitting from our extremely low interest rate environment, and investors are looking to quality stocks as a way to supplement low yielding bond portfolios. This growth has triggered Survive & Thrive clients to harvest significant gains this quarter. The timing of this harvest looks especially good, as we head into new phases of the pandemic and with the election less than 3 months away. We foresee these events adding increased uncertainty and volatility to the market through the new year. Only small adjustments were made to the fund portfolio this quarter as we continue to see strong performance in Large U.S. stocks, technology, and medical devices. However we are adding positions in Financial Services and some Small Cap stocks where we see more upside potential. Additionally, during this low interest rate environment, the cash in your Survive & Thrive account will remain in the FDIC insured cash position for its competitive (albeit low) interest rate and insurance protections. This year the Survive & Thrive Portfolio has definitely lived up to its name, and its disciplined approach of buying low and selling gains during uncertain times has been a much needed solution to the craziness of 2020.
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.