Looking at the performance of our own Optarix US Portfolio as of 30 Nov 2019, the results are quite satisfactory, too: +15.68% for 12 months and 10.31% annually for the last 2 years. All of these is after taxes and fees.
|
1 year |
2 years |
| S&P 500 |
+13.80% |
+8.92% |
| Optarix US Portfolio |
+15.68% |
+10.31% |
| Optarix Active Return |
+1.88% |
+1.39% |
Values in this table are annualized for periods of over one year.
Here are updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from November 2018 to November 2019.
Please note that past performance is no guarantee for future performance.
Other Developments
Since the last block post we have also completed our goal to add posiitions for all dividend aristocrats in the S&P 500 to our portfolio. The dividend aristocrats, i.e. companies that have increased their dividend each year for at least 25 consecutive years, represent our base investment.
In addition we have a small selection of investments in the hightech sector. Examples are companies such as Microsoft (MSFT) or Atlassian (TEAM). We select these companies based on our opinion about their business model, their growth perspectives, their profitablity and - where present - a history of increasing their dividends from when they started to pay dividends.
Over the last few months the trade wars and the looming Brexit were topics that we think influenced the markets. Surprisingly despite the trade tensions, the economies in the US has been astonishingly robust. The Federal Reserve has cut the rates this year and believes that for now they are in an observing position. If needed, however, they will act when and as appropriate.
The ECB is keeping interest rates low as well. They have also restarting their bond buying program, pumping even more liquidity into the markets. Interest rates for German Bunds remain negative and it doesn't appear as if they move into positive territory any time soon.
At the time of writing the newly elected parliament in the UK has approved Boris Johnson's Brexit deal. The plan is that the UK will leave the EU at 31 January 2020. For the relationships after the Brexit the UK wants to negotiate an agreement with the EU by December 2020. We believe this timeframe is very ambitious looking at past examples of trade agreements. In all cases the upside is that finally there is clarity: The UK will leave the EU, with or without an agreement.
In the US two articles of impeachment against President Donald Trump have been approved by the House of Representatives. However, they have not been passed on to the Senate. We believe that unless something material changes, the impeachment will struck down in the Senate by the republican majority. We also believe that for the time being the impeachment will have little impact on the financial markets.
It terms of US politics we think it will be more interesting to follow reliable polls after the democratic challenger has been determined and as both large parties prepare for the elections at the end of 2020. We think the result of those polls is likely to have a bigger impact on the markets in particular if they are tight, i.e. within the margin of error, or inconclusive.
Portfolio Changes
In November we increased our positions in Colgate-Palmolive (CL), Ecolab (ECL), Mc Donald's (MCD) and McCormick (MKC).
Suggestions For Your Portfolio
Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.
Increase
With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.
- People's United Financial Inc (PBCT)
- Franklin Resources (BEN)
- AT&T Inc (T)
- Chevron Corporation (CVX)
- Wallgreens Boots Alliance (WBA)
Decrease
Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.
- The Sherwin-Williams Company (SHW)
- Becton Dickinson and Company (BDX)
- Brown-Forman Class B (BF.B)
- Abbott Laboratories (ABT)
- Ecolab Inc. (ECL)
As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.
Disclosure
We hold positions in all of the companies mentioned in this post. We also intend to add to our position in WBA in the next 3 trading days. We have no intentions to change any of our other positions.
