Friday, February 27, 2015

Portfolio Sector Allocation

This graphic below sums up how my overall portfolio is currently invested sectors wise. This is not where I would like it to be, this is how it is as of today.


Sector%
Consumer7.62%
Bonds5.76%
Finances14.99%
Cash29.92%
Telecomm.2.39%
Energy12.46%
Transport6.04%
Index Fund3.47%
Gold2.61%
Health10.64%
REIT1.51%
Penny Stocks2.59%
Total100.00%

All in all, I'm quite satisfied with how diversifiy my portfolio is and how my different sectors are allocated.

I now own more than 17 companies, which is a little more than I would have wanted in the beginning (I was aiming for 12-15). But, coming off a very long bull market, I find it hard to add stocks (relatively cheap) to my actual holdings. Hence, the new buys I have made this last year.

I have to say, I like my new additions : Nova Scotia Bank (BNS), Alimentation Couche-Tard (ATD.B), Verizon (VZ), BCE (BCE), Therapeutics Knight (GUD), and more recently ATCO (ACO.X). Moreover these new acquisitions are all in different sectors : Finances, Consumer, Telecom, Pharma/Penny Stock and Energy.

Sector% portfolio% Goal
Consumer7.62%11%

The Consumer sector regroups Mondelez (MDLZ), Kraft (KRFT) and Alimentation Couche-Tard (ATD.B). It represents less than 8% of my portfolio. I would like to hike this number to 11%. I might buy some more ATD.B if the stock price comes down a little. I don't intend to add shares to my actual positions in MDLZ and KRFT. (I might even sell some MDLZ.)

Sector% portfolio% Goal
Bonds5.76%7%

The Bond sector is part of my portfolio risk-free section. Like I said, I have contributed in the past in a former employee's pension plan. This money is dead-lock until I am 60 years old. It thus represents  the security side of my portfolio, along with the bonds. Therefore, I don't need to have a big % allocated to secure and fixed-revenue income. Since I periodically invest a small amount in bonds, this % could reach 7 $. That's more than enough.

Sector% portfolio% Goal
Finance14. 99%16%

The Finance sector is very well represented with the likes of Royal Bank (RY), Power Corporation (POW), Power Financial (PWF) and Bank of Nova Scotia (BNS). I like this group of companies and  apart from some small changes my Finance allocation should remain close to 15-16%.

Sector% portfolio% Goal
Cash29.92%15%

The Cash sector, like the bond one, is a risk-free sector. The % is quite high at the moment, but given the long bull market we have, and unless there's a major correction soon, it will stay like that for a while. Eventually, I d'like it to be around 15% of my portfolio.

Sector% portfolio% Goal
Telecom2.39%7%

I like the Telecom sector, but it took me a while to make an entry. I have small positions in BCE (BCE) and Verizon (VZ). I would like to add some more of their shares. But it will have to wait a little. I need to crank up my % in this sector to 7% (or even more).

Sector% portfolio% Goal
Energy12.46%12%

No doubt, energy is the most volatile sector in my portfolio. Whatever we say about it, we can't seem to be doing much without oil or electricity nowadays. I don't see that changing anytime soon. Again, like my Finance Sector, I like the big names here : Fortis (FTS), Suncor (SU), ConocoPhilipps (COP) and the recently added Atco (ACO.X). 12 % of my portfolio for this sector seems about right. 

Sector% portfolio% Goal
Transport6.04%8%

This sector, Transport, is basically railway transportation in the likes of Canadian Pacific (CP). I would like to own some more of CP, but the stock, at 230$ (and counting) isn't cheap. I'd like to add to this position and eventually have a sector allocation of roughly 8% (or even 10% if I can get my hands on its competitor, Canadian National Railway (CN)).

Sector% portfolio% Goal
Index Funds3.42%5%

Index Funds are a not a sector per se. Through this particular US index fund, I'm invested in a few sectors, mainly these shown in the graphic below. (I guess, I'm involved in Information Technology after all!) I'm invested in this fund via a periodic purchasing program. It simple, free of commission and effective. I might sell this fund and buy stocks directly when I feel a have a big enough lump sum. Right now it represents not even 3.5% of my portfolio.



Sector% portfolio% Goal
Gold2.61%3%

As you are aware by now if you visit this blog from time to time, I've been a very sad shareholder of Barrick Gold (ABX). (Yes, I'm losing money over it. Damn!) I sold a few shares lately and if the stock picks up a little, I might sell some more. A 3 % Gold allocation seems more than enough for my taste.

Sector% portfolio% Goal
Health10.64%10%

Again, like Transport and Gold, the Health sector is represented by a sole company. But unlike the gold sector, it's a solid one, Johnson and Johnson (JNJ). This company is one of my oldest and favourite stock. As a rule of thumbs, we often hear that we shouldn't hold a stock that's accountable for more than 5-6% of one's portfolio. This one is accountable for more than 10! It's ok, my mind is at ease with JNJ. It will stay like that. 

Sector% portfolio% Goal
REIT1.51%3%

Real Estate should always be part of a diversified portfolio. The thing with Real Estate Income Trust is that you never know if a government is going to change its policies towards them; making it less attractive without their fiscal advantages. I'd say it's healthy to keep REIT below 3%. Don't you love their juicy dividends? I sure like my Cominar (CUF.UN) investment.

Sector% portfolio% Goal
Penny Stocks2.59%3%

Surely, it's a little pejorative to call Junex (JNX) and Therapeutics Knight (GUD.to) penny stocks. But they don't belong in the Dividend stocks category either. Let's call them speculative companies. Junex operates in the energy sector and Knight in the pharma one. I think 3 % of one's portfolio is not too much for having a little fun, don't you think? I have big and very colourful aspirations for these two. Let's dream big.

What do you think of my Portfolio Sector Allocation? Would you tweak it differently? Or get rid of those speculative companies? What would you do? I want to hear from you. 



2 comments:

  1. Interesting breakdown. Any reason why you're only keeping REIT at 3%? Wouldn't it better to make it 5% to get a little bit more dividend?

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  2. Hey Tawcan. Thanks for coming by. I'm not chasing dividends at all cost. Hence a few companies I own, like CP and POW, which have been quite moderate on that front lately. I like REIT, but the fact that the government could cut down their fiscal advantages any time they wish too, make them a uncertain investment. Hence the 3 %.

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Thanks a lot for your comment.