{"id":9041,"date":"2019-06-06T02:38:52","date_gmt":"2019-06-06T02:38:52","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=9041"},"modified":"2019-06-08T14:56:45","modified_gmt":"2019-06-08T14:56:45","slug":"how-clients-top-weightings-performed-through-may-31-19","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=9041","title":{"rendered":"How Clients Top Weightings Performed through May 31 &#8217;19"},"content":{"rendered":"<p>The SP 500 was still up 10.58% as of May 31, even though the month of May was pretty ugly in terms of the monthly SP 500 return.<\/p>\n<p>Here were client&#8217;s Top 10 holdings as of May 31 and their respective YTD returns:<\/p>\n<ul>\n<li><em><strong>Microsoft:<\/strong><\/em> +22%<\/li>\n<li><em><strong>Amazon:<\/strong><\/em> +18%<\/li>\n<li><strong><em>Schwab:<\/em><\/strong> -1%<\/li>\n<li><strong><em>JP Morgan:<\/em><\/strong> +10%<\/li>\n<li><em><strong>EEM:<\/strong><\/em> +4.2%<\/li>\n<li><strong><em>XLF:<\/em> <\/strong>+9.75%<\/li>\n<li><strong><em>VWO:<\/em><\/strong> +6.8%<\/li>\n<li><strong><em>SPY:<\/em><\/strong> +10.58%<\/li>\n<li><strong><em>CME:<\/em><\/strong> +2.5%<\/li>\n<li><em><strong>OAKIX:<\/strong><\/em> +4.6%<\/li>\n<\/ul>\n<p>Client accounts are run on a &#8220;balanced&#8221; basis, with the asset allocation typically varying from 50% to 70% on the equity allocation and 30% &#8211; 50% on the fixed-income allocation.<\/p>\n<p>Clients had a pretty good 2018 &#8220;relatively&#8221; with the SP 500 down 4.5% for the year, and client&#8217;s kept in money markets for the bulk of the year. In 2019, client&#8217;s fixed-income allocations have broadened out to include more credit risk, but still duration is kept underweighted, which undoubtedly hurt in May.<\/p>\n<p>When positioning more defensively or aggressively from a given market view, the cash allocation is changed. During the month of May &#8217;19, 5% more in cash was raised for client accounts, as the SP 500 fell towards the 200-day moving average, and after failing for a 2nd time to make and sustain an all-time-high.<\/p>\n<p>Portfolio turnover tends to be quite low, under 10% &#8211; 20% annually, so accounts are not managed with a short term view, although &#8220;tactical&#8221; trades are made occasionally.<\/p>\n<p>The biggest changes to client portfolio&#8217;s in the last 18 months were that Apple and Facebook were sold in the Spring of 2018. Apple&#8217;s <a href=\"https:\/\/fundamentalis.com\/?p=7760\">cash-flow-to-net-income<\/a> was starting to deteriorate and the Facebook issues over data privacy was &#8220;brand-busting&#8221; to say the least from a customer trust perspective.<\/p>\n<p>This year to raise some cash within client accounts the IJS (small-cap value ETF) was sold in early May as small-caps never regained what large-caps did and seemed to turn south first with the general market downturn in early May. Also, some biotech was sold in May &#8217;19 with the IBB kept.<\/p>\n<p><em><strong>Summary \/ Conclusion:<\/strong><\/em>\u00a0I am less worried about the Justice issues around Technology than i am the trade or tariff issues. Microsoft has been client&#8217;s largest holding for the last 5 years, with Schwab holding the #2 weighting for the same period, although Schwab and the rest of Financial&#8217;s have lagged badly since January &#8217;18. Amazon was actually a #4 &#8211; #5 holding for years but the appreciation of the stock moved it up the weighting scale, probably helped by the under-performance of Schwab and Financials.<\/p>\n<p>The fact that the SP 500 has not overtaken the January &#8217;18 and September &#8217;18 high and sustained both is worrisome, thus a little more cash is held today, but the portfolio&#8217;s are usually kept pretty consistent, depending on risk profiles, etc.<\/p>\n<p>If 2019 turns out to be like 2016, and I suspect the SP 500 will make an all-time-high this year (and hold it), then client&#8217;s equity allocations will likely be lifted &#8220;tactically&#8221; for anywhere from a few quarters to a year, depending on what else is happening.<\/p>\n<p>It&#8217;s just one opinion &#8211; so take it with a grain of salt &#8211; but lifting the equity allocation &#8220;tactically&#8221; allows me to add and subtract market &#8220;risk&#8221; easily, rather than increasing complexity.<\/p>\n<p>The bond or fixed-income allocations are mainly &#8220;unconstrained&#8221; mutual funds with some high-yield ETF&#8217;s (underweight) and some other positions.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SP 500 was still up 10.58% as of May 31, even though the month of May was pretty ugly&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[193,40,229],"tags":[],"class_list":["post-9041","post","type-post","status-publish","format-standard","hentry","category-corporate-high-yield","category-hyg","category-top-10-client-holdings"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9041"}],"version-history":[{"count":4,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9041\/revisions"}],"predecessor-version":[{"id":9057,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9041\/revisions\/9057"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}