Although I began building this strategy and the portfolios for the Deep Value ETF Accumulator in 2015, 2017 is this first year I can bring to you an annual report of how the portfolio is performing. You could say 2015 was the Genesis year for the Deep Value ETF Accumulator and 2016 was the implementation year.
Well, let’s get straight to the numbers.
Deep Value ETF Accumulator Performance January 1, 2017 thru December 31, 2017.
While I do not expect to beat the S&P 500 year in and year out, I do think it is a worthwhile benchmark. I’d love to say we beat it last year, but I cannot. Please note, we are building a portfolio that encompasses equities from the entire world, not just U.S. Large Cap Blend equities. As with any “Value” portfolio, one should fully expect it to lag in a year when Large Cap Growth equities dominated.
Caveats & Excuses
Our overall performance was 17.36%. While that is a respectable return on investment, the performance of IRA #3 was a certain drag on our total returns. Here are some reasons for this inferior performance:
• In 2017 I was attempting to manage this Deep Value ETF Portfolio in a 401k that only allowed me to call in orders once a month. This sort of portfolio needs to be managed about once a week. This doesn’t require much time, but orders need to be made when orders need to be made.
• In 2017 I was laid off from the job that was attached to this 401k. I transferred those funds to what is now called IRA #3 in September 2017
• That 401k which is now IRA #3 represent nearly 50% of our holdings.
• Cash is a position and cash is a drag. I have learned the hard way that while cash is a wonderful thing to have when equities go ‘on sale’, a year like 2017 proved that it is far better to have as much capital working for you as possible. We have since endeavored to ensure we are always 90% to 99% invested.
• I’ve also learned that I tend to trim profits a bit early. We will continue to trim profits when it is prudent, but those profit taking thresholds will be set to at least 1% of the entirety of the combined accounts. (example: $100,000 account balance, a single position would need to have at least a $1k profit before trimming any profits)
So, what does the Deep Value ETF Portfolio look like currently? I did not take a snap shot of our holdings on December 31, 2017, so I am displaying our current holdings as of January 29, 2018:
• Energy – weight 22.60%, we’ve begun to trim profits in this sector and will continue to trim if it continues to increase in value, we still own both PXI & XLE, we intend to divest from one of these funds soon (I’m leaning toward keeping XLE due to the dividend yield)
• REITs – weight 18.62%, we’ve been aggressively accumulating REZ, we will stop accumulating this when it stops going down in value
• Mexico – weight 16.58%, we were able to trim some profits from EWW in 2017, but its been languishing since September, we’re enjoying the dividends while awaiting further capital appreciation
• Utilities – weight 7.46%, we are aggressively seeking to grow this position larger, we will continue to accumulate RYU if the price stays low
• Biotech – FBT has been our most profitable holding at +57%
• South Africa – this single country ETF is beginning to show some weakness, we will reinitiate accumulation of EZA if it continues to fall in price
• Small Cap Blend – we have a 5% trailing stop in on IJR, when it sells we will begin to accumulate SLY
• NTIAX is the only fund we hold in our new company’s 401k – we will not be managing this
Well, that’s all I have for you on the Deep Value ETF Accumulator’s performance for 2017. I will report again in July 2018 with the H1 performance report.
Thank you taking time to read this article.
Ps: you can view our 2017 H1 performance report right here: H1 – 2017 Performance Report – The Deep Value ETF Accumulator