Super Sleep Well at Night Portfolio Nears 5% 7 Month Gain

In what is turning out to be the most steady performer of any portfolio we have ever constructed our 2014/2015 Short/Medium Duration Income Portfolio is just shy of a 5% return over 7 months (8.57% annualized).  While we don’t believe it will end at the annualized figure we are gaining some confidence that it will reach the initial portfolio yield which was 6.7%.

You may recall that this portfolio is composed only of exchange traded debt and term preferred issues which primarily mature in the next 7 years (although there are a few with longer maturities). The intention of this portfolio was that large portfolio value swings would be minimized by holding securities with the relatively short durations with the belief that we were entering a interest rate tightening cycle.  This notion continues to work very well for conservative investors as the portfolio hasn’t swung more than a few hundred dollars (on a $85,000 starting balance) in any given day.

All things considered this portfolio has been a real success, but we will watch individual issues closely if we head toward a recession as many of the exchange traded debt issues are of lower quality companies.