By Jeff Warren
January 2022
2021 Strategy Update
Objective of the Dividend Focused Strategy: Produce stable dividends as a source of income or reinvestment. Performance targets are based on investor tolerance for volatility and time horizon. Primary investment allocations include fixed income/bond funds, quality real estate companies or funds, utilities and other opportunities as they present themselves.
The year brought outstanding performers in dividends paid and a very muted Fixed Income/Bond Market. Fortunately, we utilized multiple bond sectors and funds with PIMCO. The lagging performance in high quality corporate and government bonds were to a large degree offset by a good year by PIMCO Flexible Income Fund.
High quality real estate provided good performance and dividends for 2021. Our predominantly renewable energy utilities provided good dividends but lacked on overall performance. This strategy is dominated by PIMCO Fixed Income funds that are strong dividend payers ( 75%) plus Real Estate and Utilities. The 2021 Return (net of fees) was 4.51%. based on the portfolio’s top ten holdings.
Dividend Focused Portfolio 2022 Outlook: The Federal Reserve’s rate increase policy and the market’s reaction could have the biggest impact on our strategy this year. Unfortunately, this is an unknown. We will be looking for opportunities for stable dividends performing at the highest level possible. Lower Volatility and risk are always a priority for this strategy.
Diversified Growth Strategy
Objective of the Diversified Growth Strategy: A moderate growth portfolio that is diversified with a number of core asset classes. Equities in sectors that are “in the path of growth” with an emphasis on companies with strong ESG scores (environmental, social and governance) and focused on environmental sustainability. Fixed Income/bonds, Managed Futures, Real Estate funds and commodities allocated based on appropriate market conditions. Investor’s risk/return targets and time horizon dictate weight of asset allocation.
2021 was a good year overall for the Diversified Growth Strategy. Digital Infrastructure, High Quality Real Estate and companies that provide sustainability and climate change solutions were the top performers. 39% of the strategy were equities (stocks, funds and ETF’s), 48% was in PIMCO Fixed Income , 13% Managed Futures (market hedges). The 2021 Return (net of fees) was 8.89% based on portfolios’ top ten holdings
Diversified Growth Portfolio 2022 Outlook: The outlook for all of the allocations in 2021 look promising for 2022. The only caveat to that would be the size and speed of interest rate increases by the Fed. This could slow economic activity at least for the short term. The long view is that the sectors of infrastructure, sustainability and real estate are poised for solid growth in the future (as well as now)!
Please contact me if you have any questions about these strategies or your current portfolio allocations. –Jeff Warren