G’day readers, it’s that time again for a portfolio update! This time around, we’re talking Q1 2021.
So, as you’ll know if you read my Q4 2020 update (highly suggest), I’m following what’s called a core and satellite approach. The core portion is made up of low-cost index-tracking ETFs, and should make up the vast majority of my portfolio. The satellite portfolio is made up of high conviction stocks ideas I have like CSL or Baby Bunting.
I’m trying (and failing ????) to keep the satellite part of the portfolio below 20% of assets to reduce my concentration risk. For good or bad, things haven’t gone exactly to plan. Let me explain.
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Baby Bunting Kicking Goals
Like you’ll notice in the lovely images below, I’m currently heavily overweight in Baby Bunting. This is mainly because I made a pretty substantial investment (for my money at least) when their share price took a dive in Q1 2020. BBN has recovered well since then, but it’s meant that they’re taking up 42.9% of my satellite portfolio. Yes, it’s a nice problem to have, but it means my concentration risk is real because I’m not planning to trim my position.
Instead of trimming my exposure to BBN, (I believe there’s still plenty of room for growth with BBN) I’m simply planning to continue investing monthly into my 3 core ETFs (NDQ, VGS & VAE) on a rolling 3-month cycle.
Going from left to right, the pics below outline my holdings at the end of Q1 2021 from an overall, core, and satellite perspective.
2021 – The Story So Far
2021 has been a far more normal year (so far) in terms of my portfolio’s performance (no covid crash). For context, I’m up about 10% for the year to date across the portfolio, which is close to my goal of a 15% return for the year (excluding dividends).
Is Cash Really King? Not Always..
Regarding my 26.1% cash position, I do like to keep some cash on the sidelines for any short term pullbacks in companies I like, or in the market overall. My cash position has increased quite a lot over the first quarter mainly because I’m contributing more from my pay each month into my investing account while also selling down a couple of positions.
While I’m a fan of having a cash position to capitalise on market pullbacks, a 26.1% cash position is a little too high for my liking. And that’s for the simple reason that Markets have trended upwards over time, not downwards, so given my long term investing horizon, it makes sense to be mostly invested, most of the time.
For the remainder of 2021, the plan is to continue dollar-cost averaging into my core ETF portfolio, while also keeping an eye out for any exciting opportunities for the satellite portfolio to reduce that cash position to a healthier 10%. I’m also planning to get some consolidation happening with overlapping my S&P500 ETF, IHVV. I bought this one pretty early in my investing career and soon realised its underlying holdings overlap heavily with VGS and NDQ, so the plan is to sell up and re-invest back into the two aforementioned EFTs.
I’ve also added some new positions (CSL and A2M) because I think they’re great companies available at reasonable prices following pullbacks from their highs. For context, my average entry price for both CSL and A2M is around $275, and $10 respectively. You’ll also notice the ‘others’ category, which is essentially a collection of US companies I hold through Stake like Visa.
I’ll see you all soon for my Q2 update!
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About The Author – Jesse
Hi, I’m Jesse, but you can call me Jes for short. My passion is simple, I’m on a mission to make the world of investing easily understood by removing the ‘too hard basket’ stigma that surrounds it.
Disclaimer: This website ( “The Money Pal”) is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creator’s own opinions. The information should not be regarded as financial advice.