1 st Quarter/Tax Season Wrap up Newsletter
by Timothy Guthrie on Jun 18, 2019
Through March, our average account was up 15% after all fees. This is ahead of the S&P and considering that our average account is under 80% stocks, is quite good. I appreciate you hanging on last fall, and December in particular. It was difficult, but the right choice. Remember that in December I wrote that I was “not going to sell our excellent investments at these prices.”
All stock market sectors improved, with growth stocks doing better than value stocks generally. Our growth drivers (five of our top 10 holdings) did REALLY good:
|HOLDING||1st Quarter Growth||Comments|
|IHI iShares US Medical Devices||up 15.85%||Our #1 Holding all qtr., about 11% of assets|
|ETILX Eventide Gilead Fund||up 27.92%||beating the mid cap average by over 9%!|
|IGV iShares Expanded Tech-Software||up 21.52%||beating the average tech fund by almost 3%|
|ETIHX Eventide Healthcare & Life Sciences||up 34.62%||beating the average health fund by over 24%!!!|
|GNXIX AlphaCentric Global Innovations||up 21.52%||This fund invests in industrial robotics|
The holdings above are what we use to seek capital growth by allocating to what we believe are the best sectors for strong growth. These holdings represent about 38% of assets for our average client.
Our ‘quality stock portfolio’ holdings also did well:
|HOLDING||1st Quarter Growth|
|FTCS Frist Trust Capital Strength||up 12.22%|
|DGRO iShares Core dividend Growth||up 11.43%|
|FVD First Trust Value Line Dividend||up 12.13%|
These holdings are used to diversify the more aggressive holdings above and keep our risk level appropriate. All three of the these have less risk than the S&P, and FTCS and DGRO have beaten the S&P over some longer-term time periods. FVD has about 25% less risk than the S&P 500 and owns more utilities and ‘value’ stocks. DGRO and FVD also pay better dividends than most stock mutual funds and ETFs, so I use these in accounts where generating income is important.
Moving forward, I am still expecting more gains this year, but do not expect to match the first quarter’s results. I am slightly increasing our exposure to value stocks (as opposed to Growth) and increasing our fixed income allocation a few percentage points. The goal is to moderate risk just a bit. Recently, (in midApril) healthcare stocks fell on the perception that the Democratic Party Presidential candidates promoting some form ‘Medicare for all’ will put healthcare companies under a lot of pressure. I believed this was overdone and premature and have held our current exposure to medical device stocks. I have for some clients been cutting back their exposure to the Eventide HealthCare fund, just based on re-allocating to not have too large an exposure based on the fund’s great results this this year.
We may see some volatility this summer, but my position is that employment is so strong, that the economy is going to continue to grow at a decent pace, and that means the stock market can still advance. Compared to worries a few months ago (which I did not embrace) global growth appears to be reaccelerating a bit, so recession fears have eased.
We have switched over to monthly management fee billing. This means that instead of billing ¼ of the annual fee 4 times per year, we are now billing 1/12th of the annual fee 12 times per year. We appreciate all the help you provided in getting those contract addendums back to us, and for the few that are still outstanding, we will be in contact soon to get that item completed. Please contact us with any questions.
Remember, if your life changes, (you get married, divorced, retire, change jobs, or expand your family) let us know. We want to make sure your investments are still managed to meet your needs. See our contact information below.
Our view is that life insurance is used to replace lost income of an adult who has dependents. We favor term life insurance to get the most coverage per dollar spent, and to not waste money on low yielding high commission products (whole life insurance). When clients need life insurance, we refer them to Scott Christie. He is a 29 years veteran of the life insurance industry, is a brain trust on the topic and is licensed in the states most of our clients reside, including Ohio, Kentucky, Indiana and West Virginia. He is also good at explaining life insurance concepts without the industry jargon. Below please find an article he has written on how there is a price war in term life insurance and how life insurance has never been more affordable and how life insurance is actually getting easier to obtain. If you have a life insurance need (children, spouse, mortgage) you may benefit by buying the coverage you need now or shopping around to compare current rates with the coverage you have. Bullseye and Scott Christie have no business arrangement and no money changes hands at any point. We refer to Scott because we trust him, and he is a total pro.
Scott Christie’s Article:
The Term Wars Are Back!
Term life insurance continues to be more and more affordable as numerous carriers have lowered their term rates in the never-ending quest to be the lowest. For the average daily price of a fancy cup of coffee at your favorite café, you can purchase quality term life to protect your loved ones when you’re gone. In addition to increasing pressure to lower their rates, many companies have also responded to consumer demand by making insurance easier and more convenient to obtain. The latest trend is these so-called “non-med” programs, which offers you an alternate path from the traditional process of full application, ordering medical records from your doctor, paramed exam, and lengthy wait times.
Specifics vary from company to company but basically these are programs designed with efficiency in mind. They generally involve a shorter version of the application, limited death benefit choices based on age, and limited underwriting requirements. If you’re someone who dreads the thought of being stuck by a needle for a blood draw, or you’re uncomfortable with someone visiting your home or place of work for a medical exam, these non-med programs may be right for you. They offer quick decisions for basic insurance needs and many consumers will pay the extra premium simply for the convenience. But buyer beware. Some of these programs are priced to include people with serious medical issues, or are really geared towards older clients with smaller death benefit amounts (e.g. “final expense” policies). If you’re healthy, you end up subsidizing part of their premium. Make sure your independent agent chooses a quality company with a non-med program geared towards younger, healthier clients. That way you’re getting a better premium. The good news is that most of the non-med programs currently on the market are from great companies with excellent track records and I have no problem recommending them to my clients. For a few dollars more per month you can avoid the hassle of exams, blood draws, and waiting for an underwriting decision.
Regardless of which method you choose, rates for term insurance have never been cheaper. If you’ve recently purchased a home, added a newborn to your growing family, or simply want to ensure that upon your death your loved ones don’t have to worry about any expenses or debt, I would love to answer your questions and help you obtain that peace of mind with a policy that fits your budget.