On 3/13/15 & 3/16/15 we made trades in both Powerfund Portfolios:
Aggressive Portfolio:
Sell All: American Century Utilities (BULIX), which was 5% of total portfolio.
Sell All: DoubleLine Floating Rate N (DLFRX), which was 10% of total portfolio.
Rebalance: In our real money portfolios, we're Selling About 60% of PowerShares DB Crude Oil Double Short (DTO)to rebalance the position back to 4% of the total portfolio after the ETF's big run-up, during which the position grew to roughly 10% of the portfolio in real money terms. Watch your own allocation - you may need to trade more or less to get to a 4% allocation.
Buy New: SPDR® Barclays International Treasury Bond ETF (BWX)for a new 15% position
Click here to access the Aggressive portfolio trade trade calculator.
Conservative Portfolio:
Sell All: American Century Utilities (BULIX), which was 6% of total portfolio.
Sell All: DoubleLine Floating Rate N (DLFRX), which was 10% of total portfolio.
Buy New: SPDR® Barclays International Treasury Bond ETF (BWX)for a new 16% position
Click here to access the Conservative portfolio trade trade calculator.
We are rebalancing a few real-money positions with this trade to get closer to our target allocations. In our Aggressive Portfolio we purchased about 20% more shares of iShares MSCI BRIC Index (BKF). In our Conservative Portfolio we sold about 5% of our position in Vanguard Long-Term Bond Index ETF (BLV) and about 15% of the positions of Vanguard MegaCap Growth (MGK).
You may or may not be far off on your allocations here and can skip the BKF, BLV, and MGK rebalance trades. Note these three funds are NTF (no transaction fee or commission) at TD Ameritrade if held at least 30 days, and will not trigger any short-term capital gains for us – but fees and capital gains should be considered when making a relatively small rebalance trade.
In general you should not rebalance a position if it triggers a short-term capital gain for a position that is only a few percentage points out of whack. Use your own discretion but err on the side of low cost and low tax – we generally sell seriously unbalanced holdings completely, which minimizes the need for frequent rebalance trades. Review your other positions for rebalance (or even tax loss generating) opportunities periodically. We show the target and real money allocation percentages on the portfolio pages.
Why We Traded
The oil bubble is largely gone and we needed to cut back on our oil short to protect gains, so we’re paring the Aggressive portfolio’s DTO holding.
We’re adding Barclays International Treasury Bond ETF to both portfolios. The eurohas sunk and it’s a good time to start adding investment grade, unhedged foreign bond funds with the possibility of increasing the position on further euroweakness.
Utilities have become too popular recently and we need to depart this category for the time being – goodbye to the entire stake in long time holding American Century Utilities(BULIX) from both portfolios.
Doubleline Floating Rate N (DLFRX) is also a goner from both portfolios. Junk bonds of all sorts should be mostly avoided at this time, including floating rate bank loan-ish funds.
Redemption Fee Information
We won’t see any short-term redemption fees from this trade or short-term capital gains taxes since we've owned these funds for over a year. Still, keep an eye on your own purchase history, which could be more recent than ours, and consider altering your trades for your own tax and fee advantage.
This is particularly important in regards to DTO which is up over 200% during the last year.
There are no short-term redemption fees charged by BULIX.
DLFRX, which owns sometimes illiquid, low-grade bank loans, charges a 1% fee on shares held less than 90 days. Make sure you’ve owned the fund at least 90 days before selling - junk bonds almost certainly won’t collapse in the next few weeks, so waiting a little while to make the sale shouldn't make a major difference.
In general, any mutual fund (not an ETF) purchased through a third party broker like TD Ameritrade, E*Trade, or Schwab for ‘no transaction fee’ should be held 180 days to avoid any fees charged by the broker. Also note that NTF ETFs at TD need to be held at least 30 days to avoid a commission on the sale.
Please Note:
MAXadvisor LLC partners and clients currently own, may continue to own, or have sold, some or all of the positions mentioned in this trade alert and may be buying or selling shares in the funds and ETFs or essentially similar funds at any time.
Content on this website is for informational purposes only and not intended to be specific to a user's investment objective, financial situation, or risk tolerance. This information should not be considered as a solicitation or recommendation and should not be the only basis for any investment decision.
MAXfunds.com does not provide any tax or legal advice. Investors should consult with their own advisors for such guidance.
Read additional disclosure information by clicking here.
New User? CLICK HERE!
On 3/13/15 & 3/16/15 we made trades in both Powerfund Portfolios:
Aggressive Portfolio:
Conservative Portfolio:
We are rebalancing a few real-money positions with this trade to get closer to our target allocations. In our Aggressive Portfolio we purchased about 20% more shares of iShares MSCI BRIC Index (BKF). In our Conservative Portfolio we sold about 5% of our position in Vanguard Long-Term Bond Index ETF (BLV) and about 15% of the positions of Vanguard MegaCap Growth (MGK).
You may or may not be far off on your allocations here and can skip the BKF, BLV, and MGK rebalance trades. Note these three funds are NTF (no transaction fee or commission) at TD Ameritrade if held at least 30 days, and will not trigger any short-term capital gains for us – but fees and capital gains should be considered when making a relatively small rebalance trade.
In general you should not rebalance a position if it triggers a short-term capital gain for a position that is only a few percentage points out of whack. Use your own discretion but err on the side of low cost and low tax – we generally sell seriously unbalanced holdings completely, which minimizes the need for frequent rebalance trades. Review your other positions for rebalance (or even tax loss generating) opportunities periodically. We show the target and real money allocation percentages on the portfolio pages.
Why We Traded
The oil bubble is largely gone and we needed to cut back on our oil short to protect gains, so we’re paring the Aggressive portfolio’s DTO holding.
We’re adding Barclays International Treasury Bond ETF to both portfolios. The eurohas sunk and it’s a good time to start adding investment grade, unhedged foreign bond funds with the possibility of increasing the position on further euroweakness.
Utilities have become too popular recently and we need to depart this category for the time being – goodbye to the entire stake in long time holding American Century Utilities (BULIX) from both portfolios.
Doubleline Floating Rate N (DLFRX) is also a goner from both portfolios. Junk bonds of all sorts should be mostly avoided at this time, including floating rate bank loan-ish funds.
Redemption Fee Information
We won’t see any short-term redemption fees from this trade or short-term capital gains taxes since we've owned these funds for over a year. Still, keep an eye on your own purchase history, which could be more recent than ours, and consider altering your trades for your own tax and fee advantage.
This is particularly important in regards to DTO which is up over 200% during the last year.
There are no short-term redemption fees charged by BULIX.
DLFRX, which owns sometimes illiquid, low-grade bank loans, charges a 1% fee on shares held less than 90 days. Make sure you’ve owned the fund at least 90 days before selling - junk bonds almost certainly won’t collapse in the next few weeks, so waiting a little while to make the sale shouldn't make a major difference.
In general, any mutual fund (not an ETF) purchased through a third party broker like TD Ameritrade, E*Trade, or Schwab for ‘no transaction fee’ should be held 180 days to avoid any fees charged by the broker. Also note that NTF ETFs at TD need to be held at least 30 days to avoid a commission on the sale.
Please Note:
MAXadvisor LLC partners and clients currently own, may continue to own, or have sold, some or all of the positions mentioned in this trade alert and may be buying or selling shares in the funds and ETFs or essentially similar funds at any time.
Content on this website is for informational purposes only and not intended to be specific to a user's investment objective, financial situation, or risk tolerance. This information should not be considered as a solicitation or recommendation and should not be the only basis for any investment decision.
MAXfunds.com does not provide any tax or legal advice. Investors should consult with their own advisors for such guidance.
Read additional disclosure information by clicking here.