SPDRs High Yield (JNK) Out – See What’s Now In

The MIP portfolio for over the past couple of years (well, a portfolio that was a precursor to the MIP) held the SPDRs High Yield ETF (JNK) for its over 5% yield. As fears of increasing rates continued to mount, I sold out of the position. My reason was I could swap out of that position and expand my positions into other existing positions, such as the Eaton Vance Buy-Write Opportunities Fund (ETV), which has an approx. 8% yield and is arguably less volatility than the S&P 500. So I felt the swap of the two was a better position to be in since I am not particularly of the opinion that the MIP has to have bond exposure to be successful, at least not high yield exposure at this time.

I also used the opportunities to expand the portfolio into some beaten down areas as well. As an example I started positions into the International Select Dividend ETF (IDV), the International Developed Real Estate ETF (IFGL), and lastly the Chinese Real Estate ETF (TAO). Main attraction here was to diversify away from U.S. real estate and increase exposure to international dividend payers. At their beaten down price, I believe I can start building a position at attractive pricing.

The majority of the proceeds from the sale of JNK were allocated to ETV throughout the past couple of months, so the new positions are relatively small at this time. As the MIP continues to generate cash, I will continue increase my holdings where the most opportunity is within the portfolio. The concern I do still have at this time however is that the main underperforming position in the MIP is the energy MLP exposure, which is still down about 1% this year within the portfolio. Very concious to try and not throw good money after bad, however I still view my position here very favorable, especially with the lack of infrastructure needed to transport all of the shale crude that is getting produced. I hold MLPA in this space.

Prime Day – Prime Membership $3 bounty


Ray Dalio on Gold; Gold Income Options (GLD) or (GLDI)?

Try Audible and Get Two Free Audiobooks
I’m a huge fan of Ray Dalio and his philosphy. I loved his book (see below) and am eagerly awaiting his second one. I gobble up every video I can find from him explaining his views of the market, on work, and on life.

This video shows Ray talking about his views on gold and that there is always a place for gold in a portfolio as a diversifier. I don’t like gold one bit because I just don’t understand how it has any value to an investor, and I think the typical gold theory that it is a hedge against uncertainty is a bunch of hogwash. HOWEVER, I am not a market expert and thus am trying to figure out if there is a gold income vehicle that would be an important piece of the MIP Portfolio.

The mission of this portfolio is to generate the most income, maintain capital, and have the lowest risk through low correlations possible. With the high level of income being reinvested into the most opportunistic areas at the time, compounded returns are to surpass the market over time. This is what I want to develop here with this blog.

So the question here is can gold play a part. SPDRS Gold ETF (GLD) is the most popular gold ETF, but it doesn’t pay an income. I could hold it and sell covered calls on it, however I would prefer to find a fund that has the scale and expertise to optimize the strategy. So I’ve stumbled across the Credite Suisse X-Link Gold ETN (GLDI) which sells covered calls, however I can’t tell how well it actually correlates to gold price movements over time. So I don’t know if this is a plausible vehile either. If you look at a chart of this… it is ugly. Since inception it has decreased over 50%.

Does any one know of a closed-end fund (CEF) that may be an income producing vehicle on gold? Or should gold just be forgotten completely.

Comment below!

 Try Audible and Get Two Free Audiobooks