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Strategies & Market Trends : Value Investing

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To: Sergio H who wrote (47852)

5/8/2012 7:49:39 PM

From: E_K_S

Read Replies (1) of 78704

RE: The EKS Tactical Asset Allocation

The value investor in me says I should build up the Real Estate component. Therefore, according to David Swensen Tactical Allocation Model, I should sell 50% more of my SPX 500 Fund and move the proceeds into VNQ (Vanguard REIT ETF)

After today's Sales & Buys my IRA Vanguard Fund allocations look as follows:
58% Vanguard 500 Index Fund VFIAX (VTI has performed 2% better than VFIAX),
32.5% Vanguard Inflation-Protected Securities Fund (VIPSX),
3% Vanguard GNMA Fund (VFIIX),
6.5% Vanguard International Growth Fund and International Growth

From the referenced link, this is what the David Swensen Six ETF Asset Individual Investor Plan Tactical Asset Allocation Moderate allocations are:

AssetFund in this portfolio Original Fund Description Percentage

FIXED INCOME	TIP (iShares Barclays TIPS Bond)	iShares Barclays TIPS Bond	22.79%
FIXED INCOME	TLT (iShares Barclays 20+ Year Treas Bond)	iShares Barclays 20+ Year Treas Bond	17.08%
US EQUITY	VTI (Vanguard Total Stock Market ETF)	Vanguard Total Stock Market ETF	27.84%
REAL ESTATE	VNQ (Vanguard REIT ETF)	Vanguard REIT Index ETF	32.30%

In the same account I hold SeaCube Container Leasing Ltd. (BOX) which I bought as an undervalued EK$ stock at $11.00/share earlier this year. BOX is still undervalued w/ an EK$ value of $21 but it might be a good time to just sell these shares and put the proceeds into the Vanguard REIT VNQ Fund. The Real Estate component of this allocation should still be undervalued when compared to the other asset classes. The other Bond classes (other than Tips) are probably over valued so no big hurry to put new monies there.

Of the three positions (VNQ, VFIAX & BOX), VNQ is the lagger selling at a 20% discount to the other two Funds/equity.

I will call this my EKS Tactical Asset Allocation. I am able to tweak the account with individual equity buys. So I will put Hercules Technology Growth Capital, Inc. (HTGC) on my equity watch list. FWIW, 25% of this account are equities that include: BOX, AMNF and PBA (the merged Provident Energy Pipeline Company)
goo.gl

HTGC might be a good replacement for BOX as they have similar distributions but I am skeptical of the ongoing management fee HTGC may charge. I will have to review their most recent prospetus before I make any move.

EKS

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