The FinanceFanatics Portfolio Update- June 2017

Re-balancing the portfolio

So here we are in June, and mid-way through 2017 already! Where has the time gone this year? It doesn’t seem like 5 minutes ago that we were all talking about the vote for Brexit, and now we’re about to start negotiations with the EU. It seems like nothing ever sits still in this world, and that also goes for the FF portfolio this month.

There have been a few changes to the portfolio in June which have in the main concentrated on re-balancing it. Previously, each asset was given an equal weighting, with the same amount of funds being allocated to both volatile and non-volatile holdings. Now however, the entire portfolio has been revamped with each holding now being given a fixed percentage based on the level of risk that it holds, with the idea being that the portfolio will be adjusted once or twice a year to ensure that each asset is re-balanced back to its original percentage value. Hopefully by decreasing the weighting of riskier assets, and increasing the weighting of safer assets, the total holdings will be somewhat insulated from major market crashes.

Re-balancing is extremely important because it forces you to take some profits from your winning holdings and re-allocate them into any holdings which aren’t doing so well, and have therefore become cheap in comparison. The bonus of this strategy is that you’re forced to buy new stock at a bargain price, when your brain is trying to tell you to steer clear from the losses of the weaker parts of your portfolio. You can then reap the benefits when these stocks (hopefully) increase in value some time in the future.

Major market corrections this week

So we can see in the portfolio breakdown below that this is still a work in progress, with 3 or 4 holdings sitting well below where their percentage values should be. The intention here is to make regular monthly payments into only these assets for the time being, rather than selling more stocks to top them up. Once the entire portfolio is sitting with the correct allocations it can then be topped and tailed every six months or so to bring each holding back within its correct weighting.

There have been great gains with growth stocks so far this year but I predict this won’t last too much longer. Scottish Mortgage (SMT) and Finsbury Growth and Income (FGT) have done very well, but this week we’re already seeing massive sell-offs from tech companies in the US on the basis that investors are worried that this period of exceptional growth can’t continue. Whether a major market adjustment is around the corner is yet to be seen, but the aforementioned portfolio re-balancing strategy should help to take profits while they exist and spread them around the rest of the holdings.


Personal finance blogger who's fanatical about financial freedom, investing and making money in the UK

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