Portfolio Update – 1 Sell, 1 Buy, 2 Increases

SVOL: Sell (2.4% Allocation)

On today’s rally I sold my SVOL for a slight capital loss of -0.79% (14.52% yield). This is a unique ETF that does well when market volatility is low and performs poorly when market volatility is high. Historically the market moves sideways 60% of the time, up 20% and down 20% of the time, which would favor an ETF based on volatility.

However, I can see 3 potential reasons that this ETF will experience future NAV erosion (price declines more than the dividend distributions):

1.) The price channel has been going lower for the past 6 months, not a good sign.

2.) SVOL holds mostly T-Bills as its underlying asset. T-Bill yields decline when interest rates move lower, this forces SVOL’s payout distributions lower which; in-turn, lowers the value/price of the ETF.

3.) I feel the new presidential administration (with all of the changes it’s making) is more likely than not to increase market volatility, at lease for the next 6 months maybe longer.

With the proceeds of the SVOL sale I bought the following:

JBBB: Buy (1.29% Allocation)

For increased diversification and lower portfolio risk I opened a position in the Janus Henderson B-BBB CLO ETF (7.63% yield).

QDTE: Increased Allocation from 2.01% to 2.53%

Bought more of this high yield weekly paying Nasdaq 100 covered call ETF to help replace the lost SVOL income (26.15% yield).

IYRI: Increased Allocation from 0.51% to 1.02%

Increased my position in the new ‘NEOS Real Estate High Yield Income ETF’. The first monthly distribution was announced today at $0.5005 for a current annual yield of 11.62%, which is a nice surprise! I had estimated the yield would be in the 9% to 11% range.

Filed in: Dividend Geek Portfolio