More Risk Reduction – 2 Reductions, 5 Increases

One of my primary portfolio goals for 2025 is to reduce risk. Today I made some major portfolio changes to further reduce the risk of capital loss from long-term price declines sometimes called ‘NAV erosion.’ For income portfolios this occurs when dividend distributions (yield) outpaces total return resulting in a capital loss; or in other words, the price of the fund is lower than your purchase price.

For some time I have been wanting to lower the portfolio weight of two higher NAV erosion risk technology holdings, FEPI (26.52% yield) and AIPI (34.72% yield) down to a 2% weight my general rule for higher risk investments. Then spread the proceeds from these reductions into several lower risk holdings in my target 12% to 8% yield range.

Here are the changes I made today:

FEPI: Reduced Allocation from 5.01% to 2.01%

To lower risk in this FANG high tech covered call income ETF (26.52% yield)

AIPI: Reduced Allocation from 4.70% to 2.35%

To lower risk in this AI focused high tech covered call income ETF (34.72% yield)

IWMI: Increased Allocation from 3.94% to 5.10%

Diversify more into this Russell 2000 small cap covered call income ETF (14.71% yield)

JBBB: Increased Allocation from 1.30% to 2.02%

Diversify more into this low risk CLO ETF (7.63% yield)

IYRI: Increased Allocation from 1.00% to 2.01%

Diversify more into this new NEOS Real Estate high yield covered call income ETF (11.80% yield)

HYBI: Increased Allocation from 1.60% to 2.02%

Diversify more into this NEOS High Yield Bond covered call ETF (8.84% yield)

GPIQ: Increased Allocation from 1.32% to 1.99%

Diversify more into this Nasdaq 100 covered call ETF (9.77% yield)

Today’s changes lowered the portfolio weighted average yield from 15.33% to 14.28%.

Filed in: Uncategorized