When “Doing nothing” is the best course of action

Outside the core portfolio, the Growth Portfolio makes two types of investments. First, it makes a couple of concentrated investments in particular sectors. As of the April 30 strategy update, the current overweights toward financial stocks and tech sector investments still looks to be on track. The momentum measure we use points to those sectors as being two of the strongest, so we can leave those overweights in place.

Outside the core, the Growth portfolio also makes some diversification bets. Two of these investments change, but not often. The current overweight toward dividend oriented emerging market equities and floating rate senior bank debt aren’t due to be reviewed for another month or so. Those fund holdings will remain.

The final two diversification bets are in Master Limited Partnership (MLP) investments and in large cap (really big company) international companies operating primarily in developed markets. Both of these investments are keepers. The international space continues to perform well, in spite of political headline risk in Europe. The MLP investments are having more difficulty. Most of these companies are involved in the energy infrastructure, like pipelines, that have slightly different economics that the overall energy sector. Whereas declining energy prices hurt the oil exploration companies, sometimes lower prices assure lots of energy demand, and therefore large volumes being piped to the end market, which helps the MLP companies versus the drillers and service companies. In addition, there is beginning to be talk about how master limited partnerships might be big winners in President Trump’s new tax regime. There are a lot of details to be determined, but it seems like a reasonably good time to keep those MLP investments, earn their above-market dividend yields, and see what happens.

So, there are no trades to worry about this month. Sit back and do nothing. I don’t know about you, but it’s what I do best.