Vrijheid Fonds sector allocation

Building a portfolio is not hard. Making the right decision is!
What to buy, and when you have done your research the question is: When to buy. If you wait to long you can miss out, or if you too eager you may pay a high price. (See also my blog post Lesson Learned).
For a DGI the main goal is to build a portfolio that will generate sufficient passive income every year. To achieve this goal, it is very risky to put all your money on just a few companies.

For instance if you have a portfolio with only 5 companies, 1 company means a 20% exposure. If that particular stock tanked with say, 50%, you’re losing approximately 10% of the value of your portfolio! Would you be comfortable with these numbers? Will you sleep well at night know this?
I can tell you: I don’t!!!

Therefore I’m diversifying my portfolio. With how many stocks you ask?
I don’t know yet. But it will certainly be more than 20%. At this moment I’m partial owner of 14 companies. And I have money invested in 3 mutual funds. So I’m well on my way, but certainly not there yet! There is still room to grow 😉

Another question to answer, when building a portfolio, is: which stock to buy?
A good diversified portfolio is exposed to a wide variety of stock sectors. So if one sector is not doing so well, it will not affect your portfolio too much.

Do you need to cover all possible sectors?
No, I think it will be very hard to cover every base. Simply because of the fact that not all sectors have companies which we, as DGI’s, find buyable. So not a problem if you don’t have all sectors covered. As DGI’s we want stocks with strong balance sheets, cash flow, Dividend history, etc.

Lets take a look at my Vrijheid Fonds.
For the classification of the stocks in my Vrijheid Fonds, I’m using the sectors as mentioned in de Dave Fish ‘ US Dividend Champions’ spreadsheet.

Below you will find my asset allocation for my dividend stocks. As you can see, I like the consumer staples, consumer discretionary and Energy sectors. My last addition was in the energy sector (see here). At this moment I have not invested in the Utilities sector. I’m looking to increase my exposure in this sector. With some high yields in this sector it can be interesting (but first I have to do my homework 😉 )

Consumer Discretionary 21,02%
Consumer Staples 20,76%
Energy 16,56%
Financials 8,15%
Health Care 5,26%
Industrials 2,41%
Information Tech
Materials 2,11%
Telecommunications 3,35%
cash 0,08%

At this moment I’m almost fully invested, as you can see. And do not have much cash available in my Vrijheid Fonds. This because I bought some stocks at the beginning of this month. Normally at the end of each month I add some of my savings. And when I have enough for a new buy (approx. $ 1,600), I consult my watch list. And when all signs are green….

Here you have it: my sector allocation. Do you know how your sector allocation is? What is your largest sector holding? Please let me know.



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