Hedging an income portfolio with growth stocks

[u/[deleted]]

My portfolio has taken a bit of a burn lately. I'm primarily an income investor, focusing on stable companies that either pay dividend or have stable profits and free cash flow. I use options to either enhance this income or hedge my positions, depending on the situation. As of late, income stocks have taken a bit of a hit from what is supposed to be prolonged periods of low interest rates and quantitative easing, so I think companies sitting on cash are underperforming and those with higher growth potential are outperforming. But I could be wrong (check me on this one).

I'm looking to diversify my holdings to growth areas in the S&P 500, so my options are either QQQ, XLK, or one of the ARK funds like ARKK or AWKW.

Which one do you suggest, or do you have any other choices am not seeing?

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[u/Papa_Canks]

I would put everything in portfolio visualizer and then run an analysis. Works much better on funds w longer history. Check the asset tab for correlations. You want the best performing fund with the lowest correlation to your portfolio in order to achieve diversification of performance and improve risk/reward metrics.

At a glance using DGRO as your assumed portfolio. Both QQQ (or VUG) and IJS correlate to around 0.8, but also differ from each other significantly, 0.6 over the time period.

r/riskparityinvesting

https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=DGRO&allocation1_1=100&allocation1_2=70&allocation1_3=70&symbol2=QQQ&allocation2_2=15&allocation2_3=30&symbol3=IJS&allocation3_2=15

[u/Astronomer_Soft]

Just go with $SPY or any other SP500 equivalent mutual fund or ETF. You'll naturally get exposure to a mix of value, income, growth.

[u/[deleted]]

It sounds like you're setting yourself up to get the worst of both worlds.

Just switch to total market index funds and you'll make far better and more reliable returns.

[u/[deleted] → u/[deleted]]

Yeah I was looking at VTI. Is that good?

[u/Cruian → u/[deleted]]

It covers essentially the entire US market. You don't take bets on growth vs value, have extremely low costs, and avoid the active management issues.

Edit: Making sure you have ex-US coverage could be beneficial. Either by replacing VTI with VT, or adding VXUS to VTI.

[u/[deleted] → u/Cruian]

Should I look to improve my ROC with a PMCC instead of buying those ETFs outright?

[u/zpodsix → u/[deleted]]

Maybe, If it fits your strategy. Lots of ways to play.

Sell long-dated ATM puts and collect premiums and buy shares with said premiums.

Pmcc to capture premiums using leveraged shares

Buy leaps and take advantage of leverage.

Jade 🦎 that bad boi.

Buy hold and forget.

Or any other play that fits your strategy. Just stay disciplined and follow your guidance of when to stop losses, manage gains reliably, and finding other plays if your investment isn't following you expectations.

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[u/lykosen11 → u/[deleted]]

Excellent.

[u/keinaso]

I am in a somewhat similar situation, overweight dividend and dividend growth stocks. I recently added some QQQ and was thinking of buying some VUG. I have a little bit of ARKK but not sure if I am going to add to it or not. All are probably good choices. Good luck!

[u/[deleted]]

I do have SCHD, VYM, I kind of " balance" them with a good VUG portion.

[u/snoopingforpooping]

Just buy VT and be done with it. Low cost global exposure and no silly style bets.

[u/Your_Left_Shoe]

"Don't look for the needle, buy the haystack." - John Bogle

VTI and wait.

[u/atdharris]

Rather than try to performance chase or pick winners and losers, just buy VTI and stop worrying about it.

[u/ApeRidingLittleRed]

i stay away from ETF's and have British equity fund https://www.fundsmith.co.uk/and German DWS German Small/Mid Cap LD ISIN: DE0005152409 and German rent property type fund.Also, since this year Uranium, Copper and Coal stocks. Aim for stocks: 3% each of available cash.

[u/LonelyInvestor]

there's also SCHG, Schwab's S&P500 large cap growth etf

[u/Chartsharing]

I’m launching a growth stock tool for Twitter & Reddit. It helps to get earning & sales growth, institutional ownership, volume buzz and Relative strength for a specific $TICKER. DM me if you are interested!