Saturday, September 16, 2023

Portfolio Pivoting

We had made a major pivoting decision with regards to our Bedokian Portfolio. It was not an overnight decision and sudden course of action. The transformation had taken place for the past six to nine months.

Okay, so what is the pivot all about?


For our Bedokian Portfolio built with our disposable income, we had followed the balanced allocation since its inception, which was 35% equities, 35% REITs, 20% bonds, 5% commodities and 5% cash.


Then what is our new allocation?


That would (currently) be 40% equities, 35% REITs, 15% bonds, 5% commodities and 5% cash. Basically, we had reduced the bond component by 5% and added it to the equities part.


I could call this “balanced-plus” Bedokian Portfolio, or “aggressive-minus” (for information, the aggressive Bedokian Portfolio make-up is 40% equities, 40% REITs, 10% bonds, 5% commodities and 5% cash)1, because it sits right in between balanced and aggressive.


Okay, it is just a shift of 5% from bonds to equities.


But that is not all. To “complicate” things a bit (and not advisable for passive investors), the combined equities-REITs would stand at 75%, with either component not going above 60% of the 75%, or below 40% of the 75%. In other words, we are “free-floating” the two asset classes between 60/40 and 40/60.


The next thing popping up in your mind would probably be “why the pivot?”.


After a few lengthy discussions with my other half, we had settled (somewhat) at an age where we would “step-down”. Contrary to “retire early”, step-down would be when we intend to leave the rat race and settle for a job with lesser responsibility (and lesser pay) and/or a more freelance role (and lesser pay). Several major factors contributed to the age number, and that includes our children’s age of entry to the workforce, the maturing amounts of our savings plans, the CPF amounts that we (might) take out to augment the Bedokian Portfolio, etc.


With our current runway, we decided to accelerate things a bit by going slightly aggressive not just on our Bedokian Portfolio, but on our investments via CPF and SRS, too. The key word is “slightly”; we are not going full retard into 100% equities. Diversification is still key in our overall approach.



1 – The Bedokian Portfolio (2nd Ed) p75


  1. in order to maintain your 35% REIT allocation, this means that you have to continue buying REITs that have fallen in price. I actually think that investment grade corporate bonds, with yields in excess of 5%, are actually beginning to look pretty good compared to REITs, so I am going the other direction and adding to corporate bonds via ETFs like LQDE.

    1. Hello World,

      Regarding the buying into REITs, that is correct as its portion would be seen shrinking in the overall portfolio pie. It is important that we need to be discerning in the selection of REITs (as I had identified in my previous post) or go the ETF way.

      IG corporate bonds are good and I have an ETF for it (Nikko AM IG Bond ETF). They typically pay slightly above prevalent interest rates but with the current risk-free rate at a high, they are now at a discount. It is good that you are going into it as when interest rates go down and get normalised, they would likely go back to being premium and the yield to cost would be higher.