Portfolio Weighting Update

As I mentioned last week, for this week's post I will provide a timely update on my current portfolio diversification strategy, which I have broadened out more since last month.  Overall performance was good and showed growth over last month, which is good since some components went up and some went down but overall everything moving in the right direction.

Here's the breakdown as of May 9:

Cash - 2.1%US Large Cap - 12.0%US Mid Cap - 2.8%US Small Cap - 2.8%International (split half in emerging markets and half developed) - 5.8%Commodities - 6.1%Bonds (TIPS and actively managed bond funds about half and half) - 13.7%Real Estate - 22.6%Private Equity - 10.1%Crypto (principally Bitcoin) - 12.5%Alternatives (principally gold and silver) - 9.2%Commentary on changes since last month:
As I mentioned in last week's post, I shifted some money out of equities back into bonds after considering the potential for a deflationary situation in the medium to longer term, extended stock market valuations (particularly in the US) and also to add more diversity.  One of the active bond managers has some short positions on currently, so they are making money in the current environment and aren't solely long bonds which is very helpful.  Also, the Vanguard Short Term Treasury Inflation Protected Securities Fund (VTIP) is a good way to get some passive TIPS exposure and yield without a lot of volatility, while protecting against inflation and is far superior to buying four week TBills that currently yield zero.
I shifted some of my positioning in Bitcoin (GBTC) to TIPS (VTIP), gold (GDX), silver (PSLV), Etherium (ETHE) and a small amount to a diversified mix of large cap cryptos (GDLC) based on trying to achieve more diversification and also the value proposition.  I believe gold and silver are undervalued at current levels given everything else happening in other asset classes in response to the macro environment.  Gold miners are highly levered to increases in gold prices which is why I chose GDX plus it pays a dividend and from my research I think the best physical silver fund to own is PSLV.  As it turned out, both gold and silver performed well and broke out of some key levels last week and look to continue that trend.  Also, Etherium has outperformed Bitcoin lately but I think both are good long term holds based on macro environment and adoption trends.  Investing in the Grayscale funds makes it much easier to diversify your portfolio across different asset classes in a brokerage account and I don't have to worry about the safety of the coins.  Until ETF's are approved in the US (SEC will revisit again in June), they are the only show in town.
I also diversified my international positions between emerging markets and developed markets.  Even though emerging markets may outperform in the future, I felt the diversification was a good idea and indeed as the pandemic subsides the developed markets should see good recovery similar to what we are now seeing in the US.  
I kept my real estate position the same, since it has performed well and looks to continue to do so for the foreseeable future due to the favorable macro environment, providing both current income and capital appreciation.
I added a couple of new private equity positions on Seed Invest and Republic, but I typically limit those to $1,000 to limit risk.  I'm particularly interested in DeFi projects and also Artificial Intelligence applications, which I think will be very impactful disruptive technologies.
As far as overall performance since last month, equities (in particular real estate) and commodities performed well, while crypto lagged.  I expect in the long run that crypto will continue to outperform most other asset classes which is why I have devoted a 12.5% portfolio allocation to it, which for me is pretty comfortable.  Some institutions like Morgan Stanley are limiting Bitcoin exposure to only their wealthiest clients and even then are further limiting exposure to 2.5% of their net worth, which I feel is overly conservative.  Fortunately, as I have discussed in a prior post, there are many ways for anyone to get exposure to Bitcoin and other cryptocurrencies, regardless of your net worth.  Staying diversified helps ensure you get the benefit of upside without getting crushed if one particular part of your portfolio performs poorly and in the world of extreme volatility we live in, that's always a possibility! 
I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2021.  To see all my books on investing and leadership, click here.  

Stay safe, healthy and positive.