The Income Factory
…an income portfolio with built in capital protection!
While there are good sound stocks and ETFs providing attractive dividends, there is the ever present concern at the moment that a Stockmarket correction will cause a capital loss which will reverse out any dividend yield…and then some.
So the answer is to have an income portfolio that is actively hedged, to control its exposure to a correction. It also means – and this is important – that when a correction is over, you will have free capital (being the profit from the inverse ETFs) to spend on the now cheaper income stocks with much higher yields.
This portfolio has an actively managed hedge that is increased or decreased based on index crossover charts. If the crossover charts are crossed up then the hedge is inactive and you will receive any capital growth plus the full yield.
However, as the crossover charts start to cross down, the portfolio is reduced and the hedge is gradually applied. Below is a typical crossover chart used to manage the hedge…
When the crossover charts cross back up, the portfolio is reset and all surplus capital (which comes from the sale of the inverse ETFs) is used to buy more income stocks. You will suffer a capital loss but it will be greatly reduced, which can be the difference between waiting 1 year to recover your losses instead of waiting up to 4 years!
The portfolio itself is made up of at least 17 positions, each bought using 5% of total capital. Every week we update it in the Blue Chip Report, in a table like the following sample …
Every stock & ETF is monitored for good fundamentals, liquidity and it’s yield. Then periodically the entire portfolio’s yield is optimized. After all, this is the objective of owning an income portfolio and the Income Factory’s annual yield is typically 5% plus.
Please download the full explanation PDF below to see how the portfolio’s stocks are selected and optimised. This PDF also includes the guidelines for managing the hedge and detailed mathematical modelling. You can also use the link below to contact Alan with any questions….
The Income Factory is included in the Blue Chip Report
Click on the links below to download the explanation document, visit the Blue Chip Report information page and download the Blue Chip Report subscription form.
- Full explanation, including all the nuts and bolts
- All about the Blue Chip Report
- Blue Chip Report subscription form