Dragon Claws By reading the title of this article, I bet that for the majority of the audience, the first immediate thing that comes into their minds is either the concentration or low growth risks, which come along with having 50% of the exposure tilted towards equity REITs. The truth is that I fully agree that these risks are present and most probably by allocating into more growth biased stocks and diversifying more into the other equity segments, the overall risk-adjusted return profile for the portfolio would increase. Having said that, I really do not care about having the portfolio optimized according to the modern portfolio theory, where the objective is to diversify away any idiosyncratic risk.
Also, allocating heavy amounts of capital into high-growth names does not fit my underlying investment strategy at all. The investment strategy, which I am applying, is (in broad terms) the following: Invest in high-quality and defensive businesses, which offer abnormal dividend yields. Do not forget about the dividend growth component, but the primary objective is to make sure that the distribution level that is at the point of entry does not shrink.
Reinvest the dividends into portfolio stocks, especially focusing on those that are temporarily depressed, to maximize the dividend income compounding effect. Avoid excessive single security concentration risk. As you can see, the notion of enjoying returns in the form of price appreciation is irrelevant in my situation, where th.
