UDC Portfolio Q4 Results

The Utility Dividend Capture portfolio  (description here) made 5.7% in the fourth quarter, and 12.2% for the year.     The fund once again, as planned,  generated significant dividend income (4.8%).  The portfolio was also able to piggyback on the rising tide of utility stocks in the stock market to post a small capital gain (.9%).

Of course the S&P 500, and more specifically the utility sector ETF (XLU) had much better gains than the portfolio.  That is not surprising as this portfolio's objective is more oriented towards an absolute return and better weathering downdrafts.  This is illustrated by the continually falling volatility of this portfolio.  Over the 10 quarters of existence its SD is now less than half the S&P 500 and 20% less volatile than even the much more docile utility ETF.  Performance results for the past 10 quarters are shown below.

Looking ahead, it will be interesting to see how this fund performs.  The rise in prices of utility stocks has understandable been driving the dividend yields on these stocks down.  Hence it is getting a little harder to find perfect candidates. Further there would seem to be some real risk that utility stocks can not continue to ride.  So it is possible we will be able to see how well this portfolio meets its objectives in a down market

RETURNS	UDC DIV.	UDC CG	UDC TOTAL	XLU	S&P500 (DSPIX)
2009 q3	7.73%	-2.86%	4.87%	6.26%	11.43%
2009 q4	8.22%	-4.29%	3.93%	7.02%	6.02%
2010 q1	8.10%	-5.93%	2.17%	-4.38%	5.36%
2010 q2	7.98%	-7.89%	0.09%	-3.68%	-11.39%
2010 q3	5.53%	1.08%	6.61%	12.16%	11.24%
2010 q4	5.62%	-3.25%	2.37%	1.05%	14.80%
2011 q1	5.95%	-3.34%	2.61%	2.69%	5.90%
2011 q2	5.96%	-0.39%	5.57%	6.10%	-2.10%
2011 q3	6.85%	-8.89%	-2.04%	1.44%	-13.89%
2011 q4	4.78%	+0.96%	5.74%	8.17%	11.2%
Compound Return			36.5%	42.0%	39.9%
Standard Dev			4.2	5.0	9.1

Correlations between these three funds are shown below.

• udc/xlu .77
• udc/spy .71
• xlu/spy .46

TRADE STATS	Trades	Wins	Loses	Win %
2011 q4	15	14	1	93.00%
Total	180	136	44	76.00%