UDC Q1 Performance Meets Objectives....Again

The Utility Dividend Capture (UDC) portfolio (description here) strives to generate an absolute return in excess of 2% per quarter in quarters when the market is up and not lose money in down markets.  The fund accomplishes this objective by swing trading between utility stocks capturing multiple dividends per quarter.

The UDC portfolio returned 3.56% in the first quarter of 2012.   These results represent the 10th of 11 quarters where the fund has achieved its objective.   As planned, the fund once again generated significant dividend income (4.6%) while losing a small amount in capital gains (-.9%).  11 of the 14 trades made this quarter were winners (79%).  This is consistent with the longer term win percentage of 76%.  Volatility remains low.

Performance results for the last 11 quarters are shown in the tables below.

Of course the S&P 500,  had much better gains than the UDC portfolio in q1.  However, as stated above the objective of this fund is not to track the undulations of the S&P500, but instead yield more consistent absolute returns.   A more representative benchmark for this fund is the utility industry as best represented by the SPDR Utilities Select Sector (XLU).  This etf lost 1.7% in q1.  Hence UDC significantly over performed this fund.

Looking ahead, it will be interesting to see how this portfolio performs.  The dividend yields on the target stocks have been declining and it is getting a little harder to find  candidates. Further, there would seem to be some real risk that utility stocks can not to be challenged if/when interest rates begin to rise.  So it is possible we will might better test 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%	11.20%
2012 q1	4.46%	-0.91%	3.56%	-1.70%	12.00%
Compound Return			41.40%	39.60%	56.60%
Standard Dev			4.0	4.9	9.0
TRADE STATS	Trades	Wins	Loses	Win %
2012 q1	14	11	3	78.6%
Total	194	147	47	76.0%
Correlations between these three funds are shown below.
udc/xlu	0.72
udc/spy	0.70
xlu/spy	0.35