2023 First Quarter Portfolio Status

2023 First Quarter Portfolio Status

As of the 2023 first quarter, it is time to share the status of the portfolio. In 2022, I started the year poorly and ended it well. I grew the portfolio by 29.9% in dollar terms compared to the previous year and closed the year at about 83 thousand dollars. You can check this article for details. I hope to start and end this year on a good note ๐Ÿ™‚ The first quarter results are alright.

Portfolio size

As of the 2023 first quarter, my total portfolio increased by 8.6% in USD compared to the previous quarter and reached 90 thousand. You can see from the table below that it increased by 12.1% in Turkish Lira terms. However, in the same period, the Turkish Lira depreciated by only 3.2% against the US Dollar. The reason is apparent: the political will does not want an increase in the exchange rate until the elections. They can hold the exchange rate with capital control measures for now. I am still determining what will happen next, but Turkey’s foreign trade deficit has exploded due to inconsistent economic policies. Real interest rates need to rise, and economic growth (domestic demand and inflation) needs to slow down. Whether or not these policies will be implemented depends on the outcome of the elections a month from now. Let’s hope for the best.

Portfolio - April 10, 2023
Portfolio – April 10, 2023

Asset allocation

You can see the asset allocation of my financial independence portfolio in the chart below. There are significant changes compared to the 2022 year-end. First, I sold some more Eurobonds to reduce the pre-election credit risk. Also, one of them matured. As a result, the share of Eurobonds in my portfolio dropped to 19.7%. Secondly, I continued to buy in the long-term US Treasury bond ETF (IDTL). My average cost has dropped considerably. I am now at breakeven. As a result of these purchases, the weight of this asset in my portfolio reached 22.5%. The portfolio’s share of the S&P 500 increased from 26% at the end of 2022 to 27.9% today. Essentially, the weight increase in this asset class is due to the appreciation of stocks.

Portfolio asset allocation - April 10, 2023
Portfolio asset allocation – April 10, 2023

High-yield US corporate bonds

If you look carefully at the equity chart, you will see a new ETF. This ETF contains high-yield US corporate bonds (Xtrackers High Beta High Yield Bond ETF, HYUP). It has an annual cash yield of 7.1%. Coupon payments are made monthly. I bought it on a trial basis as an alternative to Eurobonds to increase cash flow. I may continue to buy it depending on the conditions.

Borsa Istanbul

Borsa Istanbul is no longer visible in the asset allocation chart. Because as I explained in the article titled “TUPRAS, at least for a while, Goodbye” dated March 8, I exited Borsa Istanbul before the elections. Of course, the most crucial factor is that I reached the target I set in dollar terms ๐Ÿ™‚ However, I did not want to take unnecessary risks in the most important election after the 1950 elections. If new opportunities arise after the elections, I will consider and evaluate them.

Cash flow

Now for the cash flow. As I parted ways with Borsa Istanbul for the time being, I could not earn dividends from Turkish companies this year. However, dividends and interest payments from my overseas assets compensated for a significant portion of this loss. As of the 2023 first quarter, I generated $188.6 in cash flow from my overseas investments and $764.89 from Eurobonds. My portfolio generated a cash flow of $953 in the first quarter of this year. Today’s exchange rate is 19.27 * 953 = 18.364 TL, slightly below the same period last year.

Cash flow - April 10, 2023
Cash flow – April 10, 2023

In conclusion

Compared to the previous period, I increased the size of the portfolio by 8.6% in dollar terms while the asset allocation changed radically. I no longer hold stocks of Turkish companies. The share of US long-term government bonds in the portfolio exceeded Eurobonds. I have shifted to high-yielding US corporate bonds to increase cash yield. I also still hold a large amount of cash. After the elections, I aim to maximize the opportunities that may arise in the S&P 500, bonds, or Borsa Istanbul. Of course, this choice has an opportunity cost. But Interactive Brokers is offering up to 4.3% interest on cash I still need to invest. Better than nothing.

Let’s call it a day. I hope to see you in the following article.

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