MPC ETF Elite – Holdings Change Feb 2025

The ETF Elite Portfolio investment committee meeting involved a detailed discussion on portfolio performance, strategic adjustments, and potential reallocations. Here are the key points and insights from the discussion:

Portfolio Performance and Strategy

• The ETF Elite Portfolio has performed well, with a return of 1.86% since inception after fees, aligning with its goal of outperforming the ASX 200 benchmark by a couple of percentage points annually.
• The portfolio is structured into core holdings (designed to track the ASX 200 index) and active allocations (focused on high-conviction thematic plays). Currently, it leans more toward active holdings due to market conditions perceived as “peaky.”
• The committee emphasized maintaining transparency, liquidity, and simplicity in the portfolio while balancing risk and return.

Market Observations

• The metals sector, particularly gold, was noted for strong performance, with gold nearing $3,000 per ounce. The committee is confident in maintaining current allocations but may consider adjustments if gold surpasses key levels.
• Concerns were raised about geopolitical risks, including tariffs and energy policies under the Trump administration, which could impact certain holdings.
• Bitcoin’s price action was discussed briefly; no immediate changes were proposed, but the committee is open to opportunistic additions if prices dip further.

Broader Insights

• The portfolio’s beta is currently at 0.91, within the target range of 0.8–1.2. This reflects its design to closely track the index while allowing room for active thematic plays.
• The committee stressed the importance of avoiding unnecessary complexity and focusing on high-quality assets with predictable returns.
• A potential future idea involves exploring a US-based food ETF that includes agricultural machinery and packaged food companies as a hedge against tariff risks.

Decisions on Reallocation

Immediate Action

1. Fixed Income Adjustments:
   
   • Sell 5% of USHY (USD High Yield Bond ETF), citing its unpredictable quarterly distributions and currency complexities.
   • Reallocate:
     
     • 2% to GEAR, a leveraged ASX 200 ETF, to optimize capital efficiency and enhance returns.
     • 3% to BHYB, an Australian Hybrid Securities ETF, offering more predictable monthly yields around 7.2%.
2. Equity Simplification:
   
   • Sell 5% of MOAT (VanEck Morningstar Wide Moat ETF), which has underperformed relative to expectations.
   • Consolidate this allocation into QUAL (iShares MSCI Quality Factor ETF), which has demonstrated consistent performance and fits better as a core holding.

Potential Future Action

1. Uranium Exposure:
   
   • The committee debated reducing exposure to URNM (Sprott Uranium Miners ETF), currently at 4.5%, due to underwhelming market performance despite positive fundamentals for uranium demand.
   • They decided to monitor its technicals further before making a final decision but flagged it for potential trimming or exit.
2. Future Allocation Considerations:
   
   • Expressed interest in adding up to 3% in IIND, an Indian quality index ETF, citing India’s demographic advantages and economic resilience. The committee plans to wait for further technical confirmation before proceeding.