I’ve overstayed my welcome in the Vanguard Short-Term Treasury ETF (VGSH) and the VanEck Preferred Securities ex-Financials ETF (PFXF), but with the Federal Reserve accelerating its interest rate increases, I think selling these two members of my Dividend Portfolio is a bit more pressing right now. So I’ll be selling these two ETFs tomorrow, June 21.
The Vanguard Short-Term Treasury ETF is down 5.07% since I added it to the portfolio on March 3, 2020. The yield, now 2.53%, isn’t enough to offset the risk to capital presented by the Fed’s interest rate moves. The ETF is down 3.5% for 2022 to date as of June 17. And down 1.56% in the last three months.
The yield on the VanEck Preferred ETF is higher at 5.45% currently but that’s a result of the ETF’s loss of 17.09% for 2022 to date. The ETF is down 9.03% since I added it to this portfolio back on February 26, 2016. The ETF’s portfolio is heavily weighted toward utility stocks and while that means the fund stands a very small chance of seeing any of these companies miss a payment, it does mean the ETF is exposed to a sector that’s under pressure right now. The Utilities Select Sector SPDR ETF (XLU) is down 8.77% year to date but off 9.58% in the last month.
Selling these two positions does, of course, bring up one of the hot-button topics for investors who have or are looking to move to cash for safety in this Bear Market: Where do you park that cash so that you’re not being punished so severely by inflation?
I’m going to offer some suggestions in a special bonus to my current Special Report: “Your Best Investment Strategies for the Next 5 Years.” That “Where to park” bonus and the third part of my Special Report will go up tomorrow, Tuesday, June 21.