Personal Finance: A Core, All-In-One Investment Service

The best way to stay invested while keeping peace of mind is to make quality and total returns your primary focus.  The shares of good dividend-paying companies provide a double benefit: (1) income that gives you a head start on total return and (2) less volatility than the broad market.

— Philip Springer, Personal Finance

Personal Finance is KCI Investing’s flagship investment service. It won Best Financial Advisory Newsletter awards in 1991, 1992, 1994-1996, 1999, 2000-2001, and 2007. And according to Hulbert’s Financial Digest – the undisputed authoritative source in evaluating newsletter performance – its investment portfolios have outperformed the overall stock market over each of the past 3, 5, and 10-year periods.

Everything You Need in One Newsletter

Too often today, when I read investment newsletters, I find niche products that focus only on a single, narrow investment style. Sure, such specialized niches are great for advanced investors looking to add extra spark to their investment returns, but for the average investor, who is seeking financial advice on how to construct a core, well-diversified portfolio, it can be frustrating.  It seems as though one is required to purchase several different newsletters just to get the general investment advice needed. 

No so with Personal Finance.  It provides everything the average investor needs under one roof.  I am amazed at the amount and scope of investment information provided. A subscriber gets access to three portfolios that cover the spectrum of basic investing styles:

(1) Growth stocks (a third of which are foreign companies);

(2) Income securities, including common stocks, REITs, preferred stocks, bonds, and cash, with a recommended percentage allocation to each type; and

(3) Mutual funds and ETFs, including stock funds, bond funds, and “special situation” funds.

In Part 1 of my series on Asset Allocation, I explain how wealth generation requires diversified investing that avoids “the big loss.” With three portfolios to pick and choose from, any investor can construct a well-balanced portfolio of growth stocks and income securities that include real estate and international exposure. Personal Finance is not for traders, but is meant for long-term investors. As I wrote in The Growth vs. Value Debate, growth stocks make the best buy-and-hold investments and dividend-paying income stocks are the best defense against bear markets. Put them together, and you’ve got a powerful portfolio. Furthermore, the U.S. represents less than half of the world’s equity capital, so it is important to invest throughout the world, and Personal Finance does just that.

Three Advisors for the Price of One

The breadth of investment recommendations is just one of Personal Finance’s benefits.  I also like the fact that it is a team effort, with each portfolio managed by a different KCI investment expert. Philip Springer manages the growth portfolio, David Dittman manages the income portfolio, and Ben Shepherd manages the fund portfolio.  Three heads are better than one. As the newsletter’s editors once wrote:

We believe PF, unlike most other advisory services, should be more than one person’s view. No one can rely on a single voice.

Updates Galore

The editors provide updates on their portfolio recommendations on a regular basis in their “The Growth Track,” “The Income Report,” and “Fund Focus” articles. 

Extra Features You Won’t Find Anywhere Else

Philip Springer also writes a “Marketwatch” column in each issue which provides his very latest opinion on the direction of the market during the next few weeks and months. The “On the Money” segment adds another layer of value to the newsletter with its discussion of retirement planning, tax strategies, money management, investment-related resources and book reviews, just to name a few.

In addition, there are at least three good reasons not to rely only on print versions of the newsletter, but to access on a regular basis PF Online, the newsletter’s webpage at First, PF Daily provides real-time daily updates on stocks in the PF portfolios, info that perhaps can’t wait until you receive the print issue in the mail. Second, the website offers video commentary from Philip Springer. Isn’t it much more pleasant to see and listen to your advisor rather than just read his copy? 

Top-Down Investing

But the thing I like most about Personal Finance is its top-down analytical approach.  The quotation with which I start off this article is a good example of the newsletter’s mindset. In How to Pick Industry Sectors, I noted that three out of every four stocks follows the trend of their respective index. In other words, no matter how good one is at isolating great businesses with improving fundamentals, if its industry group is out of favor, the stock will most likely go down anyway.

All too often, when reading other investment newsletters, it’s clear to me that the stock recommendations made are based on nothing more than fundamental stock screens. No thought is given to the economic backdrop or long-term economic or demographic trends. If a stock passes the screen, it makes the cut. 

In stark contrast, the editors at Personal Finance pick individual stocks only as the last step. The first step is identifying long-term economic trends and which industries are most likely to benefit from the tailwinds the identified trends provide. Only after the best industry sectors are found do they go to the final step of picking individual stocks.

Industry Sector Analysis in Each Feature Article

Personal Finance publishes twice a month (24 issues, not the typical once-per-month frequency of other newsletters). Each issue has three feature articles which show you how to profit from current trends in various markets and industry sectors. And each feature article provides buy recommendations, but not all article recommendations are included in the portfolios.

Just as there are regular updates on portfolio recommendations, there are also regular updates on these feature articles to let subscribers know if the industry analyses discussed within them remains valid.  

Big Profits

While the S&P 500 has been on a great run the last few years, stocks that were portfolio recommendations have done even better.  For example, a Growth Portfolio pick in the industrials sector is up 72% in just the last two years, an Income Portfolio pick is up over 700%, and a Fund Portfolio pick is up 33% in a little more than a year. 

A True Value

Probably the most amazing thing of all is that you can obtain a one-year subscription to this information-packed newsletter for only $39.95.  If at any time up until the last issue of your subscription you are not happy, you are entitled to a 100% refund, not just a pro-rated one. Amazing. Personally, given the newsletter’s comprehensive all-in-one investment advice and its market-beating returns, I think the price is way too low for the value received, but fortunately for you I’m not in charge. 


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Stock Talk

Milt K

Milt K

I had more confidence in this newsletter’s recommendations when the name of an analyst was included for each recommendation.

dixon miles

dixon miles

Reaves Utility is down a lot, is it time to buy, hold?

Ari Charney

Ari Charney


On a year-to-date basis, UTG’s share price is down about twice as much as its net asset value (NAV):
-21.7% for the share price vs. -11.9% for the NAV

The fund has traded at a discount to NAV that’s averaged about 3.8%, and for most of the year that gulf has been a function of the fact that utilities have sold off due to expectations of an imminent Federal Reserve rate hike.

The fund employs significant leverage to boost returns and dividends. This magnifies losses during bearish periods, which can further amplify the decline in share price.

More recently, the share price has dropped by 11.4 percentage points more than the NAV over the trailing month. I suspect that is largely due to the fund’s recent rights offering.

Existing shareholders were given one right for each share held, with the option to use three rights to purchase one new share of the fund at a 5% discount to the share price or NAV, whichever was lower on the expiration date. The offering period expired on Friday.

This is only the second rights offering the fund has done in its history–the last one was done in 2012 with a ceiling of 9 million shares, but was about 77% subscribed. The maximum issuance targeted this time around is 10 million shares, though management is expecting a lower subscription rate than the previous offering.

The fund intends to use the proceeds to take advantage of the selloff in the utilities space due to rising-rate fears, while also looking for opportunities to pick up high-quality energy stocks reeling from the extreme dislocation in the energy sector. Once Reaves raises these funds, management has about three months to deploy them.

The fund has an excellent long-term track record, so it’s well worth holding. But given its leverage, investors should not hold an outsize position in this security–its weighting should be no higher than the average stock in a well-diversified portfolio.

As for the decision of whether to buy or add more shares, since we’re only a few days away from a widely expected Fed rate hike, investors may want to hold off on new buying in case utilities drop further following the Fed’s action and the fund’s share price offers an even more attractive entry point. While a rate hike is mostly priced in at these levels, I wouldn’t be surprised to see another smaller drop once the Fed finally follows through.

Best regards,

Still Learning

Still Learning

My money is in an IRA . Can I invest in MLPs?

Jim Pearce

Jim Pearce

Yes, but there are some caveats. Most (but not all) MLPs generate something known as UBTI, or unrelated business taxable income, which can be taxable in an IRA if the total amount from all holdings exceeds $1,000 in a calendar year. But for most MLPs the percentage of the distribution that is classified as UBTI is quite small, so you’d have to put a lot of money into them for this to become a problem. I suggest you read this primer from the National Association of Publicly Traded Partnerships on this subject before taking action:

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