From 1 January 2026 to 9 March 2026, my portfolio delivered one of those reminders that every income investor eventually has to make peace with:
capital values can wobble, but a well-built income portfolio can still do its job.
On the surface, this was not a glamorous period. The portfolio finished at $629,520.72 on 9 March 2026, with a total return of -1.86% for the year to date. That included a -2.99% capital return, offset in part by +1.12% income return.
In dollar terms, that meant a $12,042.06 decline overall, made up of $19,309.64 in capital losses and $7,268.69 in income received.
Now, I know what most people notice first: the negative total return.
But that is not the number I care about most.
The number I keep coming back to is the $7,268.69 of income generated in just over two months.
That is the whole point of building My Income Factory.
This portfolio is not designed to win every short-term beauty contest. It is designed to keep producing cash flow, to stay resilient across different market conditions, and to give me the option to reinvest income when prices are weaker.
And in that sense, the first part of 2026 has actually reinforced the strategy rather than weakened it.
The real story: income kept showing up
When markets pull back, it is easy to let portfolio value dominate the conversation. Falling prices are visible. They are emotional. They demand attention.
But for an income investor, the deeper question is different:
Is the portfolio still producing cash?
So far in 2026, the answer has been yes.
Even while the portfolio’s market value fell, the underlying assets still generated more than $7,200 in income. That matters because income is not just a nice extra in this portfolio. It is one of the main outputs.
That cash flow gives me flexibility. It can be used to reinvest into quality assets at lower prices, to strengthen existing positions, or simply to keep the compounding engine moving while sentiment is weak.
This is why I like thinking of the portfolio as a factory rather than a scoreboard. A scoreboard only tells you where prices are today. A factory tells you whether the machine is still producing.
Right now, the machine is still producing.
Portfolio snapshot: where the money is invested
As at 9 March 2026, the portfolio was spread across multiple income-producing buckets:
- Passive ETFs: $232,053.24
- Direct shares: $103,990.00
- Active Income Fund (Dividend ETFs & LICs): $195,363.30
- Credit funds: $95,940.96
- Cash: $2,173.22
I like this structure because it gives me multiple engines of return.
I am not relying on one theme, one sector, or one style of investing. Instead, the portfolio combines broad market exposure, direct dividend shares, listed income vehicles, and credit investments that can help diversify the income stream.
That does not mean returns will always be smooth. They will not be. But it does mean the portfolio is not dependent on one narrow part of the market doing all the heavy lifting.
What worked — and what did not
The period was clearly mixed.
The strongest area of the portfolio was the income bucket, which delivered a positive 0.27% total return. In a soft market, I think that is a quietly encouraging result. This sleeve did what I wanted it to do: provide some stability and continue contributing cash flow.
The passive ETF bucket returned -2.31%, reflecting broader market weakness, especially in international shares and small caps.
The direct shares bucket returned -3.19%, showing that individual stock selection has been a mixed bag so far this year.
The biggest drag came from credit funds, which returned -3.52% overall. That may surprise some people who assume income-focused or credit-like holdings should always look stable. But listed income vehicles and credit-related exposures can still move around when risk sentiment changes, even if their cash generation remains intact.
That is an important reminder for income investors: defensive does not mean price-proof.
The biggest winners in the factory
A few holdings stood out as strong contributors.
Among direct shares, Woodside (WDS) was the clear standout with a 36.80% total return. New Hope (NHC) also delivered strongly at 28.16%, while Aurizon (AZJ) returned 12.28% and Telstra (TLS) returned 8.33%.
Within the income sleeve, VHY returned 3.31%, BKI delivered 3.00%, and HYLD added 1.93%.
These results tell me that even in a period where the overall portfolio was down, there were still meaningful pockets of resilience — particularly among higher-yielding, cash-generative businesses and income-oriented vehicles.
That is another reason I prefer a diversified income approach. I do not need every position to work at once. I just need enough parts of the machine to keep producing.
The weakest links so far
There were also some obvious laggards.
Among direct shares, Nick Scali (NCK) fell 26.02%, Harvey Norman (HVN) dropped 23.20%, Credit Corp (CCP) fell 20.06%, and Suncorp (SUN) was down 19.81%.
In the passive ETF sleeve, VGS and VSO were the weakest names, both reflecting softness in the parts of the market they represent.
Within credit and income-related holdings, KKC returned -9.46%, MOT returned -6.84%, and MRE was down -3.94%.
These numbers are not pleasant to look at, but they are part of investing reality. Every portfolio will have underperformers. The real test is whether they are isolated disappointments or whether they point to a wider structural problem.
At this stage, I see them more as evidence of a choppy market than proof that the broader income strategy is broken.
Why this period actually reinforces my strategy
If my portfolio existed only to maximise short-term capital gains, then this would feel like a disappointing start to the year.
But that has never been the mission.
My goal is to build a portfolio that throws off reliable and growing income over time, while still giving me reasonable diversification across equities, listed income vehicles, and credit.
From that perspective, this period has not changed the thesis. In some ways, it has strengthened it.
Why?
Because when prices are weaker but income continues to arrive, the strategy becomes easier to trust. I am reminded that I am not relying purely on someone else paying a higher price for my assets tomorrow. I am owning assets that are producing something today.
That is psychologically powerful. It makes it easier to stay patient. It makes it easier to reinvest. And it makes volatility feel more like an opportunity than a threat.
My main takeaway from 1 January to 9 March 2026
Here is my honest summary of the year so far:
capital performance has been noisy, but the income engine is still working.
That is not a bad outcome.
Would I prefer positive capital returns as well? Of course.
But I would much rather own a portfolio that can keep generating income during weak patches than one that looks great only when markets are rising.
So while the total return number may not excite anyone, I think the underlying message is actually encouraging.
The portfolio is still doing what it was built to do.
Final thoughts
The first part of 2026 has been a useful reminder that income investing is not about avoiding volatility. It is about building a portfolio that remains productive through volatility.
My portfolio may have declined in market value over this period, but it still generated more than $7,268 in income. That cash flow matters. It gives me options. It supports reinvestment. And it reinforces the reason I built this portfolio the way I did.
For me, that is the real scorecard.
Not whether every line item is green today, but whether the factory is still producing.
It is.
How has your portfolio started 2026?
Are you seeing the same pattern — softer capital values, but income still holding up?
If you are building your own Income Factory, I’d love to hear how your portfolio is behaving in this kind of market. Leave a comment on the blog and let’s compare notes.