The five months since Global Income Edge launched in August haven’t been easy on the markets. U.S. equities suffered a stiff correction in October, global growth contracted, and oil prices slid off a cliff. But that great volatility gave GIE portfolios a true battle test.

While a few of our holdings took some knocks, particularly in the Aggressive Portfolio, our Conservative Portfolio was a shining star as it held its value better than the broad indexes.

As I reported in our October issue, during the correction the Standard & Poor’s 500-stock index and the Nasdaq Composite were down 5.10% and 6.41%, respectively (at the time of publication). Our Conservative Portfolio lost less than 2% during the downturn. And that doesn’t include dividends. The S&P dividend yield is 2%, while our portfolio offers an annual dividend yield above 6%.

So, I’m proud to say that investors seeking maximum safety and diversification were well-served by the Conservative Portfolio. Our core international diversification strategy did preserve wealth better for investors versus a U.S.-only strategy.

At the time of this publication, the Conservative Portfolio is in the black and projected to deliver between 8% to 10% annualized total return (price appreciation plus dividends). And the GIE team is working to improve that result as we highlight new opportunities in 2015.

Meanwhile, our Aggressive Portfolio—which was designed to outperform during a global economic recov-ery—was more sensitive to the correction. At the time of this publication, the portfolio was down by about 10%, up from losses that were as high as 17%. However, the portfolio was delivering a 7% to 10% dividend yield (annualized) over that period.

I still believe when the global recovery happens and we see substantial economic growth internationally the Aggressive Portfolio will outperform market averages. That’s because many holdings are in industries that would rise quickly as global trade and investment increase.

Correction Protection

But that’s not to excuse the Aggressive Portfolio’s performance during this last correction. Though high growth, high income, aggressive investments typically underperform during market corrections, we are going to build more correction protection into the portfolio.

In the last month I decided to take steps to make that portfolio less sensitive to market fluctuations. Companies have been added that are in industries with more pricing power, such as global banking. Such pricing power is important as the recent weakness in markets revealed the global recovery may take longer than expected, and may be more volatile.

From now on, in the Aggressive Portfolio we’ll be looking less at higher yields and more toward price appreciation. This total-return approach is still different from our Conservative Portfolio section, which focuses mainly on yield. This will mean an overall lowering of the dividend yield that we look for in Aggressive Portfolio companies as volatility drops.

To further reduce risk, in early December I removed our oil and gas holdings from both portfolios. I feel the recent volatility caused by the fall in oil prices makes the dividends of these companies less dependable. In our Conservative Portfolio, we sold Kinder Morgan, which had a solid gain of about 6% since we put it in our portfolio. And we sold Seadrill in the Aggressive Portfolio, as the company suspended its dividend in reaction to the fall in oil prices and increased weakness in the oil platform market.

I believe the oil and gas market will have opportunities for GIE investors in the future, but I would rather be safe than sorry and wait and see what happens to valuations. The fall in oil prices has been unprecedented, and it’s still too soon to know how long the market rout may last.

In the rest of this article, I’ll take you through the Aggressive and Conservative portfolios’ wins and losses this year, and preview some new investment trends.

Conservative Portfolio: Utilities, UK Telecom Delivered

U.S. utility Southern Company (NYSE: SO) outperformed all the other holdings in the Conservative Portfolio, gaining 11% since August. The company has been on a winning streak. Management has worked with regulators to cover cost overruns at two new power plants, which had caused the stock to be severely undervalued over the last two years.

The firm beat third-quarter 2014 Wall Street consensus earnings-per-share estimates by 2 cents. Southern announced that total electricity sales during the third quarter improved 7.7% from the same period last year. It’s a solid, well-managed utility that has a track record of paying dividends, currently yielding 4.37%. Southern Company is a buy up to $55.

Southern barely edged out our number-one Best Buy pick, European telecom company Vodafone (NSDQ: VOD), which has gained almost 10% since our August launch and carries a dividend yield of 4.99%. Vodafone is one of the telecom players in Europe that stand to benefit most from a possible industry consolidation.

For example, there have been rumors of a possible $90 billion merger with Europe’s largest cable operator, Liberty Global (the firm has denied this), which has put a significant headwind behind Vodafone’s stock price. Most experts agree that if there’s a consolidation in Europe between telecoms, giant Vodafone will be involved.

In a Deal Book report, the New York Times observed that a merger with Liberty could create “a powerful, convergent player” in Germany, Britain and the Netherlands that sells TV, broadband, landline and mobile. Without question, we advise investors not to cash in their Vodafone gains and to continue holding the stock. Vodafone is a buy up to $39.

Our third-highest-performing stock was S&P 500 Dividend Aristocrat HCP, which has gained nearly 10% since we included it in our portfolio, and has a dividend yield of 4.86%. The real estate investment trust owns or holds interests in $22 billion worth of properties, from hospitals to senior-housing properties to biotech firms to medical offices.

Health care spending is expected to grow 6.1% this year and 5.8% in 2015. Annual compounded growth is expected to be 6.2% between 2015 and 2022. HCP is in the right business, in the right places, at the right time. HCP is a buy up to 44.

Most of our other Conservative Portfolio holdings waffled a point up or down from their starting prices, but continued to deliver high dividend yields. However, we did have one holding that dragged down the performance of the portfolio significantly for a brief period for the past month.

Duke Energy’s Brazil spin-off, Duke Energy International Geracao Paranapanema SA, has had a lot of volatility recently for a couple of reasons. First, Brazilian business doesn’t like the winner of the recent presidential election, Dilma Rousseff, and the feeling is mutual; and second, the company’s electric power subsidiary had a bad quarter. Its majority shareholder, Duke Energy, has put the company under a “strategic review.”

The stock was down double digits just last week, but staged a huge rally Dec. 11, skyrocketing 54.5% and closing at $33.17. We immediately put a sell alert on the stock (symbol: DEIPY)

This represents a gain of 20.62% on the holding since we put it in the portfolio in August.

The stock increase could be because of a recent forecast that the outlook for rainfall looks favorable in the short term. An official of the electric grid operator ONS said on Dec. 4 that Brazilian rainfall may exceed the monthly average in December, alleviating a drought that has curtailed hydroelectric supplies and had been hurting DEIPY’s earnings, according to a Bloomberg news report.

In any case, for investors there is still too much uncertainty on too many fronts: Rainfall, Duke Energy’s intentions and the political situation. So bank that 20% gain and consider it an early Christmas present.

Aggressive Portfolio: Fish & Telcos Go Swimmingly

Though I believed the firm would be a great investment, I would never have guessed that French Telecom

Orange (NYSE: ORAN) would have appreciated more than 20% in fewer than five months. It’s now the top holding in the Aggressive Portfolio, all the while delivering a dividend yield of 5.44%. Vive la France!

The weak state of the European economy as a result of the 2008 financial crisis depressed the stock price, and our analysis showed it traded at an unfair discount. A revival in the European economy has yet to happen, but the expectation of a consolidation in European telecoms over the last few months has helped drive up its stock price.

Orange is already in the thick of that consolidation, and in early September, the firm made an offer to buy Spanish fixed line telecom provider Jazztel in a deal worth up to $4.4 billion, subject to regulatory approval. If it goes through, the deal would make Orange a larger player in the Spanish market—moving the firm past our favorite conservative pick Vodafone to become the second-largest telecom in that country.

It’s rare for telecoms to appreciate by double digits like growth stocks. Typically, income investments such as these are slow, single-digit growth investments, as most tend to be in mature industries. I do believe there could be more stock appreciation in store for Euro-pean telecoms based on merger mania. Orange remains a buy up to $19.

Our next-best performer is a subscriber favorite, salmon producer Marine Harvest (NYSE: MHG). Marine Harvest has delivered more than an 8% return since we selected it five months ago. Because its dividends are not consistent, it’s tough to put a number on the yield, though in the trailing 12 months it works out to more than 9%.

The firm has been benefiting from the ever-growing global demand for salmon. Marine Harvest’s salmon volume grew 22% through the first two quarters of 2014. Further, the expansion of the middle class in emerging markets should translate into greater salmon consumption. Marine Harvest is a buy up to $16.

The one big disappointment in the Aggressive Portfolio was Seadrill, which we sold in early December. It lost about half its value when management suspended the dividend in response to falling oil prices and weakening fundamentals in the oil platform market. For the last few years companies in the oil and gas market have tried to reestablish their credentials as income investments—this after the last oil and gas price crash happened a decade ago. And they did start to prove they could be dependable investments.

But Seadrill management’s quick-fire suspension of the dividend has

reaffirmed my belief that these oil and gas cowboy firms aren’t suitable now as income investments in our port-folios. The oil and gas business isn’t like true income-generating sectors, such as utilities and telecoms. Those sectors will move heaven and earth before they would touch the dividend. I won’t say never again, but I have had my fill of oil and gas companies for now.

In the January 2015 issue I will be analyzing trends and adding new companies to the portfolio. I do believe that the world will continue to head toward a recovery driven by the strengthening of the U.S. economy and various stimulus measures around the world.

Two companies already in our portfolios, which we feel should do particularly well next year, are profiled in this issue. National Grid has a diversified portfolio of assets in the UK and the U.S. and stands to benefit from steady improvement in both of those economies. Further, shipping company Seaspan, which has had its ups and downs, is one of the best firms positioned to benefit from the recovery in global trade with China.

On behalf of Global Income Edge, we wish you happy holidays and a prosperous new year!