Oct 2017 Performance

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PERFORMANCE:


In October the Equal weighted portfolio returned 1.0%. This portfolio is my version of a buy and hold portfolio and I use it as my benchmark for the two portfolio's below. 

The TA portfolio was the best performing portfolio and returned 2.5%. This portfolio invests in the same securities as the Equal weighted portfolio but actively allocates by adjusting how much is invested in each asset class.

The Enhanced portfolio returned 1.2%. This portfolio uses the allocation of the TA portfolio and seeks to enhance those returns by buying funds that access the asset class in a different way.

Monthly returns are volatile so below I show the cumulative returns of each of the strategies as though you had invested $100,000 in them at the beginning of the blog (assumes $7 cost per trade).










COMMENTARY:
Equal Portfolio: This portfolio is invested about 25% in each of four asset classes (investment grade debt, high yield debt, large cap equity and small cap equity). It is the baseline or benchmark against which I judge the other portfolios.

TA portfolio: This portfolio had a great month. The heavy weight to large cap equity (best performing asset class) added a lot of value in October. 

Enhanced portfolio:  This portfolio struggled in October. Poor performance in the largest exposure (DSEUX) hurt this strategy. Some of the smaller exposures (global utilities and emerging markets) performed well offsetting the drag from DSEUX. The securities in this portfolio are meant to add international exposure and exposure to defensive industries. This should allow this portfolio to do better during market stress. 
    ALLOCATION:

    Color significance:
    Red          =   small cap equity 
    Orange    =   large cap equity
    Purple     =   high yield debt
    Green      =   investment grade debt

    The relevant security returns (used in my three portfolio's) for the month of October (excluding dividends) were:

    For Equal and TA portfolios: VTWO 0.7%, VONE 2.3%, JNK -0.2%, AGG -0.1%

    For Enhanced portfolio: IEMG 3.26%, DSEUX -0.4%, KXI -0.1%, JXI 2.8%

    Allocations during October were:

    Allocations after today's trades (November 1st) are:


     ATTRIBUTION:

    Oct - 17 3 Mo 
    Allocation Rt   1.4% 2.0%
    Selection Rt  -1.3%-1.5%

    The way to think of this is that the "Allocation Rt" is how much the TA portfolio out (or under) performed the equal weighted portfolio (how much did the asset allocation benefit returns). The "Selection Rt" is how much the enhanced portfolio out (or under) performed the TA portfolio (how much security selection benefited returns).

     DISCLAIMER:
    Past performance is not a guarantee of future performance.  This strategy is presented for informational purposes only and is not a solicitation to buy or sell any securities. October is one of the peculiarly dangerous months to speculate in stocks in.  The others are July, January, September, April, November, May , March, June, December, August and February. ~ Mark Twain

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