Lesson's Learned

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"That which gets measured gets improved"
~ Thomas S Monson
Last month I posted on some good calls I had made and I wanted to offset that this month with something I have learned (read between the lines - a poor call) as I have been running this blog.

Lesson: Sizing of exposures is critical. When starting the blog, I sought to make it simple and just made two bets in the enhanced portfolio. I replaced small cap equity with emerging market equity and large cap equity with international equity. Normally the portfolio would have a more diverse set of ideas but for simplicities sake I only started with two. As you can see below, the international equity (DSEUX) has not performed well and has been a large drag on this portfolio. I expect this will be reduced over time but it creates a tough start for the "enhanced" portfolio.

The way to read this chart is; each color is one of the investment options I have talked about in my blog. The return percentage is listed on the vertical axis (higher is better). The horizontal axis shows how many months of performance are included in the return number - 9 is through the end of February. The large circles show the exposure taken in TA that was sold that month (often near the top). The large triangles show the exposure taken in the Enhanced portfolio that was sold that month (also near the top until the DSEUX sales).




It was one position, and it has not had a full year to play out, but because it was early in the life of the fund it had a 50% weight. Most positions have just over an 8% weight. I do expect that the enhanced fund will come back but the exposure to DSEUX has given it a very poor start.

Once I hit the one year mark I plan on keeping a monthly running tally of how my exposures have played out but just the ones that have had a full year to play out as that is what my whole model is built around.

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