Q4 2018, Peer Review
Peer Relative Performance in the fourth quarter was not great. Markets fell and my tactical portfolio's were relatively aggressive. The following is a review of all of the Morningstar monitored tactical asset allocation funds relative to my three funds.
Return percentiles as of December 31, 2019. The % tells where the fund ranks during that period (100% would be the top performing fund, 0% would be the bottom)
Universe Size and Returns:
PORTFOLIO UPDATE (as of 1/8/2019):
MTD Performance:
The ETF's and other funds that make up the portfolio's MTD Returns:
Portfolio Description:
The first is a "buy and hold" strategy that does not ever change. I call this the Equal portfolio because it is made up of four equal parts allocated to different asset classes. It is 1/4 in large cap equity (Ticker VONE), 1/4 in small cap equity (Ticker VTWO), 1/4 in investment grade debt (Ticker AGG), and 1/4 in high yield debt (Ticker JNK). The allocations never change. The only thing needed is to rebalance every so often as performance differences will cause the weights to shift.
The second portfolio is a "tactical" portfolio. It is tactical because it adjusts the weights to the four asset classes above based on market conditions. I call this the TA portfolio. It can go 100% into any one asset class or be a mixture of them. 1/12th of this portfolio can change each month as I make a monthly call on what i expect will do best over the next year based on current market conditions. Historically I have picked the best asset class about 50% of the time, the second best about 25% of the time, the third best 18% of the time and the worst 7% of the time.
The third portfolio is also a "tactical" portfolio. I call it the Enhanced portfolio because I follow the same allocation as the TA portfolio but I pick other vehicles that I expect to offer a better return than the four ETF's used in the Equal portfolio. This allows for active management and broader exposure to asset classes such as International Equities, Emerging Markets, and Commodities among others.
Current Allocations:
Return percentiles as of December 31, 2019. The % tells where the fund ranks during that period (100% would be the top performing fund, 0% would be the bottom)
| 3 Mo | 1 Yr | 3 Yrs | 5 Yrs | ||
| Equal | 39% | 82% | -na- | -na- | |
| TA | 14% | 82% | -na- | -na- | |
| Enhanced | 31% | 45% | -na- | -na- | |
| # of Funds | 271 | 260 | -na- | -na- | |
Max Return | 4.58% | 2.41% | -na- | -na- | |
| Equal TA Enhanced Min Return | -9.65% -13.29% -11.01% -19.14% | -4.80% -4.77% -7.55% -24.23% | -na- -na- -na- -na- | -na- -na- -na- -na- |
PORTFOLIO UPDATE (as of 1/8/2019):
MTD Performance:
The ETF's and other funds that make up the portfolio's MTD Returns:
| Ticker | 1/8/19 |
| VONE | 2.8% |
| VTWO | 6.0% |
| JNK | 3.3% |
| AGG | -0.1% |
DBCMX | 2.3% |
| IEMG | 2.0% |
| KXI | 1.6% |
| JXI GOVT | 1.4% 0.5% |
Portfolio Description:
The first is a "buy and hold" strategy that does not ever change. I call this the Equal portfolio because it is made up of four equal parts allocated to different asset classes. It is 1/4 in large cap equity (Ticker VONE), 1/4 in small cap equity (Ticker VTWO), 1/4 in investment grade debt (Ticker AGG), and 1/4 in high yield debt (Ticker JNK). The allocations never change. The only thing needed is to rebalance every so often as performance differences will cause the weights to shift.
The second portfolio is a "tactical" portfolio. It is tactical because it adjusts the weights to the four asset classes above based on market conditions. I call this the TA portfolio. It can go 100% into any one asset class or be a mixture of them. 1/12th of this portfolio can change each month as I make a monthly call on what i expect will do best over the next year based on current market conditions. Historically I have picked the best asset class about 50% of the time, the second best about 25% of the time, the third best 18% of the time and the worst 7% of the time.
The third portfolio is also a "tactical" portfolio. I call it the Enhanced portfolio because I follow the same allocation as the TA portfolio but I pick other vehicles that I expect to offer a better return than the four ETF's used in the Equal portfolio. This allows for active management and broader exposure to asset classes such as International Equities, Emerging Markets, and Commodities among others.
Current Allocations:
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. The writer of this blog owns many (long positions only), if not all, of the securities discussed in this blog. 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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