Bethe Asset Allocation Portfolio Review: 12 August 2024

Crystal Springs Glow

Bethe was first launched eight years ago, but not as an Asset Allocation portfolio.  This month we begin a new (to the Bethe) investing approach with this portfolio.  As we gather data from month to month we will see how this model performs, both on a return and risk basis.  Diversification across the globe is fundamental to the Bethe. Since the plan is to not sell asset classes unless there is an emergency the portfolio is tax efficient.

Bethe Asset Allocation Portfolio

The current portfolio holds shares in 13 different asset classes.  It is a bit of a stretch to call QQQ an asset class as it focuses on hi tech securities.  Two asset classes I have not included in the Bethe are precious metals and commodities.  I’m not a fan of either asset class.  Instead I am concentrating on equities and bonds/treasuries.

Bethe Manual Risk Adjustments

With a large cash holding where do we need to invest?

1.  I first focused on the ETFs that show a Sell as those are the asset classes that should be the first to return-to-the-mean.
2.  I then moved on the ETFs that show a Buy.

More adjustments are required as asset classes represented by these ETFs are still be under-weighted.  They are:  VB, VOO, VNQ, VO, VNQI, VWO, VEA, and QQQ.  Eventually all asset classes will hold sufficient shares so the Out of Balance column will vary between + or – 0.5%.

Numerous limit orders are in place.  This will require another review of the Bethe before September arrives.

Bethe Performance Data

Since 12/31/2021 the Bethe has outperformed the AOR benchmark by 2.5% points.  I am now using AOR instead of SPY as a benchmark due to a high percentage of the portfolio invested in bonds and treasuries.

Bethe Risk Ratios

Since the last portfolio review the risk-free interest rate jumped from 5.09% to 5.12%.  The increase is minor, but it does place downward pressure on the Jensen Performance Index – our primary risk measurement.

Comments are always welcome.