Bethe Asset Allocation Portfolio Review: 18 September 2024

Rose Leaf

Bethe is another Asset Allocation model portfolio similar to the Kepler and Einstein, two portfolio recently reviewed.  In the case of the Bethe, it is outperforming the AOR benchmark.

Just a short word about investment books.  Simply put, there are not many that are of use to investors.  William Bernstein, Richard Ferri, Larry Swedroe, Burton Malkiel and Charles Ellis are a few of the better writers.  If one is looking for a one evening read that covers all the critical investing information, purchase “The Elements of Investing” by Malkiel and Ellis.

Another simple source is the video showing all critical information can be found on a 3 x 5 index card.  Most of the portfolios reviewed here at ITA Wealth Management follow the index card recommendations.  Those that don’t are the Sector BPI portfolios and they, while great performers, are not for all investors.

Bethe Asset Allocation Model

The following investment quiver is well diversified as it covers all asset classes with exception of commodities (gold being one) and private equity.  Private equity is outside availability of most individuals as it requires investing millions just to get a foot in the door.  Further, if one is not working with a manager ranked in the top quartile, forget it.

Small college endowments holding millions of dollars will pool money and invest it with the Commonfund in order to invest in private equity.

The Bethe portfolio covers different size stocks, domestic and international as well as U.S. and foreign bonds and real estate.  The Asset Allocation portfolio are built to include global exposure.

Bethe Manual Risk Rebalancing

Cash is limited and we prefer not to sell over subscribed asset classes in order to bring ETFs below balance back up to the recommended percentage.

I’ve not given a lot of thought as to when to sell oversubscribed holdings.  An upper limit might be 10%.  When an asset class is 10% above the balance recommendation, sell sufficient shares to bring it back into balance.  In the meantime, fund ETFs most below target.  That asset class is developed international stocks (VEA) so we invest or set limit orders to purchase 143 shares of VEA.  Next on the list is BND or domestic bonds.

Bethe Performance Data

Since 12/31/2024 the Bethe managed to outperform AOR, the benchmark for Asset Allocation portfolios.

Bethe Risk Ratios

Bethe is a very young AA portfolio, having started in August of this year.  It is not even two months old with this model so we are not drawing any conclusions.  As the months roll by, pay attention to the Jensen and Information Ratios as well as the slope of the Jensen.