Bethe Asset Allocation Portfolio Review: 4 October 2024

London

Asset Allocation portfolio management is an old tried and true method for managing an investment portfolio.  This is the strategy followed by Intelligent Portfolios such as the Schrodinger.  The Bethe is a portfolio where the selected securities cover U.S. Equities of all sizes, Domestic and International Bonds, Domestic and International Real Estate, Developed International Equities, Emerging Markets and Treasuries.  In other words, it is a global portfolio.

The real test as to viability is how well the portfolio performs over time and how risky the approach.  The following analysis walks readers through this information and guidance is provided as to how to do this yourself.  There is no need to pay an advisor 40 to 125 basis points to do this for you.

Bethe Asset Allocation Setup

Seven of the 13 asset classes remain below target.  As new money is added and dividends are paid, asset classes below target will remain the focus of attention.  Developed International Equities (VEA) needs the most attention.

The current yield is 2.2%.

Bethe Rebalancing Process

As mentioned recently, rather than invest all available cash in VEA, I have limit orders set for several asset classes below target realizing some will soon be struck while others may take weeks.  The largest limit order is for VEA.

Bethe Performance Data

Since 12/31/2021 the Bethe managed to outperform the AOR benchmark.  As the various asset classes come into balance, the portfolio is very well diversified as one can see from the following pie chart.  The gray area represents treasuries such as TLT and TIP.

Bethe Risk Ratios

The October Jensen, while early, is the second highest reading of the year.  Second only to the 1.81 July figure.  Another important metric is the Information Ratio and it too is second only to the July figure.

The slope of the Jensen is nearly flat indicating the portfolio is matching the benchmark when risk enters the equation.