Bohr Asset Allocation Portfolio Review: 13 November 2024

Thanksgiving Table

Bohr is one of several portfolios that were transferred over to the Asset Allocation (AA) investing model within the last year.  AA is the model commonly used to manage portfolios as it is well diversified to handle various market conditions.  Although well diversified there is no guarantee if will always generate positive returns.  Even bonds decline in a major recession.

Bohr Asset Allocation Model

Due to an infusion of cash and selling shares of VTI and TIP, numerous asset classes are still out of balance.  With a portfolio of this size I try to keep the “out-of-balance” percentage to within 0.5% of the target recommendations.  Recommended percentages are found in the third column from the left and the out-of-balance percentages is on the far right.

Bohr Rebalancing Recommendations

With the available cash I have limit orders set to purchase the number of shares found in the sixth column from the right.  This leaves VWO over-subscribed and TLT under target by 1.1%.  Unless prices change dramatically, the portfolio should be in balance in a few months.

When to rebalance brings into discussion a difference in opinion.  Some managers recommend rebalancing based on time while others recommend using percentages.  I tend to favor using percentages as I am doing with the Bohr.  Rather than rebalancing every six months or once a year I am rebalancing when new cash arrives or when dividends are declared.  Rather than sell shares that are above target, as is currently the situation with VWO, I prefer to build up asset classes that are most under target.  For example, when new cash arrives I plan to set more limit orders to purchase shares of TLT as it is most under target.  By rarely selling reduces the tax burden.

Bohr Performance Data

Since 12/31/2021 the Bohr lags the AOR benchmark by nearly 1.5% points.  It will likely take a few months and with some luck to overcome this benchmark.  It all depends on market conditions and how well the asset allocation model works with the Bohr portfolio.  Is the Bohr asset allocation set up better than the asset allocation percentages with the AOR benchmark.

Bohr Risk Ratios

One encouraging signal is the slope of the Jensen Alpha ratio.  There is also improvement in the Information Ratio indicating the portfolio is gaining ground on the benchmark.