“Don’t look for the needle in the haystack. Just buy the haystack!” — John Bogle
Last November I made a major change in the management style for the Bohr portfolio. Actually, two moves took place. 1) The assets were moved to Vanguard and 2) instead of using an active management style, I am now using an Asset Allocation or passive approach.
The portfolio is divided into six asset classes.
- U.S. Equities
- Developed International Equities
- Emerging Markets
- U.S. Real Estate
- International Real Estate
- Vanguard Balanced Index Fund
The percentage allocated to each asset class is laid out in the investment quiver shown below. Since this portfolio is housed at Vanguard, no TSLOs are permitted. At least that is currently the state of affairs. The management plan it to keep the asset classes in balance by reinvesting dividends and not selling any securities.
The following worksheet is shown primarily so readers can view the percentages held in the various asset classes. VBIAX is to hold 25% of the portfolio, yet it is only at 21.8%.
The following data runs from 7/31/2019 through early morning of 10/5/2021. The differential between the VTHRX benchmark and the IRR of the portfolio caused me to take a fresh look at the Bohr.
Before taking the passive route the Bohr was actively managed using a variation of the Relative Strength model. The following screenshot includes a number of years when the RS model was in force.
The following data runs from 11/30/2020 through early morning of 10/5/2021. While this is a very short period to make any reasonable judgments, the IRR for the Bohr is definitely an improvement.
In addition to better performance over the past 10 months, another advantage to the passive approach is that one needs to do minimum management. Just reinvest dividends and let the portfolio ride.
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