When putting together a portfolio, how many securities are you listing for possible investing? Second question: What are you using as the Max Number of Assets to Include in the portfolio?
As an example, I have 12 ETFs available for investment in the Huygens Portfolio and I set the Max Number of Assets to six (6).
I don't know if we have back-testing information available, but I would be interested in knowing if portfolios with fewer potential options (six to 12) perform better than portfolios that include more ETFs (13 to 40).
Lowell
Ernie,
As a general rule of thumb, I've been using approximately 1/2 the total number of ETFs in the investment quiver. Five seems to be a good number for diversification.
Lowell
Lowell,
I adopted your interest in a Top Tier set of additions to a basic set of ETFs, such as the Einstein for example, months ago. As a result, I tend to have well over 30 ETFs in a quiver at any one time.
I include a full set of sectors from Fidelity or Vanguard. In addition I test sub-sector ETFs such as those associated with home builders, defense industry, clean energy, software, etc and include a set of those. Once I have a maximum set of securities that the Kipling allows, I only delete an ETF from the quiver if I need to include another ETF from these monthly tests. I use the Kipling in these monthly tests. I usually set the Maximum Number of Funds to 8 based on earlier BHS test results (performed by Ernie?). I usually find the sub-sector ETFs making the monthly cut over the sectors and other ETFs in the basic quiver.
I am starting to rethink this strategy. These sub-sector ETFs can rise dramatically, but they can also fall as swiftly. I'm getting to believe that the earlier momentum of these ETFs tend to outweigh their volatility in the monthly Kipling analyses, resulting in higher Scores. But, because they can fall as dramatically within a monthly re-analysis, much of the gains gets lost. Bottom line, I'm not that sure I'm really gaining all thaat much by adding all these sub-sectors (ITB, XAR, PKB, IBUY, IGV, FINX, TAN, etc) in a quiver that is intended to be an "investment" quiver.
I've been thinking about going back to just a "basic" quiver such as the Einstein, for example, with a set of sectors included, and allowing a very limited set (e.g. 2 or 3) of "Top Tier" sub-sectors in the monthly quiver.
Lowell, that's kind of a long answer to your question above about how many securities being listed for possible investment. I'm hoping others respond with their experiences and thoughts about approaches to developing a quiver .
~jim
Jim,
As for including or permitting any Top Tier ETFs to enter the investment quiver, I am now limiting it to one. Like you, I find "out of the main stream" ETFs tend to rise and fall rapidly. Therefore, they don't stand the test of time as do ETFs that represent primary asset classes.
SAFE is currently my one ETF of interest.
Lowell
Jim,
As for including or permitting any Top Tier ETFs to enter the investment quiver, I am now limiting it to one. Like you, I find "out of the main stream" ETFs tend to rise and fall rapidly. Therefore, they don't stand the test of time as do ETFs that represent primary asset classes.
SAFE is currently my one ETF of interest.
Lowell
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