Eventually, I may write up a blog on the questions I ask below, but for now I'll confine these to the Forum.
1. Are you using a "Rutherford" or "Hawking" approach to investing? More explanation below.
2. Or are you using a Dual Momentum approach?
Dual Momentum investors focus on three asset classes and they are: U.S. Equities, International Equities, and Bonds. That is it.
Investors using the "Rutherford" model concentrate on a larger number of asset classes. Generally, this number is around ten (10) and it stays fixed.
The "Hawking" model is more expansive than either the Dual Momentum or "Rutherford" models in that more ETFs are included in the investment quiver. In very general terms, I think of the "Hawking" model as using the core ten asset classes from the "Rutherford" model, supplemented by ETFs that have been screened from many ETFs as I do when I look for Top Tier ETFs. With the "Hawking" model, as I describe it here, the investment quiver can change from review period to review period.
Are there ITA readers using what I call the "Hawking" model, and if so, are you tracking performance using the Investment Account Manager portfolio performance tracking software?
If I am reading the performance results properly, the Internal Rate of Return (IRR) results moving from low to high is as follows: Dual Momentum, Rutherford, then Hawking.
I am using the "Hawking" model with nearly all the LRPC-BHS portfolios on this blog.
Please comment or ask questions as I would like to get a discussion going on the various investing approaches. I did not include the Buy-Hold-Rebalance or Robo Advisor model. Include it as well in your thinking.
Lowell
I was hoping for more reaction to the various portfolio management styles. Looks like readers are satisfied with their investing model or perhaps you are using a variation of one of several models explained on this blog.
Look for a change in how the Millikan is managed. Up to this point, I've used the Dual Momentum model with the Millikan. However, in the latest performance data the Millikan is the worst performer of the five DM portfolios. Therefore I am making a switch from DM over to the LRPC-BHS model for the Millikan.
The investment quiver for the Millikan will differ in this way. Both the Schrodinger (Robo Portfolio) and the Millikan are housed at Schwab. I plan to use the Schrodinger list of ETFs to form the core portfolio for the Millikan. This way I will be able to see exactly how the LRPC-BHS model performs compared to the Robo Advisor model. Right now the Millikan lags the Schrodinger.
Look for a Millikan update later this morning.
Lowell
I have a more basic question on the logistics of getting in and out of funds and wonder if anyone has a similar problem
My understanding is to be disciplined and follow the recommendations from a model getting emotions out of the process. I found myself from time to time second guessing where the price of an ETF will be as a result setting the entry point too low thus missing the trade.
To get around this problem, I am thinking perhaps using index mutual funds, without the intra-day trading, may get me out the second guessing the price will be. It will be like rebalancing a portfolio based on percentage. Does anyone this sound reasonable and what will be the down side?
I have a 401k account with Fidelity. I wonder if anyone can share a set of low cost mutual funds from Fidelity that can be used instead of the ETFs in the Einstein Portfolio?
Thanks and keep up the good work Lowell, David and all the regular contributors.
-Albert
Albert,
I do not have a Fidelity account so there are other readers better able to help identify index mutual funds from Fidelity.
Have you identified the asset classes you want to cover? If you were to post the asset classes, it might help readers come up with index mutual funds.
Another alternative is to always use market prices for the ETFs.
Lowell
I did some research, here are the equivalent no transaction fee funds available at Fidelity:
| Einstein Portfolio | Expense Ratio | Equivalent No Transaction Fee ETF at Fidelity | Expense Ratio | |
| SHY | 0.15% | FUMBX - Fidelity Short-Term Treasury Bond Index Fund | 0.03% | |
| VTI | 0.04% | FSKAX - Fidelity Total Market Index Fund | 0.02% | |
| VEA | 0.07% | FSPSX - Fidelity International Index Fund | 0.05% | |
| VWO | 0.12% | FPADX - Fidelity Emerging Markets Index Fund | 0.08% | |
| VNQ | 0.12% | FSRNX - Fidelity Real Estate Index Fund | 0.07% | |
| RWX | 0.59% | FIREX - Fidelity International Real Estate Fund | 1.05% | |
| DBC | 0.89% | FFGCX - Fidelity Global Commodity Stock Fund | 1.08% | |
| GLD | 0.40% | FSAGX - Fidelity Select Gold Portfolio | 0.84% | |
| PCY | 0.50% | FEDCX - Fidelity Series Emerging Markets Debt Fund | 0.01% | Closed to new investors |
| TLT | 0.15% | FNBGX - Fidelity Long-Term Treasury Bond Index Fund | 0.03% | |
| AGG | 0.05% | FXNAX - Fidelity Strategic Income Fund | 0.03% | |
| SH | 0.89% | RYUHX - Rydex Inverse S&P 500® Strategy Fund Class H | 1.71% |
For those funds that have higher expense ratio than ETFs, I will just stick to the ETFs.
Any comments are appreciated.
-Albert
Albert,
Thank you. The list you post is essentially the Rutherford portfolio. Good to know all those ETFs are commission free at Fidelity. Frankly, I'm somewhat surprised as I think of Fidelity and Vanguard as major competitors.
Lowell
Lowell,
Fidelity is competing with Vanguard on the index mutual fund front with low expense ratio and no minimum investment. So this is also attractive for me.
In terms of ETFs fidelity has a $4.95 transaction fee.
Here is the details on Fidelity index fund offerings.
-Albert
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