Copernicus Portfolio Review: 21 December 2023

Bridge at Japanese Garden

Next to the Schrodinger the Copernicus is the easiest portfolio to manage of those I track here at ITA Wealth Management.  All that is required for those interested in the Copernicus is to save and invest in U.S. Equities.  Sale of shares will never happen unless there is an emergency.  Don’t think of this portfolio as an emergency account.  The Copernicus is definitely a retirement account.  For the very young I highly recommend saving in a Roth IRA as taxes are likely to increase rather than decrease.

In addition to your current saving plan, which might include shares of the company you work for, seriously consider branching out to include portfolios such as the Schrodinger and Copernicus.  This is known as portfolio diversification.

Copernicus Holdings

While the Copernicus holds four (4) different ETFs one could easily reduce this to one or two ETFs.  ESGV is a socially responsible ETF so that is appealing to a certain group of investors.  SPY and VOO are nearly identical ETFs so one of these could easily be eliminated.  VTI is the broadest of the four so I would definitely keep it in the portfolio.

Copernicus Performance Data

Over the past two years the Copernicus smashes all the benchmarks.  In the following screenshot I include three broad indexes at the bottom of the rows.  A nearly 14 percentage point lead over SPY is huge.

The goal is to keep the portfolio fully invested.  Based on the last three years of data the volatility of these four ETFs is running between 13.5% and 14.0%.  This volatility is quite common.  We can expect U.S. Equities to drop 10% or more sometime in 2024.  If and when this happens, try to purchase more shares if possible.  This is how we gain ground on the S&P 500.

Copernicus Risk Ratios

With exception of the Omega Ratio, all current risk ratios are higher than they were a year ago.  The Jensen Alpha value is exceptionally high.

Information Ratio:  Throughout the year the Copernicus consistently outperformed the SPY benchmark.

The primary disadvantage of this equity driven approach is the lack of downside protection.  If one is older and capital protection is needed, then the Sector BPI investment model is desirable.  Yes, it requires a little more work.  The Schrodinger is another excellent alternative, assuming the portfolio is sufficient in size so Schwab will tax manage the portfolio.

Merry Christmas to all readers.

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Copernicus Buy & Hold Portfolio Review: 18 May 2023