Copernicus is one of the newest portfolios among the sixteen currently tracked here at ITA Wealth Management. In addition to the sixteen I track, several more are tracked and managed by Hedgehunter. Copernicus is the highest risk portfolio in that 100% of the investments focus on U.S. Equities. This is also a portfolio for the young investor who is in the saving mode and is not paying any attention to market movements. In fact, the young investor is praying the market moves lower so they can purchase more shares for the same invested dollars.
Launched in the middle of January of 2022, this portfolio caught the entire draw-down of U.S. Equities and will likely be many months before it moves back into positive territory based on the IRR for Period calculation. When examining the performance data, be sure to pay attention to the IRR for Period for the benchmarks as well as for the Copernicus.
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Copernicus Investment Quiver and Current Holdings
Below is a list of U.S. Equity ETFs. They are: VTI, ESGV, SPY, and VOO. Any single ETF or combination can be used to populate the Copernicus. The thesis of the Copernicus is to save and invest only in U.S. Equities. Never sell. That is why this is an excellent portfolio for the young investor who has 30 to 40 years of saving ahead.
Copernicus Performance Data
As stated above, the Copernicus continues to lag the AOA benchmark and will likely do so for a number of months. Regardless of the IRR, continue to plug along. Save and invest in equities. This morning I used cash to purchase five more shares of ESGV and I have several more limit orders in place to add more equities. I am making an attempt to keep the Copernicus 100% invested in U.S. Equities.
Copernicus Risk Ratios
Two more months of data and I will have a year of information. It has been a bumpy year and thus far has been a very weak one for U.S. Equities. I see where the Jensen Alpha improved since October and the slope is barely in positive territory. By next spring we will have a better grasp as to how this portfolio is performing.
The Copernicus requires patience and perseverance.
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Lowell,
I don’t understand the thought behind using VTI, SPY, VOO, and ESGV together in the same model. The correlation of each pair is essentially 1.0. My interpretation of the decision based on the model is simply: “do I buy or do I sell the SP500?”
Or, based on never selling a share once purchased, the decision becomes “Do I buy the SP500?” For the latter decision, you should only need to have one of the ETFs in the model since they are all nearly perfectly correlated with the SP500.
What am I missing?
~jim
Jim,
You are not missing anything. Choose one of the four. My preference is to go with either VTI or ESGV. ESGV has two advantages. 1) It costs the least per share so one can use it to reduce the cash in the account. 2) ESGV has an environment bent.
SPY and VOO will likely have an edge when it comes to performance. When there is sufficient cash I’ll likely select one or the other of these two ETFs.
Since all four are highly correlated and commission costs are zero, investing in and or all will make little difference in the final performance.
Lowell
Lowell,
I tend to agree with Jim, if we are looking for a simple Buy/Hold portfolio of US equities, why complicate things with assets with ~1.0 correlation? If we just pick one asset (e.g. VTI) then we would buy/add to holdings if we got a Buy signal – otherwise we would stay in Cash until the Buy signal was generated. Am I too missing something?
David
David and Jim,
If constrained to go with just one, I will select ESGV for the two reasons already stated. By using ESGV I reduce carrying cash in the portfolio as it is has the lowest price per share.
It really does not matter as this is a buy only portfolio.
Lowell