At the end of 2023 the Darwin Portfolio is showing a profit of 17% (16.4% annualized IRR) since inception in November 2022. This is not as good as the return on the S&P 500 Index (up 18.5% over the same period) but beats the performance of a more diversified portfolio as exemplified by the AOR Fund (up 12.8%). I therefore take this as a positive sign.
The Darwin Portfolio is a low maintenance portfolio of 5 ETFs representing a global diversification of asset classes – VTI representing US Equity markets, VSS representing International equity markets, VNQ representing US Real Estate, TLT representing US Treasuries/Bonds and GLD as a commodity diversifier. Approximately 90% of the portfolio is held in these 5 assets on a Risk Parity allocation basis with a targeted maximum volatility on each asset set to 3% of total portfolio value. These 5 ETFs are complemented by a ~10% allocation to SVXY – a volatility based ETF – for additional diversification. The Portfolio is managed allowing 10% leverage (borrowed money) if called for. At the present time no leverage is used and the portfolio is close to 100% invested.
The portfolio is only adjusted if allocations, as determined by risk parity calculations, get seriously out of balance (>20%). At the present time 4 of the 5 ETFs are slightly out of this range but I will not be adjusting because my broker is moving my account (to my dismay) to a new platform on January 12 – so I will wait until I get to familiarize myself with the new platform.
Current positions and recommendations look like this:
The methodology is not super-sensitive to small deviations from calculated values.
In tabular format, trading in this account, to date, looks like this:
note the 16.94% IRR.
In graphical format, performance looks like this:
or, in stacked format:
where the discontinuities – in all but the “Portfolio” plots – reflect the allocation adjustments to each asset.
I have mentioned this before, but I will repeat again, the addition of the SVXY volatility ETF has been a significant contributor to the performance of this portfolio.
Look for adjustments at next month’s review when the account has been transferred to the new platform.