Einstein Asset Allocation Portfolio Review: 22 November 2023

Texture

Einstein is one portfolio where the investment strategy was disrupted several times over the last four to five years as there was a call for educational expenses at a time when the market was rising.  As a result, performance is not what it should be.  The goal is to now rebuild this portfolio over the next few years to get back on track.  Strange as it may sound, a recession may be required for the Einstein to once more begin to outperform its benchmark.  Buying back shares at lower prices is the key.

Einstein Asset Allocation Model

Below is the current Asset Allocation plan for the Einstein.  Several asset classes are still out of balance.  The last (5th) screenshot lays out the Buy orders for this portfolio.

Einstein Manual Rebalancing Recommendations

To reduce taxes there is no plan to sell off ETFs that are above target.  Infusion of new cash and dividends will be used to bring asset classes below target back to target.  For a portfolio of this size an asset class is considered to be in balance if the percentage is within plus or minus one percent.

The purple arrow points to the number of shares required to bring several asset classes closer to their target percentages.

Einstein Performance Data

Since 12/31/2021 (common launch date for all ITA portfolios) the Einstein lags the AOR by 3.47 percentage points.  This is a wide gap and will be difficult to close unless the market backs off and new cash becomes available to purchase shares at a lower price.

Einstein Risk Ratios

The following table provides additional clues as to how well the Einstein is performing under the “new” Asset Allocation model.  As with other portfolios I moved to this model in April, we need at least a year to gain a better understanding of trends.  One glimmer of hope is the slight positive slope of the Jensen Alpha or frequently called the Jensen Performance Index.  The Jensen and Information Ratio are the two most important risk factors of the four shown.

I am somewhat cool on the Treynor as it is too beta driven.

Limit Orders

Below are all the standing limit orders for the Einstein.  I used the three-year average annualized volatility as a guide for setting limit orders.

If there are questions related to setting Buy and Sell limit orders, post them in the Comment section provided below.