Schwab’s Intelligent Portfolio, the Schrodinger, is up for review today. This portfolio was launched a number of years ago to answer the question, “Who Will Manage the Family Portfolio When I Die?” Of the three portfolio investment strategies tracked here at ITA Wealth Management, the Schrodinger is by far the easiest to manage. All one does is set up an Intelligent Portfolio with Schwab, save and sit back and let their computer(s) manage the portfolio. There are no management fees other than the expense ratios associated with the individual ETFs. I made two requests of Schwab.
- Emphasize U.S. Stocks rather than hold a high percentage of International Equities. In my opinion the Schwab computers were tilting the portfolio too heavily toward non-U.S. Equities.
- I needed to convince Schwab to be more aggressive so the portfolio was tilted heavily in stocks rather than bonds. This should not be a problem for a young investor when answering the initial questions.
I mentioned there are three portfolio investment strategies employed here on the ITA blog. Here are the three.
- Intelligent Portfolio or what I call a Robo Advisor model. The Schrodinger is the single portfolio using this model.
- The second model calls for investing only in U.S. Equities. Never sell unless there is an emergency. The portfolio following this model is the Copernicus.
- A little over a year ago I developed the Sector BPI investing model. Thirteen portfolios are currently using this model, but I only report on eleven. If interested, check on the Carson as it is the oldest of the Sector BPI portfolios. Interested readers may need to register as a Guest and wait to be elevated to the Platinum level as many of the blogs are protected.
Below are the current holdings for the Schrodinger. The portfolio is getting a little heavy in cash, but Schwab may be holding off purchasing more equity shares once all the 2023 dividends are paid.
I should mention that portfolios in excess of $50,000 are tax managed. One might need to request this option. The Schrodinger is currently tax managed so it will be interesting to see what the computers do near the end of the calendar year and early in 2024. The next review will make these moves clearer.
Schrodinger Performance Data
The following data spans from 12/31/2021 through 12/19/2023 or nearly two years. The portfolio is actually older, but I use 12/31/2021 as a starting date as several new portfolios were launched at that time and I want to compare performances. Approximately once a month I post comparison data showing how all the different portfolio are performing. Platinum and Lifetime members have access to that information.
Thus far the Schrodinger is crushing the S&P 500 (SPY) as well as the other potential benchmarks. This data comes from the Investment Account Manager software. A new version of this software is coming and if interested I think I can arrange a discounted price. Stay tuned.
In general, the Schrodinger should outperform SPY in down markets, but may have a difficult time keeping up with the market in bull markets.
Schrodinger Risk Ratios
The following data table is proprietary to the ITA blog. These five metrics are risk measurements with the Jensen Alpha or Jensen Performance Index the most important. Uptick in stocks have given the Jensen a nice boost in December despite the increase in the risk-free short-term interest rates.
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