Kepler Asset Allocation Portfolio Review: 24 October 2024

Fishing boat in Newport Bay

Kepler is one of several Asset Allocation portfolios using this standard investing model.  Like the Einstein, the Kepler was used by the owner to hold assets needed for education.  Those withdrawals are over and now it is time to begin adding to the portfolio or at least stabilizing it for future growth.

Under the old operating model the Kepler was heavy into VOO.  This is still the case.  Instead of selling shares of VOO and incurring capital gains taxes, I will concentrate on asset classes most under target and slowly rebalance the portfolio using new cash and dividends.  This will take months, but holding more shares of VOO and QQQ than recommended should not hurt performance if the market continues to move up.

Kepler Asset Allocation Model

Below is the asset allocation distribution early this morning.  Since I pasted this screenshot into the blog more shares have been purchased of a few assets.  Those additions will show up in the next review.  When the portfolio it totally balanced the income should be around 2%.

When folks ask what percent to withdraw in retirement to avoid running out of money I never recommend more than 4%.  Better to keep it to 2% or 3%.  If 2% one can maintain a portfolio such as the Kepler without ever needing to sell shares.

Kepler Rebalancing Recommendations

When rebalancing a portfolio such as the Kepler one could concentrate on the single asset most under target.  VWO is an example.  My preference is to set a number of limit orders very close to the current price for numerous asset classes.  Currently I have a minimum of five (5) limit orders set to bring different asset classes into balance.

The ultimate goal is to have every asset class no more than 1.0% below target.  For portfolios greater than $100,000 I set the goal at 0.5%.

Kepler Performance Data

Since 12/31/2021 the Kepler is lagging the AOR benchmark by two percentage points.  It will not be easy making up this delta difference.

Kepler Risk Ratios

The following Risk Ratio data table is the best way to evaluate the growth direction of the Kepler.  For new readers, pay most attention to the Jensen Alpha (or Jensen Performance Index) and the Information Ratio.  The current Jensen Alpha is the highest it has been over the past year.  The portfolio is on a positive path.  The Information Ratio is also at a high water mark for the year.

Questions and Comments are always welcome.

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