Rutherford-Darwin Portfolio Review: 16 May 2025

Bonsai, Kew Gardens, London

It was a strong week in the US equity markets with the SPX (S&P 500 Index) closing the week a little over 5% higher than last week’s close:

With news on Monday that tariff restrictions between the US and China might be eased, the markets blasted through the ~5780 resistance level and never looked back for the rest of the week. Although the 6000 level might provide resistance, simply because “round numbers” often provide psychological barriers to price movement, the next target to the upside would likely be at the February all-time highs at ~6160. Of course, as we have seen over the past few months, any unexpected news can spook the markets into volatility either to the upside or downside.

In terms of relative performance:

US equities topped the list (matched by the drop in volatility as reflected in the SVXY inverse volatility fund).

In the Darwin portion of the Rutherford-Darwin Portfolio, we have returned to a position of positive returns:

led by recent strength in all equity markets.

In the only position in the Rutherford Options portion of the portfolio, a bearish position in Oil (USO) just about broke even due to “income” generated through time decay and the total portfolio closed looking like this:

As I have indicated in previous posts this is a very conservative approach to investing since the portfolio holds a high percentage (70%) of the portfolio value in “risk-free” treasury bonds. This might well suite a significant number of risk averse investors but it is not likely to generate returns in excess of those that might be generated by holding a simple index fund (albeit with lower risk). I have therefore decided to change my allocation of money to the different strategies such that, rather than only allocating 10% of portfolio value to the assets currently selected for the Darwin portion of the portfolio, I will allow the allocation to reach a maximum of 90%. The balance of money available will then be used to hedge the portfolio and/or generate “income” on top of any dividends that might be distributed.

I won’t clutter this post (and confuse everyone) by including details here but look for a new post later today.