It was a stellar year in the US equity markets with the S&P 500 closing up over 29% on the year:
There were only two drawdowns of over 4% – that came in November and early December – but these were both short-lived and, with the help of Santa, we closed the year near all time highs at ~4800. We saw new highs on over 70 days during the year. With hindsight, our best strategy for 2021 would probably have been to just Buy and Hold an asset tracking this index (or the broader US equity market) and forgetting about it. Volatility was a little higher than in previous years topping the 20% level a number of times over the course of the year.
Despite a surge higher on Monday, US markets traded within a narrow ~40 point range for the rest of the week – but still managed to close above last week’s close. Relative to Real Estate assets and Gold this was a modest performance:
So let’s see how the Rutherford Portfolio performed:
where we see relatively strong performance over the past 2 weeks.
Current holdings in the portfolio are shown below:
where we can see that we are not invested directly in US equities apart from the contribution through holdings in the benchmark AOR Fund. Real Estate and Commodities (including Gold) are well represented and account for the recent strong performance.
Let’s check on current rankings and recommendations:
where, using the BHS model, we see Buy recommendations for AOR, VTI, VNQ and DBC with a discretionary Hold? recommendation on GLD. Although GLD is a Hold? recommendation it still generates a high Score of 9, and is not looking weak, so there is no obvious reason to sell here. Note that I have taken AGG (an Aggregate Bond Fund) out of the quiver for the Rutherford portfolio. I have done this to simplify the portfolio and better balance the asset classes (particularly since I am using AOR more and bonds are represented in this ETF) – but this is not a major change.
Now we’ll take a look at this week’s rotation graphs:
where we continue to see both long- and short-term strength in VNQ and short-term strength in DBC and VTI. This leads to the following recommendations from a rotation model:
This model is showing Buy recommendations for AOR, VTI, VNQ and TLT. AOR is currently held in Tranche 2 (the focus of this week’s review) and I will ignore the Buy recommendation on TLT due to weakness in the rotation graph and negative short-term HA signals. This leaves VTI and VNQ that are recommendations from both BHS and Rotation models. I will therefore adjust the portfolio as follows:
i.e. I will use the available Cash to purchase shares in VTI and VNQ.
For the past 2 years I have used a tranche system to review/adjust the Rutherford Portfolio so as to demonstrate the significance of review date (timing) luck. I may discontinue this methodology whilst retaining the ~10 asset quiver of diversified ETFs. Would this cause any problems for ITA members – or has the message been received (loud and clear)?