Stairway to the Beach
The Schrodinger is always a pleasure to update as I don’t need to apologize for poor performance or take credit for positive results as this is a computer managed Robo Advisor account. Schwab refers to these style portfolios as Intelligent Portfolios. When measured against the other 14 portfolios tracked here at ITA the Schrodinger is always in the top 50% based on return and risk. As a result, I use it as a standard or portfolio benchmark for the other ITA portfolios.
Schrodinger Investment Quiver and Recommendations
Below we see the nine ETFs Schwab is using to manage this portfolio. While I do not use the following Tranche Worksheet to manage the Schrodinger, I include it here so readers can see how many shares each ETF holds and compare it with the LRPC model recommendations. Note that every ETF is currently recommended for purchase. The prices are for 2/9/2023.
Schrodinger Performance Data
How is the Schrodinger portfolio performing? Over the past 13 plus months the annualized Internal Rate of Return (IRR) is -5.4% while the AOA benchmark is -11.1%. While still in negative territory, the portfolio is far outpacing its benchmark. The delta is even larger when compared to the S&P 500 (SPY).
Think of the Schrodinger as 80% stocks and 20% bonds and cash.
Schrodinger Risk Ratios
What is remarkable is that the Schrodinger managed to navigate a poor year for equities by squeaking out positive Jensen Alpha values the entire year. That is not a trivial feat. Each month the Information Ratio came in with a positive number. These are reasons why I highly recommend a Schrodinger style portfolio be one of the options for your family portfolio.
A Schrodinger style portfolio answers the question, “Who will manage the family portfolio when I die?” Turn your assets over to Schwab and set up a Robo Advisor account.
Schrodinger Interim Update: 19 October 2022
As long-time ITA readers know, I’m a strong advocate of security diversification (ETFs or no-load mutual funds) as well as portfolio diversification. This is what the ITA blog is all about.
Lowell
Discover more from ITA Wealth Management
Subscribe to get the latest posts sent to your email.
Hi Lowell,
I I wanted to get the very same weighting of Schrodingers from Schwab, with the same ETF’s, do I just ask for 80% stocks and 20% bonds? Or is there more details needed?
TF,
I think you might need to request 90% Stocks and 10% Bonds as you will not have control over the Cash. Regardless, once the portfolio is operational you can go in and adjust the Stock/Bond ratio.
Be sure to request an emphasis on U.S. Equities. Otherwise the Schwab model will carry a higher percentage in International Equities.
Once the portfolio is set up, watch it for a few months and see how the ETFs and percentages match up with the Schrodinger. It took me a bit of convincing to tilt the portfolio as heavily toward equities.
Lowell