“Performance data represents past performance, and may not reflect future investment returns.” – U.S. Securities and Exchange Commission
Schwab’s Intelligent Portfolio, Schrodinger, is up for review this morning. Almost no action took place over the past month, likely due to the cash holding not exceeding 8.0%. Is this sizable percentage in cash holding down performance? Follow along as we check out the makeup of the Schrodinger, performance results, and risk considerations.
Young folks would do well to open up an Intelligent Portfolio with Schwab. It requires a minimum $5,000 investment and once the portfolio exceeds $50,000 Schwab will “tax manage” the account. For the young this is not an issue as I highly recommend they invest in a Roth IRA account.
Schrodinger Asset Allocation
The cash value is approaching $10,000 or 8.0% of the portfolio. The owner added a few hundred dollars to the portfolio this month, yet it was insufficient for the computer to purchase more shares of any of the current holdings.
First quarter dividends will likely provide sufficient cash to generate new purchases.
Schrodinger Performance Data
Since 12/31/2021 the Schrodinger has outperformed the S&P 500 (SPY) by a huge margin. Frankly, I did not anticipate a computer managed portfolio based on a Asset Allocation model would perform to this level.
Schrodinger Risk Ratios
On a risk adjusted basis the Schrodinger continues to show up well based on the Jensen Alpha or Jensen Performance Index. The slope of the Jensen is a robust 0.42.
While the Information Ratio is not at a high point for the past year it is quite respectable with a 0.46 reading.
With exception of Omega, all risk ratios are higher than they were back in April of 2023.
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Hi Lowell,
First, I want to thank you for the education I’ve obtained from following this blog for more years than I can remember.
I became interested in the Schrodinger portfolio as a fail safe retreat application as age encroaches and I have opened one in my wife’s account to check it out -and it has done well. I recall you mentioning that one potential drawback was the rather high percentage of cash carried. I’ve been looking at other possible options and came across TDF’s from Ishares-a relatively new set of funds. [See IRTR and series ITDA, ITBC, etc]. One thing I didn’t like about the Schwab portfolios was that it was not listed and able to be automatically charted. The Ishares portfolios are listed, do not include a high percent of cash, and can be charted on Yahoo. Perhaps not a bad thing for a pure retirement portfolio subject to regular cash withdrawals but, as you note, possibly a drag on the overall return. If you have an interest to look into them, I’d be interested in your opinion. Again, thanks for your diligent efforts.
Len
Len,
I was not aware of these portfolios. All seem quite new, but should be interesting to follow. Will they outperform Pauling II? (g)
Lowell
“First, I want to thank you for the education I’ve obtained from following this blog for more years than I can remember.”
Thank you. You likely go back to somewhere around 2008 to 2010. I think Bob W. was the first one to follow ITA, but you were among the first. Thanks for your loyalty. Loyalty is not a requirement here as it is for Individual-1. (vbg)
Lowell