Schrodinger Portfolio Review: 21 June 2023

Colorful fern in Crystal Springs.

Schrodinger is the easiest portfolio to both manage and review.  There is little to do except save as all the investing is done by the Schwab computers.  Since the last review the owner of this portfolio added cash and that money was allocated to the different ETFs based on the asset allocation algorithm specified by the stock/bond/cash ratio one can spot in the pie graph below.

Schrodinger Investment Quiver

The following worksheet comes out of the Kipling spreadsheet, but is not used to manage the Schrodinger.  I include it here to show readers how the Schwab computer allocates the different assets.  If the Kipling were used to manage this portfolio only SCHX would be a Buy.

Schrodinger Performance Data

Since 12/31/2021 the Schrodinger performance is flat.  However, this is approximately 4.5% better than SPY when annualized.

Note that Schwab maintains a cash position of 7% to 8% at all times.  It is my understand that Schwab uses this money to loan out at higher interest rates and that is how they can off these Intelligent Portfolios at zero cost to customers.  Yes, they do collect some expense ratio dollars associated with each ETF.

Schrodinger Risk Ratios

Since the last update the risk-free short-term treasury interest rate increased.  This increase puts downward pressure on the Jensen Alpha.  Nevertheless, since May the Jensen improved but is far off its high mark back in August of 2022.  Once the July-August hump is history we might see a positive slope for the Jensen Performance Index.

A steady Information Ratio indicates the portfolio consistently outperforms the S&P 500 (SPY) benchmark.  That is unlikely to continue if we experience a strong bull market sometime in the future.

Schrodinger Computer Manage Portfolio Update: 7 June 2023