Schrodinger Portfolio Review: 23 September 2022

High in Andes Mountains

Schrodinger is the only Robo Advisor or computer managed portfolio followed here on the ITA blog.  This portfolio was initially established as an answer to the question, “Who Will Manage the Family Portfolio When You Die?”  The answer was, place the money in a Robo Advisor account as the computer makes all the investment decisions.

When I first looked into Robo Advisor options there were only a few available.  All firms charged a fee with exception of Schwab.  After testing a few different management firms I decided to stick with Schwab.  My only complaint is that Schwab carries too much in cash.  However, in the current market environment this is an advantage as cash is king at the moment.  Instead of charging a management fee, Schwab loans the cash in these Robo accounts at higher interest rates and that is how they are making money.  They can’t manage these Robo Advisor accounts for free.

Schrodinger Investment Quiver

Below is the current makeup of the computer managed account with Schwab.  Shares were recently added to four ETFs.  I should mention that I have the Schrodinger set up as an 80/20 stock/bond ratio account if one considers cash falls into the bond arena.  In addition, I requested Schwab place an emphasis on U.S. Equities rather than International Equities.  This request reduced the percentage allocated to international holdings.

A reader could set up their own “Robo Advisor” portfolio by doing nothing other than following the Schrodinger.

Schrodinger Security Recommendations

I do not use the Kipling spreadsheet to managed the Schrodinger as this is a hands off account.  I only show the Tranche worksheet below so readers can see recommendations if the model is set to LRPC and the look-back period is 252 trading days.  The Target Filter is turned off.  With these settings, one ETF (VTEB) shows up as a Buy.

Schrodinger Performance Data

For the first time in many months the Schrodinger is in negative territory if the launch date is 11/30/2020.  In reality, the Schrodinger began long before this launch date.  The good news is that the Schrodinger continues to outperform any of the benchmarks by a sizable margin.

I use November 30th, 2020 as the launch date in order to normalize or include younger portfolios when posting the performance data.  Only the Copernicus was launched after the 2020 date.

Schrodinger Risk Ratios

The following data table illustrates the damage 2022 has inflicted on the Schrodinger and this is not a unique situation.  Even with a negative slope, the Sortino Ratio is positive as is the Information Ratio.  The Jensen Performance Index is holding on to a positive number.

Since the Schrodinger is a Buy & Hold computer managed portfolio, I use it as another benchmark for the other ITA portfolios.  Whatever the management style, if one cannot outperform the Schrodinger, then it would be beneficial to put your money in a Robo Advisor account.

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