Schrodinger is the portfolio up for review this morning. As long-time readers are aware, the Schrodinger is an Intelligent Portfolio housed at Schwab. I think of it as a Buy-Hold-Rebalance portfolio managed by a computer or computer algorithms. These portfolios are also known as Robo Advisor Portfolios. Regardless of the title, all one does is invest money and set up a stock/bond ratio. Computers do the rest. When it comes to investing, it does not get easier than this.
My only complaint is that the portfolio holds too high a percentage in cash. It is currently 7.9%. Schwab has been sued over this issue, but it is either hold cash or charge to manage the portfolio. I prefer the free computer management as cash can work both ways. When the market declines cash works to the benefit of the portfolio holder. When the market is on the rise, cash is a drag on performance.
Schrodinger Investment Quiver and Recommendations
The following screenshot shows both the ETFs held in the Schrodinger and the number of shares in each security. Checking in on VOO and VB, it makes little sense to me to hold those two ETFs in the portfolio as there are too few shares to impact performance.
While I include the Tranche worksheet in this review, it is not used to manage the Schrodinger as this portfolio is on “automatic computer” pilot.
Schrodinger Performance Data
How is the robo portfolio performing. With and Internal Rate of Return (IRR) I would say – rather well. To get a fuller picture we need to examine the Risk Ratios.
As you can see from the Investment Account Manager data, the Schrodinger is handily outperforming the AOR benchmark as well as VTTVX and VTHRX. This data include information from the last 14 months.
Schrodinger Risk Ratios
As explained many times before, I am using 11/30/2020 as the launch date so the Franklin (a young portfolio) is measured over the same time frame. It is so early in the month the February data is meaningless. While the lower (8.65) Jensen Alpha value pulls down the slope average, it is still a robust 0.56.
If one looks back to February of 2021, the values are holding up quite well as they should since 2021 was a banner year for U.S. Equities.