Launched with a $5,000 investment on the 31st of July of 2017 the Schrodinger is now seven months from its 5th birthday. This is sufficient time to make some serious evaluations as to whether or not investing with a Robo Advisor makes any sense. The Schrodinger survived the 2020 Covid-19 Crash, even though U.S. Equities were quick to recover.
IRA readers know this portfolio is truly a passive portfolio or what I call a “do nothing” portfolio. To set up an Intelligent Portfolio (computer managed) with Schwab you do two things. 1) Deposit the required minimum amount of dollars. Check with Schwab. 2) Answer a few questions to aid in what your stock/bond ratio should be. This ratio can easily be changed later. I did make one additional request of Schwab (after a hint from an ITA subscriber) and that was to skew the portfolio toward U.S. companies and away from International companies. This is just a U.S. tilt and does not mean Schwab will not invest in any international companies. Since I made this request the portfolio has performed a tad better as U.S. Equities have had an amazing run the last two calendar years.
The owner of this portfolio made a recent cash deposit and that accounts for the little larger than normal holding (9.5%) in cash. Schwab generally holds between 7% and 8% in cash. I think they use this money to make money for the company, not the customer.
The yield (1.39%) is not particularly high as I’ve set up the Stock/Bond ratio to be growth oriented. If one needs income, then run a portfolio similar to the Hawking or Huygens. The Huygens is schedule for a review early next week.
Kipling Recommendations for Schrodinger
The Tranche worksheet from the Kipling is not used to manage the Schrodinger. I show the following screenshot as an example if one were managing the Schrodinger as a Relative Strength portfolio.
Note a few changes such as the look-back period. I’ve set it so it is essentially a one-year look-back combination. Check the heavy weight assigned to the 252 trading days look-back period. The Target Filter is turned off and the investing model is set to LRPC.
The portfolio beta is low (0.792) so this portfolio is not designed to keep pace with the S&P 500.
Schrodinger Performance Data
Over the past 13 months the Internal Rate of Return for the Schrodinger is a robust 23.2%. Once more, two potential benchmarks are missing critical data. We do see the Time-Weighted Return for AOR, one possible benchmark. The Schrodinger is crushing this benchmark.
With this kind of performance for so little effort, the Schrodinger can easily become a favorite portfolio.
Schrodinger Risk Ratios