Reducing portfolio risk is at the forefront of investor thinking after a flat market in 2015. Momentum principles, as laid out in the Kipling 2.5.1 spreadsheet, do not always work as well as preferred, due in part to the 33-day portfolio review waiting period. We see the rankings change when we use 12 Portfolio Offsets. It has been suggested one might split a portfolio into smaller units so the portfolio reviews comes up at different times, much as the 14 portfolio rotations I track on this blog. While I am not recommending one split a portfolio into 14 sections, one suggestion is to divide a portfolio into units of $100,000 to $250,000. Portfolios of this size provide more flexibility than very small portfolios. In addition to looking at different parts of the portfolio at different times, different securities can easily be used for diversification purposes.
Assume a portfolio is $500,000 in size. Breaking it into halves or thirds makes sense. In families this may come naturally as a couple may have two taxable and two tax deferred accounts. If this is the case, the portfolio divisions, while not equal, are present by default.
Even if a portfolio is divided in half and one uses 12 Portfolio Offsets, over a month we have good coverage as to what securities were ranked high during nearly every trading day of the month. Give serious thought to dividing a portfolio into different parts.