After a stellar year in 2021 followed by a bear market in 2022, it makes good sense to run an analysis on what is working when it comes to the ITA portfolios. Which of the eighteen (18) ITA portfolios rank high on a return basis and which rank high on a risk adjusted basis and what happened to U.S. Equities over the past two year? On September 26, 2020 VTI closed at 162 and change. On September 26, 2022 the same ETF, VTI, closed at 182 and change. In other words, very little difference over the past two years. We are about to finish off the third quarter of 2022 so we can look forward to dividends flowing into some of the income oriented portfolios. Other portfolios will benefit less as they don’t have the same exposure to high yield securities. Once we close out November of 2022 I will have two years of comparison (Copernicus is an exception) with which to judge the different portfolios styles.
During the fourth quarter of 2022 I will be paying close attention to the return and risk of the eighteen (18) portfolios I track here at ITA Wealth Management. The reference I’ll use for comparison is the Schrodinger as it is a computer managed portfolio with a buy and hold investing style. I don’t do anything with the Schrodinger other than keep records of when the owner adds or withdraws cash. Based on the most recent data, the Schrodinger ranks number 13 out of 18 on return over the last 22 months. Based on my risk calculation the Schrodinger is number 12. Portfolios lagging the Schrodinger return are: Millikan (Relative Momentum), Gauss (Relative Momentum), Newton (Factory Income), Franklin (Dual Momentum), and Copernicus (Buy and Hold U.S. Equities).
Based on this data, we have at least one portfolio from each investment style lagging the Schrodinger return over nearly two years of operation. On the bright side of the equation, there are 12 of 18 portfolios that are outperforming the return of the Schrodinger and 11 of 18 carry less risk. Those are rather good results, but I’m striving for even better returns. Once we pull out of the bear market the Copernicus in particular should do well. This portfolio is an anomaly as it was launched in mid-January of 2022 or just as the bear market began. The Copernicus was launched too late to take advantage of the 2021 bull market.
Once dividends are posted for the third quarter I’ll post the ITA portfolio performance data so Platinum and Lifetime members can make a fresh comparison to see how the various portfolios are performing with respect to the Schrodinger. During the last quarter of 2022 additional attention will be give to Internal Rate of Return (IRR) data to see if any management changes are required for specific portfolios.
Using the most recent performance data the top five ITA portfolio performers are scattered over every investing model. Return rankings beginning at #1 through #5 are: Curie (Factory Income), McClintock (Dual Momentum), Kepler (Relative Momentum), Carson LRPC (Relative Momentum), and Huygens (Factory Income).
From all the data I have thus far, it is difficult to identify which investing style works best as the top and bottom performers occupy all the basic investing models. The take-away is that 12 of the 18 portfolios are performing better than the computer manage account or a percentage of 67%. By the end of 2023 I would like to lift that percentage up over 80%.
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