Today, a follow up to yesterday's post by plugging the Catalyst/Warrington Strategic Program Fund (CWXIX) and the Rational Tactical Return Fund (HRSTX) into a portfolio as bond substitutes. The primary strategy for both is primarily using option combos to create a T-bill like return similar to client holding Alpha Architect Box ETF (BOXX).The funds have a little more going on with trend and volatility trading than BOXX does.
First, for a little context is 60% Vanguard S&P 500 (VOO) with 40% in AGG, then CWXIX and then HRSTX for a full bond replacement look.
There's not much differentiation between the three except for 2022.
Next, we'll incorporate them into the type of portfolio we often work with here. Each of the following have 65% in Invesco S&P 500 Momentum (SPMO), 5% in client/personal holding BTAL as a first responder defensive, 10% in managed futures and the final 20% in AGG, CWXIX or HRSTX as noted.
Again not a ton of variation most of the time except for 2022 and 2024 where all three outperformed VBAIX dramatically.
While it's nice that the three outperformed VBAIX, the driver of the result is most likely attributable to the top down decision to avoid or at least minimize exposure to fixed income duration.
As for the correlations of the two funds to a couple of core holdings as well as several other alts;
The yellow highlighted symbols are in my ownership universe. It's interesting that the correlations between BOXX, CWXIX and HRSTX are all quite low.
This exercise was productive.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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