WSJ Joins The Party

The WSJ wrote about three alternatives to the typical 60/40 portfolio allocation, all three of which we've looked at here before. I added a fifth.

The results

Our backtest goes to Aug 30, 2000 because that was the timeframe WSJ cited. Portfolio 5 simulates 67% in NSTX which leverages up in such a way that 67% to that fund equals 100% in VBAIX. 

Was the leverage in Portfolio 5 worth it? Based on growth rate it seems like it was. Because of the volatility, the Sharpe Ratio wasn't impressed just being right in the middle of the pack and there hasn't been reliable crisis alpha.

If you're interested in very simple 30/70, iShares has an ETF for that with symbol AOK which has $630 million in AUM. For what it's worth, I think 70% in bonds in the AGG/intermediate or longer treasuries sense is a dreadful idea. 

I've been writing about most of these alts for a very long term and certainly the idea of avoiding duration for much longer than that and I am convinced it works. MERIX/PPFIX are client and personal holdings.

VBAIX' return with AOK's volatility. IRL, I might want smaller weightings to more alts though or maybe a larger allocation to something like TFLO or add in T-Bills.

We just got back from a quick trip, so just a short, fun post. 

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