Canadian Portfolio

General Discussion on the Permanent Portfolio Strategy

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Fredmong
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Re: Canadian Portfolio

Post by Fredmong » Mon Jun 29, 2020 11:57 am

Smith1776 wrote:
Sun Jun 28, 2020 1:48 pm
I wanted to share a new concoction of mine without starting a new thread, so I'll post it here. I've "invented" a variation of the Goldsmith PP. The Goldsmith PP being itself a variation of the PP that uses a vanguard conservative fund as a replace for the stock, bond, and cash components of the portfolio. I've assembled a factor tilted variation of the portfolio for Canadians that I am quite taken with.

- 25% KILO.B. (Gold ETF)
- 60% VCIP (Vanguard Conservative Income Portfolio - 80% bonds/20% stocks)
- 15% VVL/VMO/VVO/VLQ (Vanguard value, momentum, low volatility, and liquidity factor funds)

An allocation to the above ETFs would yield the following underlying exposures:

- 25% gold
- 48% intermediate term global investment grade bonds
- 12% global market cap weight stocks
- 3.75% global value stocks
- 3.75% global momentum stocks
- 3.75% global low volatility stocks
- 3.75% global liquidity premium stocks

Hard to find a portfolio more diversified. If you are big on factor diversification as I am, you'll like this one.
Interesting portfolio ! Have you read Meb Faber's Global Asset Allocation book ? He sure makes a case for global equity investing.
Before the virus, US equities looked so overvalued compared to global equities. Now the world is such a mess, that US equities still look like the best house in a bad neighborhood for times to come. Long-term there is some better value in global equities, but short-term US equities might outperform.

How do you handle rebalancing bands with such an allocation ? Or do you only rebalance on a fixed date ?
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Smith1776
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Re: Canadian Portfolio

Post by Smith1776 » Mon Jun 29, 2020 5:32 pm

Fredmong wrote:
Mon Jun 29, 2020 11:57 am
Interesting portfolio ! Have you read Meb Faber's Global Asset Allocation book ? He sure makes a case for global equity investing.
Before the virus, US equities looked so overvalued compared to global equities. Now the world is such a mess, that US equities still look like the best house in a bad neighborhood for times to come. Long-term there is some better value in global equities, but short-term US equities might outperform.

How do you handle rebalancing bands with such an allocation ? Or do you only rebalance on a fixed date ?
Yeah, I was thinking about optimal rebalancing and complexity just the other day for this portfolio. Rebalancing bands become a bit of a conundrum for non-symmetric allocations don't they? What I think I'll do is stick with Browne's 35/15 rebalancing bands by taking out my trusty calculator and figuring out what the underlying exposures are. Should only take a few extra moments when doing portfolio check ups.

The factor funds that make up that 15% slice I don't think I will rebalance internally. I'll just let them ride and add money to the laggards when making contributions.

Meb Faber's book! I've been wanting to read that tome for years, but I haven't gotten around to it. I was looking for something that would push my Amazon purchase amount above the free shipping threshold... I might just do that!
I still find the James Rickards portfolio fascinating.
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