These articles chronicle some of the decisions and analysis of our Investment Committee.
Last year, our 2023 Marotta’s Gone-Fishing Portfolio was a recommendation of 12 stock investments. This article is to report on the 2023 performance of those twelve stocks.
This quarter, we saw that in 1-year returns ending March 31, 2024, Developed Freedom Investing had a -5.8% disadvantage, Emerging Market Freedom Investing had a +3.83% advantage, and Overall Freedom Investing had a -2.89% disadvantage.
Last year, eleven countries made our cut-off. This year, twelve do.
Because of Mexico’s current valuation, we believe that it has the possibility to perform well regardless of how this potential conflict resolves.
This quarter, we saw that in 1-year returns ending December 31, 2023, Developed Freedom Investing had a -3.97% disadvantage, Emerging Market Freedom Investing had a +4.9% advantage, and Overall Freedom Investing had a -1.27% disadvantage.
This quarter, we saw that in 1-year returns ending September 30, 2023, Developed Freedom Investing had a -4.77% disadvantage, Emerging Market Freedom Investing had a +3.89% advantage, and Overall Freedom Investing had a -1.63% disadvantage.
If China booms, it may be a mistake that we reduced the allocation. If China undergoes investment controls, it may be a mistake that we kept China at all.
This quarter, we saw that in 1-year returns ending June 30, 2023, Developed Freedom Investing had a -3.68% disadvantage, Emerging Market Freedom Investing had a +4.15% advantage, and Overall Freedom Investing had a -0.61% disadvantage.
This quarter, we saw that in 1-year returns ending April 30, 2023, Developed Freedom Investing had a -2.99% disadvantage, Emerging Market Freedom Investing had a +1.85% advantage, and Overall Freedom Investing had a -0.4% disadvantage.
Last year, thirteen countries made our cut-off. This year, eleven do.
In the past, we’ve shown some preference to Vanguard funds, but going forward we plan to show some preference to the cheaper Fidelity funds.
Reducing expense ratios by a theoretical 0.42% is a significant result. It is good to know that what works in theory has also worked even better in practice.
Here is a review of the performance of Freedom Investing in 2022.
This quarter, we saw that in 1-year returns ending December 31, 2022, Developed Freedom Investing had a +0.13% advantage, Emerging Market Freedom Investing had a +0.45% advantage, and Overall Freedom Investing had a +0.77% advantage.
Biotechnology’s low correlation, the very thing that makes you dislike it, is specifically what gives it a place in efficient portfolios.
The lower the market falls, the safer it is to be invested.
This quarter, we saw that in 1-year returns ending September 30, 2022, Developed Freedom Investing had a -0.44% disadvantage, Emerging Market Freedom Investing had a -0.34% disadvantage, and Overall Freedom Investing had a +0.14% advantage.
This quarter, we saw that in 1-year returns ending September 30, 2022 our U.S. Stock Strategy had a +4.11% advantage over VTI.
This quarter, we saw that in 1-year returns ending June 30, 2022, Developed Freedom Investing had a -1.19% disadvantage, Emerging Market Freedom Investing had a +0.46% advantage, and Overall Freedom Investing had a -0.12% disadvantage.
This month, the forward P/E ratios showed considerable variation with many sectors returning to a fairer valuation.
Singapore is approximately 37.6% in the Financial sector and has yet to increase its domestic interest rates.
This quarter, we saw that in 1-year returns ending March 31, 2022, Developed Freedom Investing had a +1.44% advantage, Emerging Market Freedom Investing had a +2.07% advantage, and Overall Freedom Investing had a +1.28% advantage.
We are constantly reviewing our portfolios’ asset allocations in order to bring them more in line with our Investment Committee’s best practices. Here is a summary of our recent changes.
At the start of the year, purchases of all of these securities had no transaction fee at Charles Schwab. However in December 2021, Schwab added a transaction fee to some of the holdings.
Now that the Franklin Templeton funds have been added to the Institutional Intelligent Portfolios platform, we are updating our allocations to use the cheaper funds as their primary targets.
A Technology correction may not happen, but moving more into Mid and Small Cap Value may help allocations even if it doesn’t.
We anticipated Consumer Staples to have a lower expected return but a larger risk-adjusted return and we expected Biotechnology to have very volatile returns with lower correlations to the other sectors. Both of those things happened in 2021.
The estimated advantage of Franklin funds during 2021 was 0.40% or $118,955.
An initial equal weight strategy of these 26 companies implemented on January 1, 2021 and held without further buys or sells through December 31, 2021 had a +8.64% advantage over the foreign healthcare benchmark.
This quarter, we saw that in 1-year returns ending December 31, 2021, Developed Freedom Investing had a -0.12% disadvantage, Emerging Market Freedom Investing had a +1.27% advantage, and Overall Freedom Investing had a +0.21% advantage.
This quarter, we saw that in 1-year returns ending September 30, 2021, Developed Freedom Investing had a +0.70% advantage, Emerging Market Freedom Investing had a +1.64% advantage, and Overall Freedom Investing had a +0.71% advantage.
This article is part of my series where I review how Freedom Investing performs for the quarter.
Recently, we lowered the duration of our U.S. Bond portfolio and increased the amount which is inflation protected. This article explains the reasons for this change.
While many have been following the domestic returns and recovery, fewer investors know how well foreign investments did this past year.
We are constantly reviewing our portfolios’ asset allocations in order to bring them more in line with our Investment Committee’s best practices. Here is a summary of our recent changes.
This means that in addition to the overall Emerging Market funds, we will have country-specific Emerging Market allocations to both Taiwan and Chile.
No one knows what the future holds for Hong Kong, but we needed to make a decision on whether it has a place in our Freedom Investing.
We would expect the switch to Frankiln funds to save our clients 0.11% annually due to the lower expense ratio.
When reviewing our Foreign allocations, we discovered that the foreign Health Care sector has shown high risk-adjusted performance.
Our Gone-Fishing Portfolios are free to use portfolios that take advantage of the no-transaction-fee, low-cost ETFs or mutual funds of each major custodian. Over the years, we’ve changed the funds and the allocations as new research or securities reveal improvements.
We believe these 26 companies will be an effective weight to add foreign healthcare to our portfolios.
We hope this small increased exposure to foreign healthcare will help capture some of the efficiencies we believe to have found.
We believe that holding on to Energy and waiting for it to recover might mean missing out on greater gains elsewhere.
We decided to add two new sectors after generating several hundred efficient frontier graphs of various United States classifications, industries, and sectors over a variety of time periods.
In this article, I am reviewing the quantitative measurements and performance metrics of Freedom Investing to see how its risk and return compare to the EAFE Index, its benchmark.
Hong Kong has always been an anomaly: a tiny, extremely free country with an expiration date in 2047.
As a result of new fund additions, we added five new country-specific funds to our Schwab Institutional Intelligent Portfolio asset allocations.
These findings together demonstrate how Economic Freedom seems to have been a valid factor for higher expected returns than investing in the EAFE Index alone.
As we are still in the midst of COVID-19 quarantines, we will have to wait to see what continuing or lifting restrictions actually does to companies, their expected earnings, and their market pricing.
Diversification means always having something to complain about. Recently, it has been energy.