I Created a Lazy Portfolio (with 12 ETFs) that beat S&P500
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After the beginning of US-China trade war in Jan 2018 and the terrific Covid-19, I realise buying stocks that can easily fell 20-30% in a day is extremely risky. An etf, on the other hand, consists of hundred of thousands of stocks which are well-diversified, thus, lower drawdown.
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Same as the goal of every investors, my goal is to beat S&P500 in the long run. So I started testing a few strategies that require little maintenance but are able to beat the S&P500.
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One simple portfolio that I created is the Lazy Portfolio (you can find it in Paperfolio or my profile) that consists of 11 ETFs (select sector ETFs) and is rebalanced monthly.
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The concept is simple:
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1. Based on historical monthly performance of each sector in S&P500, allocation is made based on Kelly Criterion.
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2. In times when the Fed is about to reduce rates, TLT is allocated.
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3. Only BIL is allocated for all September months.
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Result:
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As demonstrated below, the model portfolio beat S&P500 on 3-yr, 5-yr, 10-yr, 15-yr and 20-yr horizon with a lower standard deviation. Not too bad for a simple portfolio.
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(Follow me for more)
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An engineer turned equity analyst and fund manager, 8 years of experience. Good at stocks, ETF, options and warrants.
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