Golden Butterfly Portfolio

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Dieter
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Re: Golden Butterfly Portfolio

Post by Dieter » Sat Jan 21, 2023 3:40 pm

TomWexler wrote:
Sat Jan 21, 2023 6:12 am
To any holders of the GB, or anyone really, what is your review of its performance in 2022, and how do you see it going forwards? How did it do vs the PP?
If Quicken isn’t lying to me, Gold, LTT, and SCV have all beaten the S&P500 for the last three months (up 18-11%!) and YTD, so, looking better so far!

I Shoulda rebalanced in September (although didn’t hit any rebalance bands)

Future returns may vary
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Re: Golden Butterfly Portfolio

Post by Lucho Jr » Sun Jan 22, 2023 8:40 am

Has any non-US investor here implemented a GB portfolio? What ETFs do you use?

I'm currently thining about using the following:

20% Global stocks: SSAC - iShares MSCI ACWI UCITS ETF (Acc) - TER: 0.20%
20% Small Cap Value: USSC (USD ver. of ZPRV) - SPDR MSCI USA Small Cap Value Weighted UCITS ETF (Acc) - TER: 0.30%
20% Long Term Bonds: DTLA - iShares USD Treasury Bond 20+yr UCITS ETF USD (Acc) - TER: 0.07%
20% Short Term Bonds: IB01 - iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) - TER: 0.07%
20% Gold: ZGLDUS - ZKB Gold ETF A (USD) - TER: 0.40%

Looking at how International SCV performed in the past compared to US SCV, I think the international version would change the profile of the GB too much. But for the TSM part, SSAC seems like an ok alternative?
I am not too keen to go full "US-only".

Also, what does everyone use for Gold outside the US? I tend towards the ETF mentioned because it is a real ETF (not ETC), but the fact that the TER is high and it cannot be bought in fractional shares makes it a bit difficult to buy/rebalance to the exactly the necessary amount.
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Re: Golden Butterfly Portfolio

Post by senecaaa » Sun Jan 22, 2023 9:37 am

I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
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Re: Golden Butterfly Portfolio

Post by seajay » Mon Jan 23, 2023 9:04 am

senecaaa wrote:
Sun Jan 22, 2023 9:37 am
I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
Are you really sure about that? I know nada about 4GLD however many that claim to be backed by physical and that permit conversion often have criteria/conditions, such as certain sized/amounts only and/or only by certain entities. Push come to shove in a gold-rush and you might be towards the back of the queue only to find none remained by the time it was your turn. Opps sorry, no gold left, we're bankrupt, the queue to sue us is over there. Such that the greatest time to have held (physical) gold was lost to you.

Circumstances during the early phases of a disconnect between physical and paper gold could make it very appealing for funds to lend more of the physical gold they held than usual, leaving less actually available should that progress into a gold-run (high demand for delivery of physical gold ... and subsequent failures to fulfil the demand).
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Re: Golden Butterfly Portfolio

Post by senecaaa » Mon Jan 23, 2023 10:39 am

seajay wrote:
Mon Jan 23, 2023 9:04 am
senecaaa wrote:
Sun Jan 22, 2023 9:37 am
I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
Are you really sure about that? I know nada about 4GLD however many that claim to be backed by physical and that permit conversion often have criteria/conditions, such as certain sized/amounts only and/or only by certain entities. Push come to shove in a gold-rush and you might be towards the back of the queue only to find none remained by the time it was your turn. Opps sorry, no gold left, we're bankrupt, the queue to sue us is over there. Such that the greatest time to have held (physical) gold was lost to you.

Circumstances during the early phases of a disconnect between physical and paper gold could make it very appealing for funds to lend more of the physical gold they held than usual, leaving less actually available should that progress into a gold-run (high demand for delivery of physical gold ... and subsequent failures to fulfil the demand).

Well we can never be sure, but read this: https://www.xetra-gold.com/en/product/

Hard to believe they are lying?
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Re: Golden Butterfly Portfolio

Post by seajay » Tue Jan 24, 2023 12:23 pm

https://www.xetra-gold.com/fileadmin/us ... pektEN.pdf
page 18
d) No Rights or Beneficial Ownership in the Gold

Purchasers of the Notes will only acquire the rights securitised by the Notes. Purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold.

In the event of insolvency of the Issuer, the physical Gold is therefore generally deemed to be part of the insolvency estate. This means that if the Issuer becomes unable to pay or insolvent the claims of the holders of the Notes in respect of the Gold held in custody are not adequately secured (see also risk note "2.1.1.a) Insolvency Risk due to the Limited Assets of the Issuer"). In the event of the Issuer's inability to pay or insolvency, this may even lead to the loss of the entire capital invested by the holders of the Notes when purchasing the Notes.
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Re: Golden Butterfly Portfolio

Post by senecaaa » Tue Jan 24, 2023 2:19 pm

I guess if you want to prevent that you better get gold bullion (which I also do).
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Re: Golden Butterfly Portfolio

Post by Lucho Jr » Tue Jan 24, 2023 9:56 pm

Lucho Jr wrote:
Sun Jan 22, 2023 8:40 am
Has any non-US investor here implemented a GB portfolio? What ETFs do you use?

I'm currently thining about using the following:

20% Global stocks: SSAC - iShares MSCI ACWI UCITS ETF (Acc) - TER: 0.20%
20% Small Cap Value: USSC (USD ver. of ZPRV) - SPDR MSCI USA Small Cap Value Weighted UCITS ETF (Acc) - TER: 0.30%
20% Long Term Bonds: DTLA - iShares USD Treasury Bond 20+yr UCITS ETF USD (Acc) - TER: 0.07%
20% Short Term Bonds: IB01 - iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) - TER: 0.07%
20% Gold: ZGLDUS - ZKB Gold ETF A (USD) - TER: 0.40%

Looking at how International SCV performed in the past compared to US SCV, I think the international version would change the profile of the GB too much. But for the TSM part, SSAC seems like an ok alternative?
I am not too keen to go full "US-only".

Also, what does everyone use for Gold outside the US? I tend towards the ETF mentioned because it is a real ETF (not ETC), but the fact that the TER is high and it cannot be bought in fractional shares makes it a bit difficult to buy/rebalance to the exactly the necessary amount.
I've decided to go with SGLD (Invesco Physical Gold ETC Fund) instead of ZGLDUS. Gold fund TER's don't seem to include all the annual cost and the ZKB Gold ETF is probably closer to 0.70% p.a. SGLD is one of the largest funds, with lower annual cost and the possibility of buying in smaller increments.
As for safetly, I still believe ZKB Gold is probably closer to holding your own gold bullion, though (with all it's up and downsides).

Still not 100% sure about the other parts of the portfolio.
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Tue Jun 20, 2023 12:20 am

I am very surprised to see that Portfolio Visualizer has not included the GB as one of their model portfolios.
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Tue Jun 20, 2023 12:00 pm

Does anyone know if there's a canonical rebalancing policy with the GB?

I've been wrestling with it for a bit and I think something like +/-5% absolute bands or +/-25% relative bands seem reasonable.
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Re: Golden Butterfly Portfolio

Post by snedgar » Tue Jun 20, 2023 1:24 pm

I have never found anything canonical, but have just scaled from the PP.

In other words, I rebalance at +/- 8% = +/-10% (from PP) * (20% allocations / 25% allocations)

Still hit that pretty infrequently.
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Re: Golden Butterfly Portfolio

Post by senecaaa » Tue Jun 20, 2023 1:29 pm

If you scale them proportionally with the PP you get a 14-26% band like:


Screenshot 2023-06-20 at 21.26.14.png
Screenshot 2023-06-20 at 21.26.14.png (139.63 KiB) Viewed 10472 times
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Re: Golden Butterfly Portfolio

Post by Kevin K. » Wed Jun 21, 2023 11:45 am

Yes - 14% and 26% were the consensus recommendation years ago when the GB was introduced. I’ve rarely come close to them in actual practice.
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Re: Golden Butterfly Portfolio

Post by snedgar » Wed Jun 21, 2023 12:46 pm

I'm not questioning it, but I can't quite understand how you get +/- 6% by scaling from the HBPP +/-10% bands.

Can somebody (gently) explain the maths?
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Re: Golden Butterfly Portfolio

Post by Kevin K. » Thu Jun 22, 2023 10:24 am

snedgar wrote:
Wed Jun 21, 2023 12:46 pm
I'm not questioning it, but I can't quite understand how you get +/- 6% by scaling from the HBPP +/-10% bands.

Can somebody (gently) explain the maths?
As I recall it’s 30% of the 20% slice of each asset in the GB.
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Re: Golden Butterfly Portfolio

Post by ochotona » Mon Sep 25, 2023 12:38 pm

This AAII NYC Event may be of interest to those who want to learn more about Small Cap Value.


Hello,


The AAII NYC chapter cordially invites you to attend a special two-part mega-event featuring two of our most popular speakers, Paul Merriman and Chris Pedersen.

Date: Wednesday, October 11
Time: 6:30 PM ET, 5:30PM CT. 4:30 PM MT, 3:30 PM PT
Place: Online, via Zoom
Register: https://us02web.zoom.us/webinar/registe ... s8DfcAYxLQ

Part 1: The Case for Small-Cap Value: the Good, the Bad, and the Ugly (Paul Merriman)

Few equity styles generate as much love and hate as small-cap value. It boasts impressive long-term returns, but the ride can be rocky. The silver lining to that dark cloud is diversification. Portfolios that include an allocation to small-cap value have increased returns more than they've increased risk and been more resilient. This presentation looks at small cap value performance from seven different points of view. Come see how small-cap value can help in accumulation or retirement and the easiest ways to get and use it for a lifetime.

What you'll learn:

1. Why small-cap value deserves a place in your portfolio

2. How and why you need to right-size your small-cap value allocation

3. What to expect when it's combined with a target-date fund in accumulation and retirement

4. How to choose small-cap value funds with the highest expected returns

To help you make the most out of this event, you can download some free books and other resources at the Merriman website:
https://paulmerriman.com/millions-downloads/

Registration is free and open to all, but you must register to attend. See you there!
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Mon Sep 25, 2023 2:10 pm

ochotona wrote:
Mon Sep 25, 2023 12:38 pm
This AAII NYC Event may be of interest to those who want to learn more about Small Cap Value.


Hello,


The AAII NYC chapter cordially invites you to attend a special two-part mega-event featuring two of our most popular speakers, Paul Merriman and Chris Pedersen.

Date: Wednesday, October 11
Time: 6:30 PM ET, 5:30PM CT. 4:30 PM MT, 3:30 PM PT
Place: Online, via Zoom
Register: https://us02web.zoom.us/webinar/registe ... s8DfcAYxLQ

Part 1: The Case for Small-Cap Value: the Good, the Bad, and the Ugly (Paul Merriman)

Few equity styles generate as much love and hate as small-cap value. It boasts impressive long-term returns, but the ride can be rocky. The silver lining to that dark cloud is diversification. Portfolios that include an allocation to small-cap value have increased returns more than they've increased risk and been more resilient. This presentation looks at small cap value performance from seven different points of view. Come see how small-cap value can help in accumulation or retirement and the easiest ways to get and use it for a lifetime.

What you'll learn:

1. Why small-cap value deserves a place in your portfolio

2. How and why you need to right-size your small-cap value allocation

3. What to expect when it's combined with a target-date fund in accumulation and retirement

4. How to choose small-cap value funds with the highest expected returns

To help you make the most out of this event, you can download some free books and other resources at the Merriman website:
https://paulmerriman.com/millions-downloads/

Registration is free and open to all, but you must register to attend. See you there!
Thanks for posting this. I'll be there for sure.
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Re: Golden Butterfly Portfolio

Post by ppnewbie » Sun Oct 15, 2023 9:03 pm

Did anyone go to this session?
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Re: Golden Butterfly Portfolio

Post by ochotona » Tue Oct 17, 2023 9:46 am

ppnewbie wrote:
Sun Oct 15, 2023 9:03 pm
Did anyone go to this session?
I could not, but the author posted an article in the AAII Newsletter, plain text excerpt below. It backs up the Golden Butterfly results. There was much more written. Here is the entire journal for that month from my Google Drive.

----------------------------------------------------------------------------------------------------------------

Small cap value article AAII journal October 2023

Small-Cap Value Is the Best Choice for Equity Diversication
By Paul Merriman

Any long-term portfolio anchored by the S&P 500 can benefit from the addition of small-cap value stocks.

Although there are more small-cap stocks in the total market index, the large-cap companies, with their higher individual values, make up the majority of the Wilshire 5000's total index value. Wilshire states the 747 large cap stocks comprise more than 91 percent of the Wilshire 5000 index value. The next 1,737 small-cap stocks are worth about 9 percent. The remaining roughly 2,500 micro-cap stocks are, despite being numerous, collectively worth less than 1 percent of the stock market value tracked by the index.


Small Cap Improves Upon S&P 500 Returns

Here’s what I’m suggesting: Assume your default bedrock equity investment is the familiar, comfortable S&P 500. Also assume that you would like to do better than that index over the long term and you’re willing to put a portion of your equities into another asset class. In that scenario, I think small-cap value is your best choice for diversification.

I can’t show you the future, but I can show the past.

Many investors believe small-cap value stocks are riskier than the S&P 500. Our analysis paints a different picture. We studied 53 years of returns from 1970 through 2022. We compared the S&P 500 alone to an equity portfolio split 50%/50% between the S&P 500 and small-cap value stocks. {that’s what Golden Butterfly does}

Here’s what we found:

» The two-fund combination had a compound annual growth rate of 12.2%, compared with 10.4% for the S&P 500 itself.

» In 11 of the 53 calendar years, the S&P 500 lost money; in three of those losing years, small-cap value stocks realized gains.

» In another five of those 11 years in which the S&P 500 lost money, the two-fund combination also lost money, but not as much as the S&P 500.

» In its 42 profitable years, the S&P 500 was up 18.7% on average; in those same years, the average gain for small-cap value was 21.3%.
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Re: Golden Butterfly Portfolio

Post by ppnewbie » Tue Oct 17, 2023 9:58 am

Thanks!
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Re: Golden Butterfly Portfolio

Post by vnatale » Tue Oct 17, 2023 10:37 am

ochotona wrote:
Tue Oct 17, 2023 9:46 am

ppnewbie wrote:
Sun Oct 15, 2023 9:03 pm

Did anyone go to this session?


I could not, but the author posted an article in the AAII Newsletter, plain text excerpt below. It backs up the Golden Butterfly results. There was much more written. Here is the entire journal for that month from my Google Drive.

----------------------------------------------------------------------------------------------------------------

Small cap value article AAII journal October 2023

Small-Cap Value Is the Best Choice for Equity Diversication
By Paul Merriman

Any long-term portfolio anchored by the S&P 500 can benefit from the addition of small-cap value stocks.

Although there are more small-cap stocks in the total market index, the large-cap companies, with their higher individual values, make up the majority of the Wilshire 5000's total index value. Wilshire states the 747 large cap stocks comprise more than 91 percent of the Wilshire 5000 index value. The next 1,737 small-cap stocks are worth about 9 percent. The remaining roughly 2,500 micro-cap stocks are, despite being numerous, collectively worth less than 1 percent of the stock market value tracked by the index.


Small Cap Improves Upon S&P 500 Returns

Here’s what I’m suggesting: Assume your default bedrock equity investment is the familiar, comfortable S&P 500. Also assume that you would like to do better than that index over the long term and you’re willing to put a portion of your equities into another asset class. In that scenario, I think small-cap value is your best choice for diversification.

I can’t show you the future, but I can show the past.

Many investors believe small-cap value stocks are riskier than the S&P 500. Our analysis paints a different picture. We studied 53 years of returns from 1970 through 2022. We compared the S&P 500 alone to an equity portfolio split 50%/50% between the S&P 500 and small-cap value stocks. {that’s what Golden Butterfly does}

Here’s what we found:

» The two-fund combination had a compound annual growth rate of 12.2%, compared with 10.4% for the S&P 500 itself.

» In 11 of the 53 calendar years, the S&P 500 lost money; in three of those losing years, small-cap value stocks realized gains.

» In another five of those 11 years in which the S&P 500 lost money, the two-fund combination also lost money, but not as much as the S&P 500.

» In its 42 profitable years, the S&P 500 was up 18.7% on average; in those same years, the average gain for small-cap value was 21.3%.


So after 20 years of holding the lesser performing asset - small cap value - the time may have come where the reverse will happen??!!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Golden Butterfly Portfolio

Post by ochotona » Tue Oct 17, 2023 2:34 pm

That's a portfolio for you. Something always is bad, sometimes for a long time. The alternative is what?
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Re: Golden Butterfly Portfolio

Post by vnatale » Tue Oct 17, 2023 5:19 pm

ochotona wrote:
Tue Oct 17, 2023 2:34 pm

That's a portfolio for you. Something always is bad, sometimes for a long time. The alternative is what?


Market timing which leads to the worse results of all!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Golden Butterfly Portfolio

Post by ppnewbie » Tue Oct 17, 2023 8:57 pm

Another way to look at it is that with VBR having a P/E around 10 it’s about a 10 percent return (not sure if that is naive). That also seems about as cheap as it will get.

As long as they are mostly good companies that’s better than most alternatives. And eventually the stock price will catch up with earnings.
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