An interesting Golden Butterfly iteration

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Kevin K.
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An interesting Golden Butterfly iteration

Post by Kevin K. »

Came across this portfolio in a Bogleheads thread on retirement allocations:

"50% Stock Fund (VT)
16.65% Intermediate Term Treasuries Fund (VGIT)
16.65% Gold Fund (GLDM)
16.7% Money Market Fund

Similar to the Golden Butterfly, but with less duration on the fixed income side, and more balance on the stock side (no tilting or country bias). Also a little more stock allocation overall. I think of it as a good portfolio for anyone who can't tell the future."

I think this is one of the more thoughtful versions I've seen.
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ochotona
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Re: An interesting Golden Butterfly iteration

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This same idea has come to my mind, but VT is only large cap, I think that breaks the GB model. There are small cap international funds like SCHC, FNDC from Schwab. I am definitely going to be a GB investor... eventually.
Kevin K.
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Re: An interesting Golden Butterfly iteration

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ochotona wrote: Tue Nov 26, 2024 9:22 am This same idea has come to my mind, but VT is only large cap, I think that breaks the GB model. There are small cap international funds like SCHC, FNDC from Schwab. I am definitely going to be a GB investor... eventually.
VT is actually global by market value and thus includes mid and small caps just like VTI does. The GB massively overweights SCV though the particular fund Tyler uses and recommends (VBR) includes a lot of mid-caps and isn't very "value-y" compared to DFA funds or AVUV. But what I like about the VTI/VBR barbell is the total stock allocation is almost perfectly split between small, mid and large caps.

Because all of the mega cap tech companies are U.S. domiciled you could argue that the ~35% international in VT is already a small-cap play.

What I like about this other iteration is that it doesn't place outsized bets on any part of the stock market, avoids the stupidity (IMHO) of LTT's and has just enough gold for SHTF insurance.
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ochotona
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Re: An interesting Golden Butterfly iteration

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Oh I follow you... compared to US megas, ex-US large caps are "relatively small". That's a good way to think about it.

What do you think about ACWV min-volatility global? It actually tracked VT pretty well until COVID, then VT took off, because of US Tech. ACWV doesn't have much of the Mag Seven... which could be a good or bad thing, all depending on what you want to own.

I've always thought because of the lower-vol nature of ACWV you could devote a larger slice to stocks, and because it's more boring stocks, it would be easier to hold in a drawdown.
Kevin K.
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Re: An interesting Golden Butterfly iteration

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ochotona wrote: Tue Nov 26, 2024 3:13 pm Oh I follow you... compared to US megas, ex-US large caps are "relatively small". That's a good way to think about it.

What do you think about ACWV min-volatility global? It actually tracked VT pretty well until COVID, then VT took off, because of US Tech. ACWV doesn't have much of the Mag Seven... which could be a good or bad thing, all depending on what you want to own.

I've always thought because of the lower-vol nature of ACWV you could devote a larger slice to stocks, and because it's more boring stocks, it would be easier to hold in a drawdown.
I wasn't familiar with ACWV. Fascinating option that is probably well beyond my pay grade in terms of really understanding but it certainly does look like a smoother ride.

That said, I think that for me the only part of the GB I feel comfortable monkeying with is the bonds - switching out the barbell for, say, 45% ITT's with 5% cash for living expenses, rebalancing, etc. The guy who went with 50% VT is probably not aware of the fact that Tyler has said that international stocks don't do anything for a PP or GB since the substantial allocation to gold fulfills the "international" diversification by virtue of it being an asset of universal value. And of course SCV is a much better diversifier than Total International. I keep coming back to the lessons in this article of his from three years ago:

https://portfoliocharts.com/2021/12/16/ ... ortfolios/

Thanks for the discussion!
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