Opinions on my variable portfolios

[Jeffreyalan]

I have been backtesting a couple of variable ETF portfolios for risk vs return and I seem to have found a couple that seem to work for me. Any thoughts on them?

Portfolio #1:

40% Cash
25% IJR (small cap index)
20% IAU (gold)
15% EDV (vanguard extended duration)

Portfolio #2:

60% Cash
15% IAU (gold)
15% EDV (vanguard extended duration)
10% TQQQ (3x Nasdaq)

Thanks in advance for the opinions!!!

[WhiteElephant]

Hi Jeffreyalan, what is your goal with your Variable Portfolio? Are you planning to find an allocation and stick with it?

I think it would help if you add the names of the ETF's.

[boglerdude]

http://www.etf.com/IJR
PE 45

Leveraged ETFs and decay?
https://www.reddit.com/r/wallstreetbets ... of_3x_etf/

[Kbg]

http://www.etf.com/IJR
PE 45

Leveraged ETFs and decay?
https://www.reddit.com/r/wallstreetbets ... of_3x_etf/

viewtopic.php?f=10&t=603

viewtopic.php?f=10&t=9310&start=24

Much better discussion and nuance on leveraged ETFs.

Comments on the portfolio...risk, only you can decide. As a minimum, that cash needs to be working for you because there is so much of it. If it isn't being put to work just go ahead and roll about 2.5% of it up every year into a ball and burn it. (Well technically that would double your loss to inflation, but you get the idea.) Either establish a treasury bond ladder or buy something like SHY, SHV or their counterparts from other ETF/mutual fund providers.

[Jeffreyalan]

Comments on the portfolio...risk, only you can decide. As a minimum, that cash needs to be working for you because there is so much of it. If it isn't being put to work just go ahead and roll about 2.5% of it up every year into a ball and burn it. (Well technically that would double your loss to inflation, but you get the idea.) Either establish a treasury bond ladder or buy something like SHY, SHV or their counterparts from other ETF/mutual fund providers.

Yes, the cash will be in an ETF such as SHV or MINT.

I am looking for something with minimum volatility that will return 1-2% over cash. Backtesting these two portfolios seems to accomplish that.

In regards to TQQQ, I have read about decay of leveraged ETFS. However, backtesting from 2011-2018 the TQQQ at only 10% of my portfolio outperforms normal stock funds at much larger %s. I am aware that we have been a bull market for many years but even in a down year such as 2015 the TQQQ portfolio outperformed portfolios with larger stock allocations. So when would that potential decay come into effect? Only in a sideways market?

[Kbg]

See the two links I posted...I'm probably biased, but there is some really good stuff/discussion in there about decay.