Simple combination and nice derivation! One common risk factor is actually the USD, because all of these assets are denominated in this currency, so I wouldnt blindly implement it, but extend the Pantoffel-approach to other countries/currencies.
We equalize volatility across all assets, they contribute the same, no matter what their basic volatility is. If they correlate, the portfolio volatility target will capture most of it. Yes bonds were bad during last years - but that’s the idea of uncorrelated assets - the portfolio on total is positive.
Nice read, I had not heard of this. If this format seeks low volatility, then bonds would in theory be less volatile. IEF even better than TLT. But I am missing where the positive growth is in this model. TLT has been awful for awhile, but less volatile the stocks or gold, so the portfolio is heavily weighted to that. What am I missing?
Thanks, this is good. None of it is new, either to the world or to me or (probably) to most who will read this. But it is a well built approach to explaining it, succinctly and visually. I'm now a subscriber and looking forward to more.
Thank you — and you’re absolutely right, none of the individual ideas are new. The goal is to connect them into a coherent framework and make the reasoning transparent. Glad it landed. 😀
Even as a German I never heard the word Pantoffelportfolio 😅. I like it a lot and have to borrow it 🤣.
This strategy is part of my portfolio too, but with some changes like equal-weighting.
Simple combination and nice derivation! One common risk factor is actually the USD, because all of these assets are denominated in this currency, so I wouldnt blindly implement it, but extend the Pantoffel-approach to other countries/currencies.
From a non US perspective this is the question of being hedged vs cost of hedging - so yes I agree. I will write about that in a future article. 👍
We equalize volatility across all assets, they contribute the same, no matter what their basic volatility is. If they correlate, the portfolio volatility target will capture most of it. Yes bonds were bad during last years - but that’s the idea of uncorrelated assets - the portfolio on total is positive.
Nice read, I had not heard of this. If this format seeks low volatility, then bonds would in theory be less volatile. IEF even better than TLT. But I am missing where the positive growth is in this model. TLT has been awful for awhile, but less volatile the stocks or gold, so the portfolio is heavily weighted to that. What am I missing?
Thanks, this is good. None of it is new, either to the world or to me or (probably) to most who will read this. But it is a well built approach to explaining it, succinctly and visually. I'm now a subscriber and looking forward to more.
Thank you — and you’re absolutely right, none of the individual ideas are new. The goal is to connect them into a coherent framework and make the reasoning transparent. Glad it landed. 😀