A.I.M. Users Bulletin Board

[ls7550]

Risk parity funds will now have to do some selling (based on the volatility spike) and this will take several days, possibly weeks?

I am bracing for more volatility which will put a lot of pressure on SVXY, if it continues to survive that is.

Are you still considering it in your portfolio?

Yes. Larry (Swedroe) Portfolio targets something like 30% Small Cap Value (he actually includes some Emerging Markets), 70% safe. SCV is a bit like a 1.2x total stock market, so 30% weighting is more like 36/64 stock/bonds.

Assuming SVXY to be a 5x then 6% SVXY, 94% bonds, rebalanced once yearly, is a reasonable conservative portfolio that might produce similar reward to a Larry Portfolio, but with a bit more interim volatility along the way.

See this and this as a guide to the potential (modest relatively consistent rewards).

At current yields for 'cash' I'm more inclined to a 5 year treasury/cash deposit bond ladder, 95% allocation has around 19% of total portfolio value maturing each year that is available to be rolled into another 5 year bond, plus/minus whatever SVXY might have made/lost over the year.

Holding off SVXY for the time being to let volatility calm down (don't think it can be currently traded anyway).