How to implement P_Diversified Timing Asset Allocation Portfolio w/Total Return Bonds
From the Jan 26 newsletter: P Diversified Timing Asset Allocation Portfolio With Total Return Bonds is in fact a very reasonable portfolio as it is easier to implement (much less frequent rebalancing) and it has a very reasonable annualized return now. For those who are conscious on rebalance hassle, tax issues as well as a peace of mind, this portfolio can be a good substitute for a strategic portfolio as it is similar to that most of times.
I have an Expert subscription. I can't figure out how to implement this portfolio. I am looking for a portfolio with minimal turnover for tax reasons. The portfolio above is a portfolio of portfolios the way I see it. How does one initiate this portfolio? It would be great if you could provide a tutorial of how to implement a portfolio like the above. Or provide direction to a TAA portfolio like I have described. Thanks.
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Dan,Admin · 01/29/2015 15:19:08
We have put the following write up on P Diversified Timing Asset Allocation Portfolio With Total Return Bonds:Implementation of this portfolio:
1). whenever a component of the 5 holdings go to the total return bond portfolio, you check on the total return bond portfolio P_46880(Schwab Total Return Bond) (or whatever total return bond portfolio you choose in your brokerage) and find out its current holding. You then purchase the bond fund for this portion.
2). You can find out the ACTUAL holdings of sub portfolios (such as P_46880(Schwab Total Return Bond)) by clicking on 'Holdings of Sub Portfolios' button on this page.
3). CAUTION: since brokerages have minimum holding periods, you might not be able to sell a bond fund to switch to the position such as stocks when it calls for. For that purpose, you might want to a). pay transaction fee b). find a brokerage that charges no such fees (for example interactive brokers does NOT impose 90 days or so holding period to charge brokerage specific redemption/transaction fee). Most if not all total return bond funds used have ONLY 30 days minimum holding period (fund specfic minimum holding period). So if a brokerage does NOT impose its own (not fund specific) minimum holding period, you should be able to make a transaction monthly. c). use bond ETFs instead. Refer to a portfolio like P Bond ETF Momentum Monthly or just use BOND or BND.
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Perhaps I am not making myself clear. I know how to determine which bond fund using the Total Return Bond Portfolios. What I don't understand is it seems that each of the 20% Portfolios of US Stocks, Intl, etc. has to be switched between the risk part and the bond funds per the 200dSMA. Doesn't this create taxable events in taxable accounts for each of the five components when the component switches from equity to bonds? How does this limit rebalance transactions? How is this a buy and hold, yearly portfolio? What am I missing? Plus, when I go to look at each of the 20% portfolios, I get an message that says I can't view this portfolio. I'm lost.DanH111 · 01/29/2015 15:35:56
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1). when we say more tax efficient, it is because the moving average based signal will be much less frequent. In fact, some of them can stay for years. Thus, it avoids frequent adjustments. However, this is no doubt not a buy and hold method and thus it is still less tax efficient in that regard.Admin · 01/30/2015 13:17:24
2). to look at each portfolio, you have to follow it. To avoid that, you can simply look at the original plain vanilla portfolio and get the signal in that way.
3). This portfolio is intended to serve as a reference for various implementations. It is not meant to be used as it is.
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