For the past 12 months I have invested a portion of my capital using the Allocate Smartly tactical asset allocation free subscription. On the last trading day of the month just before close I realign my positions to whatever the allocation structure the Sample Model Portfolio #1 is set at according to their website. For example the current allocation is:

  • EFA 8.0%
  • GLD 16.0%
  • IEF 8.0%
  • IWN 2.0%
  • SPY 58.0%
  • VNQ 8.0%

So I will hold these positions in place until the end of this month when they’ll display the next allocation. It takes me no more than 15 minutes to put my buy/sell orders on each month.

This portfolio is made up of three strategies:

I won’t pretend I know the intricacies of what these do. I do know though that it diversifies over 5-7 instruments, sometimes flicking me into 50% cash. Up to this point I haven’t been interested in the portfolio/strategy structure. I just wanted to get a feel for putting on the trades each month, tracking it against Allocate Smartly’s published results and the S&P500. This is my 12 month result:

My result in blue (Hatch is the broker I use), 10.32% return for 12 months is tidy. It is not as high as Allocate Smartly or the S&P500, but I couldn’t be happier considering the near zero effort I put in. A couple things to point out:

  • AS results are based on the assumption trades are placed at the closing price of each month. At best I put my orders on 5 mins before the close. At worst I missed the whole day and placed them in closing hours which triggered the next trading day on the open. This was expected. Close is generally around 7am here in NZ so I can do it before work most days, but sometimes I forgot or I had other things happening. Overall it tracked pretty closely though.
  • Having the 3 strategy combo meant I was diversified. This helped with drawdowns. I started just as the market was declining but my drawdown of -6.35% was much nicer than the near 10% the S&P500 had. The dip on month 9 was also more in my favour. Of course I didn’t get the better returns, however drawdowns happen and a lot of staying in the game is about sticking through those hard times.

Now admittedly the market has been pretty strong during this period, with the S&P500 +17.53%, but I’ve just used the most basic (free) portfolio, which helped with drawdowns and gave me >10% return over a 12 month period (before tax, after broker fees). Current 12-month risk-free term deposits are hovering around 6.20%, which is damn good, so arguably you could say its not worth the risk, but I quite enjoyed the experience of following the market along and trying the service.

There are about 100 strategies available in the paid membership, which can be combined in any way to build a portfolio to trade, with detailed historical performance models to help further with choosing a best fit. Trading days are customisable, but I like the month-end trades (and a lot of the strategies are built around that). The blog is chockas full of good information including detailed summaries of each of the strategies. There are a number of advanced tools to dive deep into the data too.

I am contemplating paying for this annual subscription.