Aug 09 2008
Passive Portfolio HWEE Report
Another portfolio I watch over is one I code as the HWEE portfolio. This portfolio is similar to the one I reported on yesterday, only the make up is different in that other ETFs are used to build and manage the portfolio.
The Information Ratio for this portfolio is higher than the HWJM portfolio with a value of 0.68. I don’t write about the IR for the AA-Mosaic, Mosaic2, or the GLW portfolios as I don’t have sufficient information to make the calculation. As I mentioned yesterday, one needs a minimum of three years of data before this ratio carries any meaning. One of the reasons for reporting on the HWJM and HWEE portfolios is to provide some discussion for the Information Ratio.
Brokers such as TDAmeritrade are always looking for ways to attract customers. One suggestion I would make is for them to develop a benchmark tracking system similar to what Bivio provides and then permit the user to select a benchmark or even better, a combination of benchmarks. With that information in hand, the monthly statement would calculate the Information Ratio, giving the investor a feel for how high a risk they are taking in order to achieve the return.
Broker houses have all the information and they certainly have the computing power. All they need is for a few programmers to code the information, thus providing a real service to their customers.
Lowell Herr
Photograph: Andes mountain range taken looking over the Sacred Valley of Peru.
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