ITA Wealth Management

I spent time this last weekend updating the AA-Mosaic spreadsheet, a portfolio launched in late December of 2007.  Had I been able to keep the portfolio on target, I would not have done as well as the actual IRR value and the reason is tied to cash in the portfolio.  During a market decline, holding cash will enhanced portfolio performance.  Holding cash is the reason the AA-Mosaic is outperforming the VTSMX index by 11.7% points over the last eleven months.  Even so, the IRR for the portfolio is well into negative territory.

I did notice, and Premium subscribers can check this out, that a fully invested portfolio would still have outperformed the VTSMX benchmark by over one percentage point over the last 10.5 months.  Over time, that difference begins to add up.

Over the next several weeks, I will be performing additional analysis on the AA-Mosaic in order to determine which asset classes to emphasize over the next year.  Right now five asset classes are under weighted and I want to see if those are the asset classes where cash needs to be put to work.  Readers interested in portfolio construction and management will find this analysis of interest.

Photograph:  Typical scene just outside of Wertheim, Germany.

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