April 2022 Portfolio Review

An absolutely horrible, terrible, no good month for investors of any stripe: stocks falling steadily, bonds in free fall, inflation high and rising. But if there is a bright side for RP, it’s that it did less badly than others, with RP portfolios occupying the top 4 spots for the month and overall.

2022/04 Portfolio Review Spreadsheet
Comp Prev. Mnthly Inflation,Classic 60/40,Golden Butterfly,All Seasons,RPC Income,Bogleheads 80/20,Qian,Levered Butterfly,100% Equities,RPC Growth,Levered Seasons5/1/2022,0.708%,-7.51%,-5.70%,-6.71%,-6.43%,-8.01%,-9.29%,-7.43%,-9.00%,-10.86%,-11.19%Month’s Rank,5,1,3,2,6,8,4,7,9,10Month Start...

To put it mildly: there was very little good news for investors in April. Inflation continues to be the story, with the Department of Labor calculating 8.5% for the previous twelve months, the highest figure since December of 1981. This meant a rise in withdrawals, up to $3,465. As inflation ramps up even more, stocks appear to be rolling down a hill. The S&P 500 was down 8.8%, small cap value stocks were down 6.3% and international stocks were down 6.5%. That sounds bad, but bonds fared even worse. Interest rate hikes to manage inflation sent yields up and prices down, as demonstrated by a 9.2% decline for VGLT. The only asset to perform well in April was commodities. PDBC was up 5.7%. In case you were wondering, TIPS dropped the ball once again - short-term TIPS basically finished at 0% and long-term TIPS were down 12.8%.

The Golden Butterfly was the best performing portfolio this month, which was to be expected, given its conservatism. It lost “only” 5.7%, mostly because of its large allocation to short-term Treasuries. The RP Income finished second and the All Seasons portfolio third. For these, their allocations to commodities partially counteracted losses elsewhere, and importantly, meant that withdrawals could be taken only from commodities, which will hopefully give some time for the other assets some time to recover. Before RP investors pull a muscle patting themselves on the back, though, the worst three portfolios for this month were also Risk Parity portfolios. The Levered Seasons finished down 11.2% and the RPC Growth finished down 10.8%. Massive declines for leveraged stock and bond funds were the culprits.

The RPC Income finished as the best overall portfolio for the third month in a row, and is followed by the Golden Butterfly and then the All Seasons. Given the declines for the market as a whole in 2022, this is to be expected. The conservative RP portfolios (the first path for RP) were expected to be safer than traditional portfolios because of their diversification, and the data bears that out. The supposedly safe 60/40 and the RPC Income were essentially even as of the beginning 2022, with the RPC Income just $600 larger, but the 60/40 now trails that one by $30,000. Also of note is that the 60/40 is now fifth overall, trailing even the Levered Butterfly, which has 80% additional leverage. In the test of whether it is better to employ modest leverage to have a more diversified portfolio, or sacrifice diversification and avoid leverage, it seems as though the former is the better path.

Monthly Results:

May 2022 Monthly Rankings

Cumulative Results:

May 2022 Overall Rankings

Asset Performance:

May 2022 Asset Performance