May 2022 Portfolio Review

Market declines continued in May, though a late rally saved returns from looking too bad. Less leveraged and non-leveraged Risk Parity portfolios continue to lead the pack, still occupying the top 4 spots overall, though the best portfolio this month was the Bogleheads 80/20.  

2022/05 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 Seasons6/1/2022,0.692%,-0.22%,-0.93%,-0.94%,-0.86%,-0.09%,-0.76%,-0.21%,-0.31%,-3.79%,-1.27%Month’s Rank,3,7,8,6,1,5,2,4,10,9Month Start V...

If we had checked in the middle of the month, it would have been absolute carnage. A late rally in the last week or so prevented the month from being a doozy, though, and for all the stress, the month finished off basically flat with just a slight downward tilt. Prior to deductions for living expenses, four of the ten portfolios had positive returns; after  subtracting $3,489 for the month, none of the ten did.

As with the previous month, these past months are contrary evidence to the idea that portfolios can withstand inflation-adjusted withdrawals of 4%. Of course, periods like this are part of investing, though this  down period basically coinciding with the launch of the portfolios makes the decline particularly poignant.

Inflation once again dominated market news, and the April figure came in at 8.3%, which if you are looking on the bright side, was a decline from 8.5% the month prior. The monthly withdrawals are now up to $3,489 per month. High inflation drove commodities once again to the top of the asset leaderboard. PDBC was up 4.61% for the month and the portfolios that contain it saw an interesting development - the allocation to PDBC was 30% to 70% above its target in relative terms. This led withdrawals to come solely from PDBC in five portfolios.

You see here one of the advantages of a well diversified portfolio that always has at least one asset ascending. You can take withdrawals from that while the others are swooning, and thereby give them time to recover. Preferred Shares and Small-cap Value also had good months. The 3X leveraged real estate fund (DRN) struggled mightily, but the digital currency fund managed to make its decline look restrained. GDLC was down a gargantuan -36.6%!

As for portfolios, the unlevered or the slightly levered Risk Parity portfolios continue to be the cleanest shirts in the dirty clothes pile. The RPC Income completed its fourth month as the best overall, though to be fair, it is still down -8.9% since July 2021.The Golden Butterfly is second, the Levered Butterfly is third, and the All Seasons is fourth, just ahead of the best traditional portfolio which is the classic 60/40.

The traditional portfolios did have good months, though. The 80/20 was the best in May while the 60/40 finished third, split by the Levered Butterfly in second. The big loser was the RPC Growth portfolio which was sunk by the crypto allocation.The other big news for the month was a change to the RPC Income portfolio. Following my look into managed futures and DBMF (please see this primer on managed futures and this closer look at DBMF as the preferred asset), I decided to start tracking it in a portfolio to get a closer look. I chose the RPC Growth portfolio as the right vehicle since it is already my most aggressive and most eclectic portfolio. I sold off half of its holdings in PDBC to fund the purchase of DBMF, and then set the target allocation for both PDBC and DBMF at 7.5% each. I’m really eager to see how it performs going forward, as I do get a warm and fuzzy feeling for the asset class. Let’s see if it's an enduring love or just a pre-teen crush.

Monthly Results:

June 2022 Monthly rankings

Cumulative Results:

June 2022 Overall Rankings

Asset Performance:

Asset Performance June 2022