Diversify Equity with Value Tilt

In this episode we answer emails from Phil and Chris.  We discuss moving from target date funds to low-cost index funds, why equity diversification needs a value tilt, how managed futures replication mimics an index fund in that asset class, options collars versus simply holding less equity, momentum models trade-offs and regime risk, long Treasuries compared with STRIPS for rate sensitivity, why TIPS don’t hedge portfolio-level inflation and practical ways to fight portfolio-level inflation with value-tilted stocks and alternatives.

Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Many Happy Returns Podcast Featuring Tyler:  How to Pick Your Perfect Portfolio, with Tyler from Portfolio Charts

Portfolio Charts Drawdowns Chart:  Drawdowns – Portfolio Charts

DMBF Video Re Dispersion of Recent Returns:  iMGP DBi Managed Futures Strategy ETF Update with Andrew Beer | October 2025

Bernstein TIPS Article:  Riskless at Age 104 - Articles - Advisor Perspectives ("A bond fund manager recently related to me his difficulty in figuring out the role of TIPS in his portfolios. After fumbling for a reply, I realized that he was right: like Social Security, they don’t occupy a formal slot in most folks’ asset allocation. . . . TIPS should be kept mentally separate from the policy asset allocation as well.")

Breathless Unedited AI-Bot Summary:

Ever feel like your “set it and forget it” fund is quietly holding you back? We open the hood on target date funds and show how shifting to clear, low-cost index building blocks can recover real performance over the long haul. From there, we get practical about designing portfolios that don’t just look diversified—they behave differently when markets sour. Think value tilts to counter mega-cap concentration, long-duration Treasuries for recession defense, and managed futures for trend-driven shock absorption.

We also tackle the allure of complexity. Options collars can cap losses, but they cap gains too—and often mimic what you’d get by simply holding less equity and more diversifiers. Momentum strategies like GEM carry academic support, yet every rule set faces regime risk and behavioral hurdles. Rather than chasing perfect timing, we focus on roles: which assets hedge recessions, which fight inflation, and which compound steadily in normal times. That clarity helps you skip the noise and build sturdy allocations.

On inflation, we cut through the myths. TIPS protect relative to nominal bonds, but they rarely shield an entire portfolio when inflation surges. If you want a real inflation response, look to assets with pricing power and trend sensitivity—managed futures, energy producers, and certain insurers—while reserving long Treasuries for growth shocks. We share why DBMF’s replication approach acts like an “index” for trend following, how STRIPS such as ZROZ can replace some long bonds for targeted rate exposure, and why a global perspective makes U.S.-centric limiting beliefs easier to spot and drop.

If you’re ready to swap wrappers for transparency and replace clever tactics with durable structure, this one’s for you. Follow the show, share it with a friend who’s reconsidering their default fund, and leave a quick review so more investors can find these ideas.

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