Risk Parity Radio Episode 244: Fun With New Managed Futures Funds, TIPS Misconceptions And Portfolio Reviews As Of February 24, 2023
Feb 26, 2023
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Don't Overpay For Bundled Portfolios
- Avoid buying composite funds that simply bundle cheap ETFs when you can assemble the parts for lower cost.
- Buy low-cost equity ETFs and a separate managed-futures fund instead of paying 1.27% for BLNDX.
Managed Futures' Performance Is Regime-Dependent
- Managed futures can outperform during certain recent periods but historically underperform for long stretches.
- Large allocations to managed futures can cause long-term underperformance and emotional difficulty holding them.
Decompose New Funds Before Investing
- Break a new composite fund into its components and backtest those parts to understand real value.
- Short track records and high fees often make new bundled funds inferior to DIY alternatives.