Risk Parity Radio Episode 408: Rebalancing Frequency, Share Lending, Style Boxes, Strips, And The Golden Ratio Portfolio
In this episode we answer emails from Randy, Richard and Jamie. We discuss rebalancing frequency, share-lending at Fidelity, moves in Morningstar's style boxes and strips treasury funds vs. long term treasury bond funds.
And we announce the new listing of the Golden Ratio portfolio at Portfolio Charts and thank Tyler and Van for that.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Golden Ratio Portfolio at Portfolio Charts: Golden Ratio Portfolio – Portfolio Charts
Golden Ratio Portfolio Write-Up: Beautiful Constants and the Golden Ratio Portfolio – Portfolio Charts
Kitces Article re Rebalancing:
Optimal Rebalancing – Time Horizons Vs Tolerance Bands
Discussion of Changes to Morningstar's Style Boxes: Morningstar redefines growth/value style box criteria - Bogleheads.org
Risk Parity Radio All Episodes Feed Page: Risk Parity Radio RSS Feed
Amusing Unedited AI-Bot Summary:
Exciting news opens this episode as Frank announces the Golden Ratio Portfolio has been officially added to Portfolio Charts, complete with its own dedicated page and insightful write-up. This recognition represents a significant milestone for a portfolio strategy that has been a cornerstone topic throughout Risk Parity Radio's 400+ episodes.
The heart of the episode focuses on answering thoughtful listener questions about portfolio management techniques. Randy inquires about rebalancing frequency and whether to participate in Fidelity's securities lending program for gold ETFs. Frank explains that while rebalancing more frequently than once a year generally doesn't improve performance, coordinating semi-annual rebalancing with tax planning can be advantageous. As for securities lending, Frank shares his personal experience that these programs work smoothly but typically generate minimal income—setting realistic expectations for listeners considering this option.
A particularly detailed discussion explores the nuances between traditional long-term treasury funds and STRIPS funds (GOVZ, ZROZ, EDV). Frank clarifies that STRIPS-based ETFs typically move at approximately 1.5 times the rate of standard long-term treasury funds when interest rates change, effectively functioning as a form of leverage. This characteristic makes them valuable tools for tax-loss harvesting or creating more efficient allocations by achieving similar interest rate sensitivity with smaller position sizes. Rather than focusing on market timing for transitions between these instruments, Frank emphasizes coordinating such moves with broader tax management strategies—practical advice that demonstrates how risk parity investors can implement sophisticated portfolio techniques while maintaining tax efficiency.
Want to connect with other Risk Parity Radio listeners? Frank announces a meetup at the Economy Conference at the Solari Hotel. Email frank@riskparityradio.com for details and to join the community of thoughtful DIY investors exploring alternatives to traditional asset allocation.