Nicolas Rabener

Evaluating Metrics for Fund Selection – II. What works, what doesn’t? insights.finominal.com/research-evalu…

Can fees be reduced? The portfolio costs 0.52%, but we can replace every holding with lower-cost ETFs. For example, the Western Asset Inflation Indexed Plus Bond Fund (WAFSX) can be replaced with the Schwab US TIPS ETF (SCHP), which costs 0.03% vs 0.61% for WAFSX. The lower-cost portfolio had similar returns but cost only 0.15%. finominal.com/portfolio-anal…

How has the portfolio performed when inflation expectations increased? We can take the 10-Year Breakeven Inflation Rate as a proxy for inflation expectations, which spiked to 3% in 2022. The annualized, realized U.S. CPI reached 9% in July 2022. Franklin Templeton's portfolio declined less than a global equities + bond (60%/40%) portfolio in 2022, when the U.S. Fed started hiking rates. finominal.com/portfolio-anal…

Portfolio Review: Franklin Templeton's Strategic Real Return Portfolio. What are the current holdings? The portfolio provides exposure to various asset classes to hedge against inflation increases and achieve a long-term real return. The largest allocations are the Western Asset Inflation Indexed Plus Bond Fund (WAFSX, 41%), Franklin Global Equity Fund (SMYSX, 20%), and Invesco Optimum Yield Diversified Commodity Fund (PDBC, 18%). The portfolio is expensive at 0.52%. finominal.com/portfolio-anal…

Quality Stocks in Emerging Markets. Superior returns from betting on good business models? insights.finominal.com/research-quali…

Are there cheaper alternatives? Yes, investors looking for similar exposure to concentrated growth stocks have plenty of options, e.g. the iShares Russell Top 200 Growth Index ETF (IWY), Vanguard Mega Cap Growth Index Fund (MGK), or Invesco Large Cap Growth ETF (PWB). These charges range from 0.07% to 0.55%, so they are considerably cheaper than POLIX (0.97%) and have generated higher absolute and risk-adjusted returns. finominal.com/asset-comparer…

However, if we compare the top 10 over- and underweights on position levels, we observe significant differences as expected for a concentrated portfolio. The top 5 overweights are Oracle, Amazon, Mastercard, ServiceNow, and Eli Lilly, while the largest underweight is NVIDIA. The chip maker has significantly outperformed all of these stocks since 2023, especially ServiceNow, which cratered recently, given the "AI is eating software" theme. finominal.com/fund-analyzer-…

Product Review: Polen's $3.5bn Growth Fund (POLIX). What is the fund's strategy and performance? The fund provides exposure to a concentrated portfolio of approximately 30 U.S. stocks selected for their sustainable, high earnings growth. The fund's fact sheet shows two benchmarks: the S&P 500 and Russell 1000 Growth. POLIX significantly outperformed the S&P 500 between its inception in 2010 and 2022, but then underperformed significantly thereafter. The period of outperformance likely explains the $3.5 billion of assets. finominal.com/fund-analyzer-…

Multi-Factor Investing in Emerging Markets. More attractive than in developed markets? insights.finominal.com/research-multi…

Can this portfolio be simplified? Yes, we can replace the model portfolio comprised of 8 funds with the Nasdaq (QQQ, 0.2%) and World Stock Index (VT, 0.06%). The simpler portfolio would have generated a higher CAGR and lower fees (0.08% vs 0.56%). finominal.com/portfolio-anal…

Can the fees be reduced? Yes, we can replace every fund with a cheaper ETF tracking well-known benchmark indices. For example, the American Funds Capital World Growth & Income Fund (WGIFX) can be replaced with the Vanguard Total World Stock Index Fund (VT), which is cheaper at 0.06% vs 0.52% for WGIFX. The total portfolio cost can be reduced from 0.56% to 0.07%. finominal.com/portfolio-anal…

Portfolio Review: American Funds' Global Growth Model Portfolio. What are the current holdings? The portfolio provides exposure to global equities via 8 mutual funds from American Funds, with the three largest allocations to the American Funds New Perspective Fund (ANWFX, 20%), American Funds Growth Fund of America (GFFFX, 15%), and American Funds New Economy Fund (NEFFX, 15%). The total portfolio cost is expensive with 0.56%. finominal.com/portfolio-anal…