IVY PORTFOLIO
The traumatic 50% stock market drops in 2000-2002 and 2007-2009 revealed the flaws of the fixed portfolios. An investment in stocks (for example VFINX) or a balanced portfolio (for example VBINX) earned nothing for a great portion of the 2000-2010 decade. This inspired the IVY portfolio which combines some diversity in asset classes with diversity in time.
The IVY portfolio is a rules-based portfolio investing dynamically in 5 diverse sectors plus cash described in a paper entitled "A Quantitative Approach to Tactical Asset Allocation" . The idea is the asset classes slowly rise and fall and the 200 day simple moving average (or similar 10 month average) can be used to advantageously buy and sell assets and assemble the asset group which is most likely to continue rising. Note: Simple Asset Allocation (SAA) described next is a subset of IVY using only stocks and cash (FSICX/FADMX).
Status of the IVY portfolio is covered among other places in Advisor Perspective "Moving Averages".
The rules are these:
Depending on the price trends you could be in all cash or in one, two, three, four or five of the assets.
PERFORMANCE OF THE IVY PORTFOLIO FROM 2007 TO THE PRESENT (10 MONTH SIMPLE MOVING AVERAGE VERSION)
The IVY portfolio is a rules-based portfolio investing dynamically in 5 diverse sectors plus cash described in a paper entitled "A Quantitative Approach to Tactical Asset Allocation" . The idea is the asset classes slowly rise and fall and the 200 day simple moving average (or similar 10 month average) can be used to advantageously buy and sell assets and assemble the asset group which is most likely to continue rising. Note: Simple Asset Allocation (SAA) described next is a subset of IVY using only stocks and cash (FSICX/FADMX).
Status of the IVY portfolio is covered among other places in Advisor Perspective "Moving Averages".
The rules are these:
- Invest in one or more of the following funds/asset classes: VTI, domestic stocks, VEU international stocks non-US, DBC-commodities, IEF-US bonds, VNQ-US real estate and cash (we use a strategic income fund FSICX/FADMX).
- If the price of an asset is above its 200 day simple moving average (or 10 month average in some implementations), you invest 20% of your assets in that portfolio. Otherwise that 20% goes into cash.
Depending on the price trends you could be in all cash or in one, two, three, four or five of the assets.
PERFORMANCE OF THE IVY PORTFOLIO FROM 2007 TO THE PRESENT (10 MONTH SIMPLE MOVING AVERAGE VERSION)
HOW DID IVY INVEST DURING THE GREAT RECESSION TO LIMIT LOSSES?