TLDR: Syfe’s current portfolio is underweighted their custom allocation, even on their riskiest portfolio they are >50% in US treasuries. While the market is scary, it is conventional wisdom for investor to stay invested through the ups and downs of market cycle and not “time the market”.
However all of their portfolio had respectable 20+% return in 2019 they might be onto something.
I am not sure what to make of this odd portfolio.
Although one of the basic tenet of investing is to stay invested through good time and bad, I was surprised to see all of the portfolio for Syfe is currently loaded up with US Treasuries despite their higher risked portfolio is supposed to be invested mostly in equity.
Looking at their 25% risk portfolio that is supposed to be 90%/8%/2% (Equity/Bond/Commodity), they are currently 55.94% into bond! Majority of this bond is held in US treasuries.
Even their social media account recommend long term investor to stay invested so it was interesting for them to take such a gutsy move in having such a low allocation in equity in their higher risked portfolio.
I was about to write them off but I note that their portfolio did better than I did in 2019 with 24.5% return in 2019 for their higher risked portfolio and a very respectable 21% for their balanced portfolio.
It is unusual for a fund manager to stay on the sideline and in my brief review of other portfolio of stashaway/autowealth, none of them took such a (risky) move.
I am not sure when did they divest the portfolio of the equity position and when are they intending to jump back in. They are trying to time the market and it is something most professional investor find it extremely hard to do.
“There’s a lot of people who get it right sometimes. But nobody gets it right consistently. Don’t try to time the market,” he said. “You will get it wrong. Ride things out. Be well diversified.”Malkiel – author of a random walk down wall street
If they are able to time the bottom through their methodology (and do it consistently) I will be more convinced of their “magic” but most of the literature suggest that it is extremely hard to “time the market” and it is better to stay invested through the up and down.
If Syfe miss the “critical month” of the rebound, the portfolio will not beat their benchmark.
See this video by morningstar on the peril of timing the market.
By being underweighted equity relative to their desired allocation, they have already missed out on a big bounce from below 2,500 to 3,200 (700+ points) which is a 28% move.
Whether they are genius or otherwise really depend on how they come out of this covid led recession.