Yesterday I analyzed the Faber-Richardson Five portfolio found in The Ivy Portfolio. In this post, Platinum members will find the QPP analysis of the Faber-Rickardson Ten. I used the same five-year time frame so readers can compare the two results. Improvements and negatives come with this expanded portfolio.
While the projected return moves up to 8.2%, we give up risk as the projected portfolio uncertainty increases to 16.6%. We would need to temper this portfolio with something like the ITARR model as anything over 15% begins to raise concerns, particularly if one believes we will see another three sigma bear market within the next five to ten years.
With this expanded portfolio we see a decrease in both diversity and Portfolio Autocorrelation. While that may surprise readers, these are the projections. Granted, the differences are likely well within the limits of uncertainty.
My primary criticism of the Faber-Richard Ten portfolio is with the 20% allocated to commodities. I'm not comfortable with such a high percentage as I favor something in the order of 5% or no higher than 10%. In a number of portfolios I use IWN instead of VB. Over the last five years VB has a better record so it may be time to consider a switch.