Paul Farrell Second Grader's Starter Portfolio: Rebalancing Strategy

Data Source: from January 1970 to January 2024
Consolidated Returns as of 31 January 2024

Managing the Paul Farrell Second Grader's Starter Portfolio with a yearly rebalancing, you would have obtained a 8.07% compound annual return in the last 30 Years.

With a quarterly rebalancing, over the same period, the return would have been 8.02%.

How do returns and drawdowns change, implementing different rebalancing strategies?

Rebalancing Strategies

In order to keep risk under control, you should rebalance assets quotes from time to time, so to keep them at the original percentage of the asset allocation.

Rebalancing can be performed in several ways.

At fixed time intervals:
  • Yearly: Jan 1st
  • Half Yearly: Jan 1st, Jul 1st
  • Quarterly: Jan 1st, Apr 1st, Jul 1st, Oct 1st
When a component (at least one) diverges from its original weight beyond a certain threshold (e.g. 5% or 10%).

Portfolio Returns as of Jan 31, 2024

Implementing different rebalancing strategies, the Paul Farrell Second Grader's Starter Portfolio guaranteed the following returns.

According to the available data source, we assume we built the portfolio on January 1970.

Portfolio returns are calculated in USD, assuming:
  • No fees or capital gain taxes
  • the reinvestment of dividends, if existing
PAUL FARRELL SECOND GRADER'S STARTER PORTFOLIO RETURNS
Period: January 1970 - January 2024
Annualized Returns
Swipe left to see all data
Return (%) and number of rebalances as of Jan 31, 2024
Rebalancing Strategy 1Y 5Y 10Y 30Y MAX
(~54Y)
Yearly Rebalancing 13.09 (1) 9.90 (5) 8.76 (10) 8.07 (30) 9.78 (55)
Half Yearly Rebalancing 13.01 (2) 9.89 (10) 8.75 (20) 8.02 (60) 9.71 (109)
Quarterly Rebalancing 12.98 (4) 9.94 (20) 8.78 (40) 8.02 (120) 9.69 (217)
5% Tolerance per asset 13.21 (0) 9.90 (1) 8.83 (3) 8.15 (12) 9.76 (20)
10% Tolerance per asset 14.03 (0) 10.08 (0) 9.05 (1) 8.06 (3) 9.66 (4)

In order to have complete information about the portfolio, please refer to the Paul Farrell Second Grader's Starter Portfolio: ETF allocation and returns page.

Performances as of Jan 31, 2024

Historical returns and stats of Paul Farrell Second Grader's Starter Portfolio, after implementing different rebalancing strategies.

PAUL FARRELL SECOND GRADER'S STARTER PORTFOLIO PERFORMANCES
Period: January 1970 - January 2024
Swipe left to see all data
Standard Deviation
Max Drawdown (%)
Rebalancing Strategy Return % Std Dev(%) Ret. / Std Dev MaxDD(%) Ret. / MaxDD
Yearly Rebalancing 9.78 (55) 13.99 0.70 -48.52 0.20
Half Yearly Rebalancing 9.71 (109) 14.01 0.69 -48.76 0.20
Quarterly Rebalancing 9.69 (217) 14.04 0.69 -48.98 0.20
5% Tolerance per asset 9.76 (20) 14.04 0.69 -48.34 0.20
10% Tolerance per asset 9.66 (4) 13.96 0.69 -48.68 0.20
(*) Since Jan 1970 (~54 yrs) | Annualized Returns (and number of rebalances)

Drawdowns as of Jan 31, 2024

Historical Drawdowns of Paul Farrell Second Grader's Starter Portfolio, after implementing different rebalancing strategies.

PAUL FARRELL SECOND GRADER'S STARTER PORTFOLIO DRAWDOWNS
Period: January 1970 - January 2024
Swipe left to see all data
Rebalancing
Tolerance per asset
Yearly Half Yearly Quarterly 5% 10%
-48.52
Nov 2007 - Sep 2012
-48.76
Nov 2007 - Sep 2012
-48.98
Nov 2007 - Sep 2012
-48.34
Nov 2007 - Sep 2012
-48.68
Nov 2007 - Jan 2013
-39.03
Apr 2000 - Jul 2005
-39.32
Apr 2000 - Jul 2005
-39.13
Apr 2000 - Jul 2005
-38.91
Apr 2000 - Jul 2005
-38.91
Apr 2000 - Sep 2005
-38.74
Jan 1973 - Mar 1976
-39.01
Jan 1973 - Mar 1976
-39.02
Jan 1973 - Mar 1976
-38.87
Jan 1973 - Jun 1976
-38.43
Jan 1973 - Jun 1976
-24.21
Jan 2022 - In progress
-24.18
Jan 2022 - In progress
-24.17
Jan 2022 - In progress
-24.25
Jan 2022 - In progress
-24.40
Jan 2022 - Jan 2024
-21.75
Sep 1987 - Jan 1989
-21.55
Sep 1987 - Jan 1989
-21.35
Sep 1987 - Jan 1989
-21.76
Sep 1987 - Jan 1989
-21.76
Sep 1987 - Jan 1989
5 Worst Drawdowns - Average
-34.45 -34.56 -34.53 -34.43 -34.44
10 Worst Drawdowns - Average
-26.00 -26.09 -26.09 -26.12 -26.21

For a deeper insight, please refer to the Paul Farrell Second Grader's Starter Portfolio: ETF allocation and returns page.