IRA account allocation proposal

IRA account allocation proposal2017-03-03T15:27:21+00:00
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  • Frank Grossmann
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    Post count: 161

    IRA account allocation proposal

    I belief that you should use low risk investment strategies for your IRA accounts. In general, IRA accounts have a conservative character, because you should be able to live from that money once you are retired. They also have a long term character, because this is money which will stay in such an account for years.

    Reducing risk means reducing volatility. The best way to do it would be our TMV short hedge, however IRA accounts, do not allow to short ETFs or CFDs, so you need another solution to reduce risk.

    The best solution is to combine a stock market rotation strategy with the bond rotation strategy. This could be for example:

    1) only BRS (Bond rotation strategy)
    2) 50% BRS – 50% GSRS (Global Sector Rotation Strategy)
    3) 50% BRS – 50% GMRS (Global Market Rotation Strategy)
    4) 50% BRS – 50% GMRSE (Global Market Rotation Strategy Enhanced)
    5) 50% BRS – 50% MYRS (Maximum Yield Rotation Strategy)

    The smallest risk or volatility has 1) and the highest risk 5).

    To add BRS to one of the other strategies will reduce draw-downs about by 50%. An interesting result from back-tests of such combinations is, that the combined Return to Risk (Sharpe) ratio is always higher then the two single Sharpe ratios.

    The Bond Rotation Strategy may not be so sexy as other strategies, but if you want to reduce your investment risk. It is very good, to invest a part of your money in such a low-risk strategy.

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