Saturday, July 02, 2011

Couldn't Buy GTAA for my Mom

I blogged that we wanted to buy shares in the Cambria GTAA ETF for my Mom among other investments we were making in the portfolio. But the bank (one of the biggest global banks) which has custody of the portfolio (they don't manage it really, we (my brother and I) do so that's why I put it this way) said that they couldn't buy the shares because a US Partnership was involved in this stock and the "security settings" blocked them from buying these shares for non-residents. I was able personally to buy shares in GTAA through Interactive Brokers. So this is weird. I contacted the GTAA portfolio manager and he thinks it's weird too and passed the info on to the relevant people. After the changes we did make - we were allowed to buy shares in the China Fund on the NYSE - the portfolio looks like this:

The rate of return for June was -1.11% overall, whereas the MSCI World Index lost 1.54%. You can see that we managed to reinvest some of the Sterling cash but not even the majority of it. We got rid of most of the USD cash and about half the Euros. We need to retain some cash to possibly pay taxes including on the capital gains on the bond funds we sold. The reinvestment in bonds is in a convertible bond fund rather than straight bonds. Otherwise we invested in a real estate fund and tried to increase holdings in non-US stocks and alternative investments. The long-run picture of asset allocation looks like this:

The breakdown is much cruder and we don't have observations for every month. The main thing to notice is the increase over time in the allocation to equities and the reduction in cash. We are now at 31% equities, which is close to where we want to be I think. The real estate share has mostly increased due to the increase in the value of my Mom's apartment. The portfolio is now more similar to the allocation in endowment portfolios. It is particularly close to the Australian Future Fund allocation and the Harvard allocation. The main difference with Harvard is that they have 13% in private equity and this portfolio has zero in that class. Instead, the portfolio has 27% in fixed income vs. Harvard's 13% in that category. There is also more in cash and less in "real assets" in my Mom's portfolio. This makes sense for a "small" investor. Small relative to Harvard though big relative to most personal finance bloggers :)

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