The Trinity Portfolio: A Long-Term Investing Framework Engineered for Simplicity, Safety, and Outperformance
CQR, Issue 9, June 2016
24 Pages Posted: 9 Jul 2016 Last revised: 18 Jul 2016
Date Written: July 2, 2016
Let’s say one sets out to design a portfolio, knowing everything we know today about investing. Where would a logical, evidence-based investor even start? Investors today have access to more market data and strategic information than at any other time in history. While beneficial in some ways, this huge volume of fragmented information presents a challenge — how should one actually implement everything? This paper offers a potential solution – the “Trinity Portfolio.” The name is a reference to the three core elements of the portfolio: 1) assets diversified across a global investment set, 2) tilts toward investments exhibiting value and momentum traits, and 3) exposure to trend following. We examine how an investor might construct this holistic, adaptive framework consisting of some of the most well-known market anomalies. We find that the portfolio performs well across various market environments, with reasonable volatility. Finally, we examine how an investor may update and implement such a portfolio with low cost funds.
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