Portfolio Shield – October 2021

Linked below are the latest Morningstar® Investment Detail Reports for the Portfolio Shield™ family.

With the rebalance to the new allocation is complete I want to address a question that has come up about the daily tracking of SPD and QQD. One aspect that makes the Portfolio Shield™ strategy great is its ability to control risk during volatile and Bear markets by hedging with long-term Treasury bonds.

By replacing SPY with SPD and QQQ with QQD we have added an additional layer of crash protection due to the put options Simplify is purchasing with a small percentage of each ETF. By adding this extra layer of downside protection, it means the two Simplify ETFs won’t track the broad ETFs day to day or even over longer periods.

The tracking differential is expected and remains within a reasonable tolerance. Mike and I spoke about the tracking differential during our chat about the changes to the strategy. Due to the additional downside protection, the two ETFs should lag their broad-equity counterparts when the market is rising.

With Portfolio Shield™ already hedging and likely to remain hedged for another couple of months, adding an additional layer of crash protection is prudent. Particularly so after a big run-up in the equity market.

Portfolio Shield™ increased its long-term bond hedge in October across all models.

As a reminder, all strategies are rebalanced on the first trading day of each month and at that time, any new monies are invested according to the model strategy you are in.

For those who want to change between strategies, changes will occur at the next rebalance on the first trading day of each month.

There is only a 0.3% allocation to cash in each model. Due to a misreporting between Morningstar® and the ETF providers, the Asset Allocation box on the fact sheets may show a higher cash position than is actually in the model.

If you have any questions or would like to change which Portfolio Shield™ strategy you are invested in, please let me know.

Thank you,

Steven Van Metre, CFP®