Update: Global Value Strategy September 2018

Update: Global Value Strategy September 2018

September 10, 2018 0 By Jeremy




Rules-Based Strategy Update: Global Value Strategy September 2018

The Global Value strategy had a rough month with all the global turmoil.  However, for anyone who invests with a value bent, then you MUST have a long-term view.  It can take months, or years, for true value to be realized.

The Global Value strategy buys country index funds with the lowest valuation based on the CAPE ratio. It is truly a value strategy and requires a long holding period as it takes time for value to be realized by the market.

This strategy is based off of the research done by Meb Faber and presented in his book, Global Value.

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Global Value Strategy Rules-Based Investing

The Global Value Strategy portfolio trades based on specific rules that tell the investor what sectors to hold each month. Here are the rules of the strategy:

  1. Trades country specific ETFs.
  2. When ready to build a Global Value Investing, go to the Research Affiliates website and enter the Asset Allocation tool under the Tools menu.
  3. At the bottom of the screen, click on the Download link. Open the Excel file that is downloaded.
  4. Navigate to the “Expected.Returns.All” sheet, and sort the list by the “Expected Return (Nominal)” column. I set up data filters on the heading row, and the sort highest to lowest.
  5. Buy Rules: Buy the ETFs for the 10 individual countries with the highest expected returns. Buy each ETF using an equal weighting.
  6. Sell Rules: One year following the set-up of the portfolio, download a new version of the above spreadsheet and sort by expected returns as above. If any countries have fallen out of the top 10, sell that country specific ETF.
  7. Rebalance: Replace any sold countries with the new countries that are now in the top 10. You should always have ten ETFs in your global value investing portfolio.

Monthly Signals: Global Value Strategy Investing

As this is a yearly strategy, there is no signals or changes to the portfolio in September 2018.  This portfolio will be rebalanced one year after inception, which will be July 2019.

Strategy Tracking & Performance: Global Value Strategy

Here is the portfolio tracker and performance chart for the Global Value strategy. I use the Morningstar Portfolio Tracker to track all the systems at Robotic Investing. As you can see the strategy lagged the S&P500 a bit over the month, but let’s give it more time to see how it really does.

Each of the portfolios tracked use a hypothetical $50,000 starting value. This portfolio was started on July 2nd, 2018.

Portfolio Value:

Global Value Portfolio - September 2018

Portfolio Performance:

Global Value Portfolio Performance - September 2018

I update all of the strategies at Robotic Investing on a monthly basis. If you want to get notified when each strategy is updated, then please consider subscribing to my newsletter. You will only receive emails when posts have been updated.

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By Mariordo (Mario Roberto Durán Ortiz)Own work, CC BY-SA 4.0, Link