It is important to note that it is virtually impossible to duplicate the performance of any model portfolio.
This is for reasons such as different trade execution prices on different blocks of shares or simply the
speed at which today’s market prices fluctuate due to high frequency trading.
However, model portfolios can serve as an important window into how an advisor or manager is really
adding value to the equation for their clients.
(Is it any wonder virtually zero brokers or advisors maintain any sort of model portfolios and publicize
them? What are they afraid of- being found out? )
Too often in today’s financial services field, the broker, advisor, planner or manager wishes to be
‘neutral’ or ‘agnostic’. Either way, it is shunning responsibility for the performance of your
investments so they can ultimately shift the blame for underperformance to someone else. An old
investing adage says ‘It’s ok to be wrong. It’s not ok to STAY wrong.’ Along those same lines, we
feel it is ok for a manager or disciplined strategy to underperform for a year or two. But at what
number of years in a row of underperformance will they decide that maybe the problem is not with
the individual managers they select and maybe a much larger flaw in their philosophy or process?