MODEL 2 - PRUDENT WITH BRIO

This is the second model I developed. It's based on the same algorithms of MODEL 1, but allocates within 10 asset classes instead of 7.
Basically I added the gold (in€), Euro government 15-30 years and Treasury 7-10 years.

The table below shows that yearly returns improve with more assets, in line with more volatility.
The model loses money in some years (2007 and 2010), but is a winner in long term.

In the pie-chart you can see the allocations: again you have zero allocation in some assets such as Dax, Gold and Inflation bond. Equity allocation continues to be very low and most of time is a choice between Short term bonds, Govies € or $ and High Yield/inflation bonds.

Because of the low equity allocation, MODEL 2 is quite defensive, but more aggressive than MODEL 1

Finally graph shows that MODEL 2 (INDICE) outperforms all other assets in the long term (taxes on capital gains and commissions not included).

In summary: MODEL 2 is more aggressive than MODEL 1, but still conservative because most time is on bond. Increasing asset universe led to higher returns, with a small increase in volatility.
One cons is that it the low allocation on equity (and none on gold) therefore I'll do further studies in the future to see if I can find other assets that improve the model. At the moment I'll let it run with the original setup.
In the next post I'll describe my favourite model, that is quite more aggressive and based on a different setup, but still quite conservative (as I am).
In the future I'll also explain how different models can be "diversified" in a single one to obtain a good strategy. But I'll let this for next months.
NOTE: for January the model is allocated on € government bond 15-30, in line with December position