Gauss Portfolio Update: December 22, 2025 | ITA Asset Management

Gauss is the portfolio under review this morning and is undergoing some asset allocation adjustments. Gauss is one of the better performing portfolios, in part because there have been no withdrawals since its inception several years ago. In addition to no withdrawals, new money is added from time to time. This method of dollar-cost averaging is one of the best ways to build a retirement portfolio.

Gauss Asset Allocation Holdings

Below you will find the current holdings for the Gauss. I made the mistake of buying too many shares of VEA and that asset class will be downgraded at the next review in January. Note that VOO is not part of the Gauss. Instead, I’ll start building shares in RSP, the equal-weight ETF designed to mirror the S&P 500. This move from VOO to RSP reduces exposure to the seven to 10 mega-cap stocks that continue to dominate US equities.

Recommendations for Gaussian rebalancing

Below are the recommendations to balance the Gauss based on the Manual Risk Adjustments worksheet. As mentioned above, VEA is well outside the intended recommendations, so I will sell shares and use the money to balance GLD and VHT. If cash is still available, I will increase RSL and QUAL shares.

Going forward in 2026, I plan to use dividends to balance buy-rated asset classes and keep the other asset classes running. One goal is to not sell shares in asset classes other than SHV, and to use SHV only when cash is needed.

With all the holdings of bonds and government bonds, the Gauss will throw away dividends of more than 3.0%. Cash from dividends will balance the different asset classes.

Gaussian performance data

Since December 31, 2021, the Gauss has comfortably outperformed the AOR benchmark. Based on the current asset allocation model, it will be very difficult to keep pace with the stock market if it continues to rise. Since I expect a correction sometime in 2026, the Gauss is in a good position to benefit from such a correction.

Gaussian risk ratios

Over the past year, the Gauss has been generating a fairly consistent Jensen Alpha. The value hangs around the range of 4 to 5 or a very high level. Anything above zero is quite positive. Since last December we have also seen slight increases in the Sortino and Information ratios.

Once we get a clear December, there is a possibility that the slope of the Jensen will become positive.

Comments are always welcome.

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