I want to invest my savings into two securities: USFR and VOO. What I'm stuck with is deciding how to distribute my capital into the two. I tried to be very technical and calculate the weights using a mean variance optimization tool, However, the results don't make sense because USFR's sharpe ratio is absurdly high at ~14. Can anyone help me provide a data-based approach on how to allocate the assets, or explain to me what I'm doing wrong?
Another thing that confused me is how to appropriately calculate the historical return on a bond etf? Does the historical daily return only account for the delta in price or does it also account for the distribution yield? I.e. if you look at USFR at Yahoo Finance, the YTD Total Return is at 1.25% but the distribution yield has been above 5% since the year started...
Any comments would be greatly appreciated!
Submitted March 20, 2024 at 01:55AM by -Lines https://ift.tt/ymOQVWT
