PERFORMANCE ANALYSIS FOR THE TWO-MINUTE PORTFOLIO IN BOTH CANADIAN AND U.S. STOCK MARKET

Date created
2013-12-16
Authors/Contributors
Author: Gu, Xudong
Author: Wang, Ximeng
Abstract
The “Two-Minute Portfolio” was first introduced by Rob Carrick in 1999 for the Globe and Mail’s Finance Section. By using his strategy with equal weighting in each market sector, Rob claims that individual conservative long-term investors would spend little time in the portfolio selection and still outperform the market (TSX). Over time, the “Two-Minute Portfolio” evolves its strategy to improve the performance. Based on the four main characteristics of the Two-Minute Portfolio: Equal-weight strategy, Large-Cap (blue-chip) companies, Dividend-paying constraint, and Annual rebalancing schedule, we construct the Two-Minute Portfolios in both TSX and S&P 500 markets. We tested the “Two-Minute Portfolio” strategy for its long-term mean return and risk-adjusted return. We found that the Two-Minute Portfolios do not provide statistically significant excess returns. However, in terms of the risk-adjusted measurement, Two-Minutes Portfolios may perform better than benchmarks. We further found that the added Dividend-Paying constraint does not provide significant improvement to the portfolio.
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