Portfolio Tiferet

This report by Sefirot Financial Research presents the design and analysis of Portfolio Tiferet, a three-ETF structure built around a core principle that is often overlooked in passive investing: equal weighting is not the same as diversification. By examining the correlation structure between global equity, S&P 500 EUR-hedged, and physical gold exposures, the study demonstrates how naive allocation can systematically underperform a correlation-aware construction - capturing equity drawdowns while missing the gold rally. The report provides a rigorous yet accessible framework for understanding how asset selection and weight assignment interact in practice.

Key topics covered:

• Equally weighted portfolio analysis: return, variance, max drawdown, and return distribution across the 2023-2025 period

• Individual ETF profiling: performance metrics, return distributions, and violin plot analysis for AGOLD, SWDA, and XDPE

• Correlation matrix analysis: how a 0.90 correlation between SWDA and XDPE creates hidden concentration risk

• Portfolio composition rationale: the role of physical gold as a genuine decorrelator (correlation = -0.01 with equity)

• Key takeaway: the equally weighted baseline returned +47.8% but failed to capture gold's +63.5% run - structural correlation, not allocation size, determines true diversification