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VP portfolio - Feedback wanted
Posted: Wed Mar 20, 2013 12:01 pm
by GT
Looking for some feedback on a VP portfolio.
Stocks
500 index 20%
small cap Value 5%
International developed stocks 10%
Emerging markets 5%
Bonds
Long term government bonds (TLT) 20%
Short term goverment bonds (SHY) 15%
Real Assets
Real Estate investment trusts 10%
Gold 15%
I used a back testing site and came up with the below results based on a 1972 to 2010 time frame:
Portfolio Allocation: 20.0% 500 Idx , 5.0% EM , 15.0% ST Trsry , 10.0% REIT , 20.0% LTGB , 15.0% GOLD , 10.0% EAFED , 5.0% SCV Compound return = 11.06% Worst year: 2008 -13.48%
Re: VP portfolio - Feedback wanted
Posted: Wed Mar 20, 2013 12:31 pm
by melveyr
Looks reasonable. Seems like a PP with some personal tilts thrown in.
Would you mind walking us through your logic when deciding on the weights?
Re: VP portfolio - Feedback wanted
Posted: Wed Mar 20, 2013 4:15 pm
by foglifter
Just thought it's nice to have a look at your allocation in another tool. Here's the 1972-2011 results from Simba's spreadsheet:

Re: VP portfolio - Feedback wanted
Posted: Wed Mar 20, 2013 7:28 pm
by GT
Foglifter - thank you for the data!
Melveyr-Yes, you are correct I wanted to keep as much of the balanced PP theory as possible while titling towards a more growth oriented VP. I do not have a specific allocation formula for the individual asset weighting rather I used the basic concepts I have gleamed from reading books by Harry Brown and David Swensen.
Stocks 40%:
US: 20% S&P 500 with a growth tilt of 5% to Small Cap Value – 25% total
International: 10% developed with a growth tilt of 5% to Emerging markets – 15% total
Overall for stocks
· Tired not to overweight the portfolio in stocks so bonds and gold could counter balance a sharp drop in the market.
Bonds 35%:
US Long term 20% - Hedge for deflation, flight of fear asset against stock market drops
US short term 15%- Helps smooth volatility of stocks and 20 year bonds; small hedge to recession.
Gold 15%
Gold- Hedge to inflation, flight of fear asset against stock market drops.
US Real Estate 10% -
US Real Estate - I was thinking of direct ownership via personal property rental or the TIAA real estate fund which provides direct ownership interest in commercial real estate. Real Estate works as a diversifier and has a long term hedge to inflation. The REIT’s index ETF "VNQ" is going to be a fall back option because I am concerned with the close correlation to the US stock market (index of real estate Company’s stocks not actual property).
"Feels" balanced to me but I am still in the learning process so feel free to pick this apart or ask questions.
Re: VP portfolio - Feedback wanted
Posted: Sun Mar 24, 2013 5:02 pm
by frugal
Good PP VP!
Re: VP portfolio - Feedback wanted
Posted: Tue Mar 26, 2013 5:10 pm
by escafandro
GT wrote:
Stocks
500 index 20%
small cap Value 5%
International developed stocks 10%
Emerging markets 5%
Bonds
Long term government bonds (TLT) 20%
Short term goverment bonds (SHY) 15%
Real Assets
Real Estate investment trusts 10%
Gold 15%
foglifter wrote:
Just thought it's nice to have a look at your allocation in another tool. Here's the 1972-2011 results from Simba's spreadsheet:
I played changing a little this portfolio in Simba's spreadsheet and I got this result:
15% US TSM
15% EAFE85/EM15
30% Long Term Govt Bond
15% 2 year ST Treasury
15% Gold
10% REIT
1972-2011
Average: 10.58%
Std. Dev: 8.06%
CAGR: 10.30%
Worst Year 2008: -7.37
EDIT: And still less volatile without much return loss:
10% US TSM
10% EAFE85/EM15
30% Long Term Govt Bond
20% 2 year ST Treasury
20% Gold
10% REIT
1972-2011
Average: 10.35%
Std. Dev: 7.54%
CAGR: 10.10%
Worst Year 2008: -2.74
What do you think?
Re: VP portfolio - Feedback wanted
Posted: Tue Mar 26, 2013 6:52 pm
by GT
Looks Good Escafandro! I would have guessed that you would have needed more in stocks to reach that level of return but it looks like you would not have...
Prosperity - 15% total US Market; 15% International/ with emerging markets
Inflation - 15% Gold; 10% REIT
Recession - 15% short term US Bonds
Deflation - 30% Long term US Bonds
Maybe we can get pointedstick or one of the more experienced portfolio folks to chime in... hint hint
