ESR bob and Sandwich Portfolio

[wallygator69]

Hi,

Still haven't made the jump to Vanguard from FIDO yet but getting close.

Anyone track how ESRBOB's Sandwich portfolio did since Dow 14,000?

Thx

Wally

 

[ESRBob]

2008 Performance for Work Less Live More portfolios

Thanks to Wally's question I just did the math on the 2008 Performance for the Sandwich Portfolio (page 190 in Work Less, Live More) -- the 8-fund portfolio (with a MM fund), substantially from Vanguard, was down 20.4% for the year. Not great, but I've been hearing worse. There is a fair dollop of foreign stocks in these portfolios which got truly hosed.

The single-fund portfolios mentioned in the book came in as follows:
Vanguard Lifestrategy Moderate Growth VSMGX -26.5%
Vanguard LifeStrategy Conservative Growth VSCGX -19.52%
Vanguard STAR VGSTX -25.10%
American FUnds Capital Income Builder, which has more international exposure than the Vanguard options: RIRFX -29.9%
Vanguard Wellington VWEHX -21.29%

Haven't done the calculations on the full ESR-Portfolio yet, as they require data coming in from some exotic indexes (VC, Private Equity) which I don't have yet, but my own portfolio which follows the targets in the book was down about 24% in 2008.

These were definitely the worst yearly results for the slicer/dicer crowd for as far back as my complete data go.

 

[DoubleDown]

Bob - What do you think of PRPFX (Permanent Portfolio Mutual Fund)? Would you consider that a similar one fund (invested in multiple asset classes too) portfolio? Thanks.

 

[ESRBob]

Interesting fund, hadn't heard of them before. They clearly came out better in 2008 than most. But it comes with high fee (.98%) and some pretty bold stances -- specifically they are 1/3 in precious metals right now, and then another third or more in U.S. and Swiss government bonds. The portfolio also has very few foreign stocks -- 2% or so. It is pretty much of a bunker.

I suspect that if you like this portfolio allocation, (nothing against it, it's just extremely defensive), you could piece it together very inexpensively with 3 or 4 index funds (from Vanguard or other low-fee family): a metals fund, a treasuries or treasury/corporate bond index fund and a diversified stock fund. Should save you 3/4% a year. Seems churlish to quibble over after they saved you so much pain in 2008, but its a hard-wired bias of mine to save on fees -- it's one thing over the long run that you can count on.

 

[DangerMouse]

Bob

Do you have figures for performance for previous years as I would be interested to see if the foreign did better prior to 2008 which would compensate for 2008.

 

[ESRBob]

Danger Mouse,
Not sure the exact comparisons you're looking for, but Sandwich Portfolio did have an average return from 1988 through 2006 of 8.6% per year with a low standard deviation (volatility) of returns of 6.7%. 22% of the fund is foreign stocks and 11% is foreign bonds. In general the foreign component historically dampened volatility a bit and kept returns a bit higher, but these days it is not obvious what the impact of foreign stocks and bonds will be with so much interlinkage going on in our global economy. Still, if only for currency diversification, or government-policy-impact-on-your-investments diversification, I'm comfortable sticking with the global portfolio approach.