How complex is your portfolio?

We're at 9 funds:

Vanguard Total Stock Market Admiral Fund
Vanguard Small-Cap Value Admiral Fund
Vanguard REIT Index Admiral Fund
Vanguard European Admiral Fund
Vanguard Pacific Admiral Fund
Vanguard Emerging Markets Institutional Fund
Vanguard FTSE ex-US Small Cap ETF
Vanguard Total Bond Institutional Fund
Vanguard Wellesley Admiral Fund

50/50 between us/intl. About 25% in FI, but about 15% of that is now Wellesley, which we added to our portfolio this last year.

I always debate if I should go with a total international instead of splitting it over 3 funds, but I think there's a bonus to be had and it's not that much more work.
 
More slices allows you to weight the components a little more equally, or in a way that reduces the portfolio volatility for a given expected growth. It also gives you more opportunities to rebalance between them. You can also rebalance between a truely active fund and an index or different active fund within the same slice.

Or you can just look at it as indecisive.
 
53 different holdings between mutual funds, individual bonds & stocks, collectibles, & rental properties. With after tax accounts, regualr IRA's, Roth IRA's, 40k, & HSA, each with different pruposes, hard to see how it could be less than 20-25.
 
My portfolio consists of 16 stocks +/- and 4-5 bonds. But that's not what I am posting about.

Ever hear of Harry Browne's Permanent Portfolio strategy? Too simple to fathom. But the current issue of AAII Journal has an article on it. The article backtests the Permanent Portfolio to show it gaining over 10% per year over the last 10 years, 9.5% per year over the last 40 years, and only losing 2% in 2008 (think about that). The Permanent Portfolio's worst annual loss would have been 5% in 1981.

And this is what you are supposed to put in your Permanent Portfolio:
25% in a total market index stock fund
25% in a long-term treasuries bond fund
25% in physical gold bullion
25% in cash

And leave it alone, except for rebalancing whenever one of your 4 asset categories rises to be 35% or more of your portfolio or drops to be less than 15% of it.

The historical performance is really impressive. Could it really be that simple?!
 
actually while the permanent portfolio fund was down in 2008 the homegrown do it yourself one was up.

the only problem going forward is those long term treasuries were in a bull market for 36 years. now at these levels rates will eventually turn around.

with the wind no longer at its back and the bonds acting as a big weight performance will be very different.

i still think it is a great way to bullet-proof one's portfolio but i think gains will be a fraction of what they were.

to bad as i like the permanent portfolio concept alot and have used it off and on for decades.
 
mathjak107 said:
the only problem going forward is those long term treasuries were in a bull market for 36 years. now at these levels rates will eventually turn around.
Click to expand...
The media has been warning about the bond market, saying that it will NOT replicate the performance of decades past and that a slight increase in rate could cause a 10% drop in value.

The question is "What to do?" - high yield corporate bonds? High dividend stocks? Emerging market bonds? Gold? Arts/Paintings? Timber? Real estate?
 
pick an asset class and most of us here can argue pro or con for it.

there is no answer.

the reality is everything good ends and everything bad ends so as long as you stick to your plan eventually you should be okay.

this is why i like my newsletter. it takes the pressure and constant thinking about this stuff off my shoulders.

i can freely spend my time worrying about other stuff instead of my next move.
 
Over 60% of our portfolio is in the top four funds. Our cash position is as low as it has been in a while. Like many of you we use our HSA as a tax deferred investment.

Vanguard Institutional Index Fund Institutional Shares
Vanguard Total Bond Market Index Fund Institutional Shares
Vanguard Total International Stock Index Fund Institutional Shares
Vanguard Extended Market Index Fund Institutional Shares
Cash
MegaCorp Stock (unavoidable)
Vanguard Short-Term Bond Index Fund Admiral Shares
Vanguard Wellesley Income Fund Admiral Shares
PIMCO Total Return Fund Administrative Class
Vanguard Inflation-Protected Securities Fund Institutional Shares
Individual Stocks (my playspace)
JPMorgan Equity Index Fund Class A (HSA)
 
MooreBonds said:
And finally, I favor diversification. Since my average investment used to be about $2,000-$2,500 (and has since been upped to about $3,500 per position as the portfolio grows), I've amassed an unconscionable portfolio of 437 ETFs, individual (common/preferred) stocks, REITs, MLPs, and mutual funds among just about every class out there. It helps when everything's arranged in a massive spreadsheet to keep track. Most of the count is in individual stocks/preferreds, with just a little overlap with some Vanguard funds and foreign ETFs.
Click to expand...

What I love about this forum no matter how foolish I feel for having a 60+ page tax return and complex portfolio. I can always count on somebody to beat the pants of me in the dept. We have a winner MooreBonds:dance:

Tell you heir/executor that he should be really thankful that you didn't kick the bucket in 2010, if you had they would have had to figure out the cost basis for all 437 positions in taxable accounts. With DRIPs that would have been a nightmare.
 
We've got about 15 funds in 6 different retirement accts - 401k,403b, Rollover IRA, 2 Roth's, and a Retiree Medical. Currently we have no way to reduce the number of these holdings.
 
Regarding the comments made about a past bull run in bonds, etc...

The Permanent Portfolio is actually designed to hedge and benefit throughout all phases of the market cycle and regardless of which asset class is up and which is down. It's not supposed to matter whether one asset class is in a bull run or not. It's the performance of the portfolio as a whole that's the kicker.

It goes like this:
25% stocks for when the economy is bullishly growing
25% treasury bonds for when the economy is bearishly in recession
25% gold for when we have inflation
25% cash for when we have deflation

I'm not doing it, but I just became aware of it and I am thinking about it.
 
it is interesting to see the back testing for 40 years that was done on the 4 pieces of the basic permanent portfolio which are cash, market index fund,gold,long term treasuies .

it made little difference in performance when other asset classes were introduced.

in fact the fund actually did worse as expanding out what it held into more asset classes as it really took away the neutral stance .

it also muddied the water by adding assets that did not reliably act the same way every time to the same scenerio.

some times corporate bonds moved up in recessions ,some times down, reits would follow stocks until they didnt then they would move to their own drummer.

many times adding more does not really add much more in performance or diversification.
 
For those using spreadsheets, I used Microsoft Money for 8-10 years to track, then switched to Quicken, importing all the data.
I have about 35 funds and 12 stocks, largely because of a collection of retirement accounts rolled over when my wife changed jobs, as well as a collection of IRA and Roths for both of us. A goal is to reduce holdings by a 1/3, by consolidating the accounts I can consolidate, but that will take a while.
I started out with essentially a lazy portfolio, then over the last decade used gains or new contributions to add areas to diversify to decrease correlation. This is a snake eating its tail since over the last 15 years, most categories are increasingly diversified.
Highly recommend Quicken for complex portfolios; most accounts download automatically, with two exceptions.
 
Cugglioni's Permanent Portfolio fund takes Browne's basic approach but uses Swiss franc and silver to Browne's gold and cash. The bond portfolio isn't all long-term Treasuries, although the majority of the bond allocations is. PPRFX. There is also a new ETF that was started recently.

I put the kid's college money in PPRFX back in 2008, expecting a bad market event, and it served me extremely well, averaging 9.3% over the last 3 years and a total return of 48% over a period a little more than 4 years. It did exactly what I hoped, although it did take a temporary hit in late 2008 and early 2009, but recovered quickly. I plan to cost average some unused cash in taxable accounts in it over the next year or two.

Alex in Virginia said:
Regarding the comments made about a past bull run in bonds, etc...

The Permanent Portfolio is actually designed to hedge and benefit throughout all phases of the market cycle and regardless of which asset class is up and which is down. It's not supposed to matter whether one asset class is in a bull run or not. It's the performance of the portfolio as a whole that's the kicker.

It goes like this:
25% stocks for when the economy is bullishly growing
25% treasury bonds for when the economy is bearishly in recession
25% gold for when we have inflation
25% cash for when we have deflation

I'm not doing it, but I just became aware of it and I am thinking about it.
Click to expand...
 
the fund actually did worse then just doing the 4 parts on your own . not only because of fees but the portfolio is slanted more towards inflation with the actual fund.
 
I've tried the slice and dice approach after studying the couch potato portfolios. After worrying about whether bonds were going to tank from my 3 bond funds, dealing with Congressional non-action concerns, etc., I switched to Vanguard Target Retirement 2015 fund one year ago. Couldn't be happier. The Target Dated funds use the index funds for equities and bonds and are as well diversified as you could do with individual funds but you don't have to worry about rebalancing. Also, their cost ratios are .17%.

The 2015 Fund returned about 11.5% in 2012 with 55/45 asset allocation. If you would be more comfortable with less equity exposure the 2010 fund would give you about 40%. By studying the Target Dated funds at Vanguard you should be able to select one that would allow you to sleep at night. I've decided that by allowing Vanguard to manage the Target fund, it allows me more time to spend time in other pursuits.
 
I use STAR as a core fund in all my retirement funds, only use Short-term IG for holding cash in my taxable account.

7 fund or ETF.jpg
 
One of my goals is to reduce complexity. I have 15 funds. The number is pretty consistent over the past few years. As I clean up one asset class, I add funds in another. Right now I have a few experiments going on in the bond fund area.
 
40% total US stock, 40% total int'l stock, 15% reits, 5% cash + wifes expected fixed pension as fixed income in retirement. However, between two 403b's and taxable accounts it adds up to 9 different funds.
 
Bluetrekrider said:
STAR is a well diversified fund. Seems that you have quite a bit of overlap with those additional funds.
Click to expand...

Yea but 13.79% YTD with 37% bonds and cash, is a pretty nice return. Since I am retired I can use dividends to fill my taxable income space up. My other funds fill in some places that STAR misses. And for the size of my portfolio 6 funds/EFT and a MMF is not excessive.
 
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