|Source: Capital Pixel|
The performance of the asset classes comprising the diversified portfolio over the 1st 6 months of 2012 along with component weights and expense ratios are shown in the following table constructed with data from Morningstar :
The overall portfolio has achieved a return of 6.1% year-to-date.
A few observations are worth making here. First off, there has been significant scary news throughout the course of the year that would scare even the bravest investors from the capital markets. The talk of Europe imploding, the weak U.S. economy, and the fast approaching "fiscal cliff " has been incessant. Secondly, the alternatives are pathetic. Treasury bills and money market funds yield marginally above zero and, after taking into account inflation and taxes, are guaranteed to lose ground. Finally, there is a group of so-called tactical asset allocators who argue that buy-and-hold is dead and that assets need to shifted around in response to valuation metrics. They argue, as well, that they don't really have an appropriate benchmark because they don't have a set allocation but can instead invest in any asset class.
I believe the numbers reported here bury the "buy-and-hold is dead" argument. I would further argue that the performance here is an excellent benchmark for the tactical asset crowd. It is a choice investors could easily choose over the tactical approach. If the tactical approach isn't beating the well-diversified, low-cost diversified portfolio, then I would think at some point questions would arise.