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Friday, October 1, 2010

YTD Performance - BlackRock Diversified Portfolio

In previous posts, we have looked at returns over the last 20 years for parts of the capital markets including international, growth, value, fixed income etc., as provided by BlackRock.

The value of the BlackRock data is it provides long term results, shows volatility explicitly, and illustrates the value of diversification.

The following table extends these results by showing year-to-date returns for 2010 through 9/30 on the sectors of the diversified portfolio: Click to Enlarge.

The table shows the volatility of various sectors and the dampening influence on returns that results from diversification.

For the year-to-date period, the small cap stocks (IWM) stood out, with large cap growth (IWF) and large cap value (IWD) producing similar returns. The bond market (AGG) performed nicely, continuing to defy the bond market bubble worries. International is still lagging but bounced back sharply from being down double digits at mid-year.

Overall, the portfolio is up +5.47 % year-to-date calculated as follows:

.3*7.71 + .11*1.06 +.11*9.04 + .24*4.21 + .24*4.33 = 5.47

The returns are based on net asset value, as reported by Morningstar.

To me, a benefit of simplifying and using exchange traded funds is the ability to easily track performance on an ongoing basis. Also, by playing with the numbers, it is easy to see the impact of altering the allocation by, say, moving 5% from international to bonds.

Disclaimer: The information here is intended solely for instructional purposes. Investors should consult an advisor or do their own research before investing. I hold some of the exchange traded funds mentioned.

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