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Wednesday, October 1, 2014

9-Month Year-to-Date Performance - BlackRock Diversified Portfolio

Regular readers know my favorite investment chart is the BlackRock 20-year sector performance.  It details the relative ranking of asset classes on an annual basis as well as the performance of an easily replicated low-cost diversified portfolio comprised of 65% stocks, 35% bonds.  The diversified portfolio returned 8.3% on an average annualized basis over the 20-years ended 12/31/2013.

The diversified portfolio allocation is an appropriate benchmark for individuals in their 40s and even early 50s, depending on risk tolerance.  The table contains sufficient data, however, to construct a benchmark and analyze performance for any specific allocation; and, in fact, the allocation can be changed over time--as it should be as the individual ages.

Voluminous data from unbiased academic studies have been presented over the years showing that a diversified portfolio of low-cost funds outperforms upwards of 70% of active managers over the longer term, after all costs are taken into account.  These studies cover various time periods, countries, asset classes, and investment methodologies.  In line with this data, the low-cost diversified approach warrants consideration as a benchmark for investors.  It shouldn't go unnoticed that the approach economizes on the investor's time.

Below is an update showing the approximate performance of the diversified portfolio's sectors for the 9 months ended 9/30/2014.  Overall, the portfolio returned approximately 4.38%.

For the quarter, sector performance was mixed.  Small cap stocks and international had negative returns.  U.S.bonds and mid cap and large cap U.S. stocks achieved gains. 



Disclosure:  This post is intended for educational purposes only.  Past performance is not indicative of future performance.  Individuals should consult a professional or do their own research before making investment decisions.



Weight
Fund
Return (%) 9 months ended 9/30/2014
Expense Ratio
35
AGG  (Barclay’s Aggregate Bond Index)
  4.14
.08
10
EFA (EAFE Index)
 -1.46
.34
10
IWM (Russell 2000)
 -4.38
.24
22.5
IWF (Russell 1000 Growth)  
  7.74
.20
22.5
IWD (Russell 3000)
  7.90
.21
Posted by Robert Wasilewski at 9:23 AM

2 comments:

  1. Grace @ Investment TotalOctober 2, 2014 at 4:00 AM

    Sir Robert, I hope you have a wonderful and successful investing journey. May you become rich and successful. Congratulations for your stock investments. Do you have any recommendation on which stock to buy and some stock investing strategies Sir?

    ReplyDelete
  2. Robert WasilewskiOctober 28, 2014 at 3:23 PM

    Hi Grace,
    Thanks for stopping by. I checked out your website. You are doing a great service for Filipino investors!
    My investment strategy focuses on low cost, well diversified funds that are chosen in accordance with a well specified asset allocation.

    ReplyDelete

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