So what’s a 80/20 portfolio? It is a portfolio composed of 80% passive strategies (index funds, etfs) and 20% active (mutual funds, stocks, etc…). I decided to do a virtual portfolio via marketocracy to see how a 80/20 portfolio will perform over time. When you start a new portfolio, you have $1,000,000. As for now, I only have spent around $720,000 of the money, and only about 2% of the money went to active (two stocks).
So what are the asset classes for the 80% passive?
Vanguard Bond Index Fund, Incorporated Shares Short Term Bond ETF |
Vanguard Small-Cap Value ETF |
Vanguard REIT ETF |
PowerShares Global Water Portfolio |
Vanguard Small-Cap Growth ETF |
Vanguard Total Stock Market ETF |
Vanguard Extended Market ETF |
Vanguard Large-Cap ETF |
Vanguard International Equity Index Shares FTSE All World ex US ETF |
Vanguard Emerging Markets ETF |
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My 20% active part, I only focus (as for now) on value mostly conservative stocks. As for instance, I bought Wells Fargo (WFC) and Johnson and Johnson (JNJ) last month because I both thought that their price was undervalued (I certainly got that right for Wells Fargo — which gained 8% since I bought it 2 weeks ago). I don’t do anything fancy when I analyze stock to see if it is a good value to stock to buy. I mostly use PE versus historical PE, see what Value line has to say, other bloggers’ opinions, I keep an eye on all the stocks Warren Buffets carries, and with my guts…that’s about it! And when I buy a stock, its for the long-run.
This portfolio’s inception date is June 18 2008 (so yeah..just started), and its performance is in the negative: -4.01%. The reasons why I haven’t invested my cash all at once, is to do a “little” dollar-cost average strategy.
So, you might wonder how well it did versus the market…see below (CMF is my fund):
Beating | Today | MTD | QTD | YTD | |
---|---|---|---|---|---|
CMF | -0.00% | -0.30% | -1.08% | -4.12% | |
S&P 500 | -0.56% | -0.56% | -1.39% | -13.14% | |
DOW | -0.45% | -0.45% | -0.21% | -14.61% | |
Nasdaq | -1.65% | -0.63% | 0.78% | -12.87% |
As you can see it did better than the market so far. I will keep this portfolio updated on this blog and hopefully start new passive portfolios (i.e. 100% all passive). You can see here a fully detailed performance for each assets and stocks since inception.
I do not see any emerging market bonds in your portfolio? This site seems to say they are less riskier and have had better performance than S&P500 over many years. Can that really be true?
http://www.emergingmarketbondfund.com
True. Can you suggest me a good emerging market bond etf? Is it also divided by length of time?