Daily, countless dollars are spent barraging people with ads which tout mutual fund companies and their respective funds. Fund XXX returned 15.7% and fund YYY returned 16% while the S&P 500 was only up 9.7%! No where on this ad does it say that fund XXX and fund YYY contain mostly small cap stocks and have actually underperformed. The mutual funds ads simply aim to get more money under management so it can collect more fees and make more money. As a result of such ads people tend to move their money around way to often. These investors are essentially chasing performance with no clear game plan. Unfortunately, these same investors generally drastically under-perform the overall market.
Every investor needs to come up with an asset allocation plan and stay the course. An asset allocation plan will allow an investor have a set game plan and generally ignore the media hype. When developing an asset allocation plan some samples and ideas can be immense help. The sample asset allocations presented here should help individual investors develop a portfolio of there own.
The goal of the sample allocation section is to show examples of a wide variety of asset allocations. These examples will allow investors to see how the various asset classes can be combined to create a portfolio that has its own unique characteristics. A good example is the allocation called ‘Low Correlation’. This allocation was created specifically to show how different very risky assets, that have low correlation, can be combined to create an allocation with low standard deviation and nice returns. The various sample portfolios can be viewed by clicking the names on the left side of the page. Please note that the sample asset allocations and backtesting presented may not continue to be as effective in the future. They should not be considered promises or advice.