This is why I favor a global/flexible portfolio management approach. My "Flex" portfolios are the best way I know to implement such.
Yes, diversified portfolios have struggled to keep pace with the stock markets, but that is understandable because such are invested at most around 80% in stocks, and perhaps as little as 20%.
What is more important to compare is portfolio performance against the correct blended benchmark. A moderate-risk investor should be about 60-40 stocks-bonds, for example, and thus would compare to a benchmark of 60% stock indexes and 40% bond indexes--not merely the Dow Jones Industrial Average or the S&P 500 index.
This is where the Flex portfolios are doing their jobs well. They are outperforming their benchmarks, as you can see in the data below, and doing so with much less volatility (a measure of risk).
While I do not ignore short-term performance comparisons, I believe it is most relevant and prudent to consider 3-, 5-, and 10-year time periods when comparing portfolios to each other and/or to their benchmarks.
| US and Foreign Indexes | 1 mo | 3 mo | YTD | 1 yr | 2 yr | 3 yr | 5 yr | 10 yr |
| Stock Markets (50-40-10) | 4.8% | 8.6% | 4.8% | 15.7% | 6.0% | 10.2% | 1.6% | 9.1% |
| S&P 500 | 5.2% | 6.8% | 5.2% | 16.8% | 10.3% | 14.1% | 4.0% | 7.9% |
| MSCI EAFE | 5.3% | 11.3% | 5.3% | 17.3% | 3.0% | 6.9% | -0.8% | 9.2% |
| Barclays Agg Bond--US | -0.7% | -0.7% | -0.7% | 2.6% | 5.6% | 5.4% | 5.5% | 5.1% |
| Barclays Agg Bond--Global | -0.9% | -1.3% | -0.9% | 1.7% | 4.4% | 4.7% | 4.7% | 5.8% |
| Moderately Aggressive | 4.0% | 5.6% | 4.0% | 13.4% | 6.0% | 9.0% | 1.8% | 7.6% |
| 80 Flex IV | 2.6% | 4.9% | 2.6% | 9.3% | 6.9% | 9.5% | 7.0% | 10.1% |
| 80 Flex III | 2.8% | 5.4% | 2.8% | 10.3% | 6.6% | 9.2% | ||
| 80 Fidelity | 3.8% | 7.2% | 3.8% | 13.6% | 5.8% | 9.2% | 1.9% | 7.7% |
| Moderate | 2.7% | 4.8% | 2.7% | 10.1% | 5.5% | 7.8% | 2.3% | 6.9% |
| 60 Flex IV | 2.5% | 5.0% | 2.5% | 10.7% | 7.4% | 9.6% | 7.3% | 10.2% |
| 60 Flex III | 2.2% | 4.6% | 2.2% | 10.7% | 7.1% | 9.4% | ||
| 60 Vanguard | 2.5% | 4.9% | 2.5% | 11.0% | 6.4% | 8.7% | 2.8% | 7.0% |
| Moderately Conservative | 1.5% | 2.8% | 1.5% | 6.9% | 5.2% | 6.7% | 2.9% | 6.2% |
| 40 Flex IV | 1.8% | 4.2% | 1.8% | 11.0% | 7.7% | 9.6% | 7.7% | 9.7% |
| 40 Vanguard | 1.4% | 3.0% | 1.4% | 8.3% | 6.3% | 7.7% | 3.6% | 6.3% |
| Asset Allocation | Cash | Stock | Bond | Other | ||||
| 80 Flex IV | 24% | 45% | 21% | 10% | ||||
| 60 Flex IV | 21% | 40% | 30% | 9% | ||||
| 40 Flex IV | 23% | 26% | 43% | 8% |
