2015 was a down-year for the stock markets and some bond markets. Here is how the six major indexes fared last year:
- Dow Jones Industrial Average -2.2%
- S&P 500 -0.7%
- MSCI EAFE (developed-market stocks outside the USA) -3.3%
- MSCI EM (emerging-market stocks) -17.0%
- Barclays US Aggregate Bond index +0.6%
- Citi WGBI nonUSD bond index -5.5%
So, instead of comparing performance just to the Dow or the S&P 500, or to a bond index, we should use a "blended benchmark" suitable to our risk profile. For example, investors with a moderate to aggressive risk tolerance should have at least 60% of their portfolios in stocks, and up to 100%. Meanwhile, a retiree who needs investment income and should not be much exposed to stock market volatility should be mostly in bonds and cash, with about 20% in stocks.
To that end, I create and manage several portfolio models and use them for most of my clients' investments. Below are the performance data through 12/31/2015 for the models we use most. NOTE: this data does not reflect any client's specific returns; it illustrates how a model would have done over time.
Please contact me with any questions about your portfolios, accounts, and/or personal financial strategy. Thank you, and happy new year!
--Gary
| US and Foreign Indexes | 3 mo | 1 yr | 2 yr | 3 yr | 5 yr | 10 yr | 2008 | |
| Stock Markets (72-21-7) | 5.7% | -0.5% | 3.6% | 10.9% | 9.2% | 6.1% | -38.5% | |
| S&P 500 | 6.5% | -0.7% | 5.2% | 12.7% | 10.2% | 5.1% | -38.5% | |
| Dow Jones Industrial Avg | 7.0% | -2.2% | 2.5% | 10.0% | 8.5% | 5.0% | -33.8% | |
| MSCI EAFE | 4.4% | -3.3% | -5.4% | 2.3% | 0.7% | 0.2% | -45.1% | |
| MSCI EM | 0.3% | -17.0% | -11.0% | -9.0% | -7.2% | 1.2% | -54.5% | |
| Barclays Agg Bond--US | -0.6% | 0.6% | 3.2% | 1.4% | 3.3% | 4.5% | 5.2% | |
| Citi WGBI nonUSD (foreign bonds) | -1.4% | -5.5% | -4.1% | -4.3% | -1.3% | 3.1% | 10.1% | |
| Aggressive (90% stocks-10% bonds) | 3.1% | -3.7% | 0.1% | 6.2% | 5.4% | 4.0% | -36.0% | |
| 95 Flex V | 4.2% | -4.0% | -0.8% | 6.4% | 5.7% | -19.1% | ||
| 95 Strategic II | 4.0% | -2.7% | 1.2% | 9.5% | 9.2% | 8.0% | -35.9% | |
| 95 Schwab index | 4.6% | -0.9% | 1.4% | 9.9% | 8.3% | 5.9% | -37.2% | |
| Confluence Value Opportunities | 2.2% | 2.3% | 16.0% | 21.2% | 17.6% | 12.3% | -22.3% | |
| WealthFront 9 | 3.1% | -4.5% | -0.7% | 5.0% | 4.8% | -38.0% | ||
| American Funds Growth Port | 5.3% | 1.4% | 3.6% | 11.7% | 9.0% | 6.9% | -40.8% | |
| Moderately Aggressive (75-25) | 2.5% | -3.1% | 0.3% | 5.2% | 4.9% | 4.1% | -31.0% | |
| 80 Flex V | 3.8% | -3.6% | -0.3% | 5.8% | 5.5% | -16.9% | ||
| 80 Strategic II | 3.2% | -2.8% | 0.8% | 7.4% | 7.7% | 7.4% | -30.2% | |
| 80 USA tilt | 3.0% | -2.8% | 1.3% | 8.2% | 8.0% | 7.0% | -28.5% | |
| 80 Schwab index (muni) | 4.1% | -0.1% | 2.3% | 8.7% | 7.8% | 5.7% | -32.3% | |
| Money 75 | 3.3% | -1.2% | 2.1% | 7.9% | 7.2% | 6.2% | -32.7% | |
| American Funds Growth+Inc Port | 3.7% | -1.0% | 2.5% | 7.5% | 7.3% | 5.9% | -29.6% | |
| Moderate (60-40) | 2.0% | -2.5% | 0.6% | 4.2% | 4.5% | 4.1% | -25.6% | |
| 60 Flex V | 3.2% | -3.0% | 0.2% | 5.0% | 5.5% | -13.1% | ||
| 60 Strategic II | 2.4% | -2.4% | 1.0% | 5.7% | 6.7% | 7.0% | -23.0% | |
| 60 Schwab index (muni) | 3.6% | 0.9% | 3.7% | 7.7% | 7.6% | 5.7% | -26.4% | |
| American Funds Balanced Port | 3.7% | 0.6% | 3.1% | 7.8% | 7.5% | 6.0% | -28.3% | |
| Moderately Conservative (40-60) | 1.2% | -1.7% | 0.4% | 2.9% | 3.6% | 3.9% | -17.4% | |
| 40 Flex V | 2.9% | -2.6% | 0.7% | 4.5% | 5.6% | -10.4% | ||
| 40 Strategic II | 2.5% | -1.7% | 1.6% | 6.0% | 6.7% | 7.1% | -18.0% | |
| 40 Schwab Index (muni) | 2.8% | 1.6% | 4.5% | 6.1% | 6.9% | 5.3% | -19.7% | |
| Goldman Sachs Income Builder | 0.3% | -3.6% | -0.1% | 5.2% | 6.6% | 5.6% | -23.3% | |
| Conservative (20-80) | 0.2% | -1.4% | 0.3% | 1.0% | 2.5% | 3.6% | -8.4% | |
| 20 Flex V | 2.0% | -1.9% | 1.1% | 3.3% | 5.3% | -5.2% | ||
| 20 Strategic II | 1.8% | -1.5% | 1.5% | 4.3% | 5.3% | 6.6% | -11.1% | |
| 20 Schwab index (muni) | 2.1% | 2.3% | 5.2% | 4.5% | 6.2% | 4.8% | -13.7% | |
| NOTE 1: Past performance is no guarantee of specific future results. This data is presented by Potomac Wealth Strategies, LLC. This data is from Morningstar and should be accurate, but it has not been independently verified. | ||||||||
| NOTE 2: "Flex", "Strategic", and "Index" models are crafted/run by Potomac Wealth Strategies. They show history of better returns, lower volatility, or both--or, with the Index models, closer tracking--vs benchmarks and competitors. | ||||||||
| NOTE 3: "XX Schwab index" models are low-cost portfolios. They are comprised of index funds available free of transaction charges to my clients at Schwab. This is what many might recommend due to low-costs and portfolio efficiency. | ||||||||
| NOTE 4: Nothing on this blog post represents investment advice to any individual or organization. If the information hereon is of interest to you, please contact me at Garo.Partoyan@PotomacWealthStrategies.com for a consultation. | ||||||||
