Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
For me the 60/40 Asset Allocation model is a good starting point for an investor to get a feel for the market movements by monitoring the valuation movement of stocks (SPY) and bonds (AGG). If they can not stand the volatility of equities within this 60/40 allocation perhaps they should adjust it more to there risk tolerance level. A fund that I have followed that automatically adjust it asset allocation to stock market valuations is CTFAX. As stocks advance in value the fund automatically adjust equity positions downward and increases allocations to fixed income. This got me to thinking … and, I followed suit but my low threshold to equities is 40% with a high range of 60%. CTFAX has had an average annual return over the past five years about 14.9% and today it only holds about 10 percent in equities and 90% in fixed income. We shall perhaps soon see how it performs against a rising interest rate environment. I have linked below its Fact Sheet for those that might be interested. In addition, you can see how it faired against some major benchmarks.
Over the past five years I have had what I call a walking allocation to mostly the equity asset class in my own portfolio. Naturally the others are affected in some way as equities get adjusted. Coming off of 2008, I was a little better than 60+ percent equity, about 10% to 15% cash and the rest in fixed. As my equity positions increased in value I began to reduce my exposure to them and split some off into alternatives and raised my percentage of cash along with adjusting my fixed income allocation as I felt warranted. At one time fixed was about 35% and today it is about 25% . I am happy with what I have accomplished and feel the 16.5% average return over the past five years has been stellar as this actually beats a good number of the moderate allocation funds offered by some of the major fund houses. Certainly, I could have added to the returns by staying equity heavy rather than dialing it back to where I am positioned today at about 45% equity. But, considering my risk tolerance I feel I played it right and I am happy with the results working from the base line allocation of 60/40 and adjusting it form there as I read changes in the markets.
For me, CTFAX is just too fixed income heavy and equity light at the moment. It will be interesting to see if its fixed income and equity allocations get adjusted in view of an anticipated rising interest rate environment coming in the near term. I am thinking the scale that it follows to adjust its allocations will change. I'll be following it to see.
Comments
For me the 60/40 Asset Allocation model is a good starting point for an investor to get a feel for the market movements by monitoring the valuation movement of stocks (SPY) and bonds (AGG). If they can not stand the volatility of equities within this 60/40 allocation perhaps they should adjust it more to there risk tolerance level. A fund that I have followed that automatically adjust it asset allocation to stock market valuations is CTFAX. As stocks advance in value the fund automatically adjust equity positions downward and increases allocations to fixed income. This got me to thinking … and, I followed suit but my low threshold to equities is 40% with a high range of 60%. CTFAX has had an average annual return over the past five years about 14.9% and today it only holds about 10 percent in equities and 90% in fixed income. We shall perhaps soon see how it performs against a rising interest rate environment. I have linked below its Fact Sheet for those that might be interested. In addition, you can see how it faired against some major benchmarks.
https://www.columbiamanagement.com/content/columbia/pdf/LIT_DOC_3C97987F.PDF
Over the past five years I have had what I call a walking allocation to mostly the equity asset class in my own portfolio. Naturally the others are affected in some way as equities get adjusted. Coming off of 2008, I was a little better than 60+ percent equity, about 10% to 15% cash and the rest in fixed. As my equity positions increased in value I began to reduce my exposure to them and split some off into alternatives and raised my percentage of cash along with adjusting my fixed income allocation as I felt warranted. At one time fixed was about 35% and today it is about 25% . I am happy with what I have accomplished and feel the 16.5% average return over the past five years has been stellar as this actually beats a good number of the moderate allocation funds offered by some of the major fund houses. Certainly, I could have added to the returns by staying equity heavy rather than dialing it back to where I am positioned today at about 45% equity. But, considering my risk tolerance I feel I played it right and I am happy with the results working from the base line allocation of 60/40 and adjusting it form there as I read changes in the markets.
For me, CTFAX is just too fixed income heavy and equity light at the moment. It will be interesting to see if its fixed income and equity allocations get adjusted in view of an anticipated rising interest rate environment coming in the near term. I am thinking the scale that it follows to adjust its allocations will change. I'll be following it to see.
Old_Skeet