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For Investors, A 'Lazy Portfolio' May Be A Tonic For Uncertain 2014
These one tonic for all investors is too simplistic because it doesn't customize for individual goals and risk profiles. One can do a better job than this.
For example, if you are passive type of investor (not to be confused with passive funds) that just want to rebalance once in a while:
In the accumulation phase with 25+ years of horizon and small portfolio, up to 80% in equities, high beta bonds most in indexed funds with a. Allocation customized to your risk profile (via wealthfront. betterment, competent advisor who is not a fund pusher etc).
In the growth phase with 15-20 years horizon and a non-trivial portfolio ($200k+), up to 60% in indexed equities, 20% in low beta indexed bonds, 20% in specialty funds such as allocation funds and sector funds with funds chosen for high beta exposure NOT minimum volatility but with a proven record of consistent performance.
In the preservation/drawdown phase with little or no new money coming in relative to the portfio size, up to 20% in indexed equities, 20% in indexed bonds, 40% in specialty funds with funds chosen amongst actively managed for low volatity/drawdowns/preservation, 20% for income producing instruments actively managed capital preservation.
The above are just milestones with some transition plan between them.
If you have the aptitude for active investing (not to be confused with actively managed funds and fundaholics who just depend on internet suggestions) and the time to actively monitor the portfolio
If you only have time for changes 3 or 4 times a year since each change requires some research, split the indexed equities above with a mix of high beta (more concentrated) actively managed funds and non-cyclical sector index funds - health sector, tech, utilities, industrials, etc. Have a buy and sell plan for these if any of them were to head down from normal.
If you have time and aptitude for learning quantitative stuff and can monitor and buy/sell at any time (not to be confused with frequent trading), read up all you can on some basis TA such as momentum and trends and use the concentrated funds allocation above to buy/sell with sector rotation.
Obviously, everyone is different and falls in between so interpolate between them. If you are an outlier that marches to your own drumbeat, devise your own portfolio strategy.
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For example, if you are passive type of investor (not to be confused with passive funds) that just want to rebalance once in a while:
In the accumulation phase with 25+ years of horizon and small portfolio, up to 80% in equities, high beta bonds most in indexed funds with a. Allocation customized to your risk profile (via wealthfront. betterment, competent advisor who is not a fund pusher etc).
In the growth phase with 15-20 years horizon and a non-trivial portfolio ($200k+), up to 60% in indexed equities, 20% in low beta indexed bonds, 20% in specialty funds such as allocation funds and sector funds with funds chosen for high beta exposure NOT minimum volatility but with a proven record of consistent performance.
In the preservation/drawdown phase with little or no new money coming in relative to the portfio size, up to 20% in indexed equities, 20% in indexed bonds, 40% in specialty funds with funds chosen amongst actively managed for low volatity/drawdowns/preservation, 20% for income producing instruments actively managed capital preservation.
The above are just milestones with some transition plan between them.
If you have the aptitude for active investing (not to be confused with actively managed funds and fundaholics who just depend on internet suggestions) and the time to actively monitor the portfolio
If you only have time for changes 3 or 4 times a year since each change requires some research, split the indexed equities above with a mix of high beta (more concentrated) actively managed funds and non-cyclical sector index funds - health sector, tech, utilities, industrials, etc. Have a buy and sell plan for these if any of them were to head down from normal.
If you have time and aptitude for learning quantitative stuff and can monitor and buy/sell at any time (not to be confused with frequent trading), read up all you can on some basis TA such as momentum and trends and use the concentrated funds allocation above to buy/sell with sector rotation.
Obviously, everyone is different and falls in between so interpolate between them. If you are an outlier that marches to your own drumbeat, devise your own portfolio strategy.