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Run Your Personal Portfolio Like a Pension Fund - Fund Allocation Review

beebee
edited April 2018 in Fund Discussions
I began reading a white paper from Schwab this weekend and this quote caught my eye:
In 1986, Gary Brinson, Randolph Hood and Gilbert Beebower studied the allocations of 91 pension funds and concluded that asset allocation decisions, on average, explained more than 90% of pension fund risk, as measured by the volatility of returns over time
Source:Schwab Intelligent Portfolios™ Asset Allocation White Paper
https://intelligent.schwab.com/public/intelligent/insights/whitepapers/asset-allocation.html
Also, I believe @MikeM invests a portion of his portfolio with SIP™ (mentioned in this thread):
https://mutualfundobserver.com/discuss/discussion/comment/97608/#Comment_97608

Obviously a dated quote (1986), but probably still true today.

Question: Where does one turn to for Pension fund information?

I review my pension fund's performance periodically. It is state run and has a easy to access website (linked below).

My plan going forward is to benchmark my personal non- professional portfolio against my pension fund's results. There is usually a delay of a month or two for their results to post on the state's website, but for my purposes (quarterly/yearly reviews) this delay shouldn't be a big problem.

As of Feb 28, 2018:
image
My YTD Performance (through 4/27/2018):
image

Further, I like to also compare the pension fund's allocation to mine (I use M* Portfolio Manager). The pension fund's allocations are as follows:
Notice that they have a Policy Wt and and upper and lower Range for that policy weighting.
image

Via M* Portfolio manager (free service through T Rowe Price) my top 10 Holdings (70% of assets):
image

Going forward, as I become more risk averse (moving into retirement), I plan to lean on this professionally run pension information as a benchmark to my personal investing. I am no where near as diversified as the pension fund, so I will continue researching good investment choices for my portfolio.

Pension fund is linked here:
ott.ct.gov/pensionfunds_overview.html
Fund Performance Page:
ott.ct.gov/pensiondocs/fundperf/FundPerformance02282018.pdf

Comments

  • Sven
    @bee, thank you for the detail posting. Got my homework for the weekend. Is M* portfolio manager is still available at T. Rowe Price? Lately the Portfolio X-ray tool is only available when the total asset exceed $50K.
  • beebee
    Sven said:

    Is M* portfolio manager is still available at T. Rowe Price? Lately the Portfolio X-ray tool is only available when the total asset exceed $50K.

    That may still be the case. I sometime make the effort to meet these minimum by consolidating my holdings if the benefits warrant the move. TRP is worthy of your riches. Also, if that's not possible yet, I would call customer service and ask if access is possible without the minimum.
  • BenWPBenWP
    @Bee: Interesting concept. My spouse is a retired teacher in MI, but her pension payout has nothing to do with the state pension fund's performance. I suspect that in CT, the same is true. I realize you are not comparing income from your pension to income (or returns) from your personal portfolio, but I thought it useful to state. In fact, pensions are threatened because elected officials can and do modify the payouts, sometimes claiming under performance of the fund. OTOH, my TIAA RMDs do depend on the performance of my retirement portfolios because my yearly distributions are based on an age-determined percentage applied on December 31.
  • VintageFreakVintageFreak
    I don't really understand why sector funds have to be included. Is it because in most diversified funds those sectors are under-represented?
  • beebee
    edited April 2018
    @VintageFreak, I own a number of funds that focus on sectors...Tech and Healthcare has worked long term (10+ years). I believe it will continue to be two important growth sectors going forward.

    Sector performance in Healthcare sector funds like (VHT, PRHSX, FSMEX), or allocation funds like PRWCX (25% HC), and funds that overweight both Tech/HC (POAGX =65% Tech/HC) have also ranked high in their category for the last 1,3,5, & 10 years.

    FSRPX is just a "freak of vintage proportion" in both up and down markets going out 30+ years... owning mostly consumer cyclicals...management here again is key.
    FSRPX vs VFINX (1985- present)
    image

    A good manager manage risk and reward...call it luck when it works out...I call it success.

    I don't second guess success...I just try to find it.

    Interest article on Qualitative Driven Funds:
    4-best-qualitatively-driven-mutual-funds-fsrpx-vghcx
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