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Benchmarking my portfolio

edited March 16 in Fund Discussions
Thought I'd share and ask how others are holding up to their own benchmarks. Sometimes you have to step back from the headlines and financial talking-heads and see how things are going personally.

In a market that is so volatile and seems heading lower, it's hard for me to get a perspective for my portfolio losses unless I compare to some benchmarks. So I did that this morning. Overall, I have 2 tax deferred accounts that make up my total, total being ~46% equity. A little more than 1/2 my total is in a Schwab robo, Intelligent Portfolio. No fuss, no muss. Nothing I can screw up. It self balances to the goal of 45% equities (at 43% now). The other account is what I self-manage, sitting at about 49% equities, very little in bonds and a lot of the "other" category which I guess is the term for alternative investments, commodities and gold.

I'm comfortable using the TRP retirement funds for benchmarks. The closest benchmark for me is their 2010 retirement fund, TBLQX, 45% equities. I also like to compare to SPY and VTI (Vanguards total stock market etf) to get some perspective of, if the market falls big-time, what would I expect my savings to drop, percentage wise. Below is my comparisons:

YTD
Schwab robo -3.4%
Self managed -4.4
Total -3.9

Bechmarks:
TBLQX -4.6
SPY -9.3
VTI -9.9

So in perspective, I guess I'm holding up ok versus these benchmarks. If I make no adjustments and the market has a big drop I can guestimate my loss being "only" about 40% of that drop. Good to know.

FWIW, some other TRP retirement funds YTD:
TRRIX 38% stock = -4.1%
TBLPX 41% stock = -4.3
TBLQX 45% stock = -4.6
TBLSX 48% stock = -4.7
TSBAX 52% stock = -5.0
TBLVX 60% stock = -5.5




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Comments

  • @MikeM,
    Wealthtrack guest this week discusses TRP Retirement Funds:

    Linked Here
  • I benchmark to VWIAX, down only 3.08 ytd despite bonds getting killed. I think its probably among a handful of the best conservative allocation funds all time. Perhaps the GOAT. I rarely beat VWIAX in up years and only slightly outperform in down. I'm currently down 3.06. Were it not for the sport of all of this I'd probably dump everything in VWIAX and let it ride. You could do a lot worse!
  • beebee
    edited February 19
    wxman123 said,
    I'd probably dump everything in VWIAX and let it ride. You could do a lot worse!
    3 possible Benchmarks:

    VWIAX (VWINX) - Conservative Allocation
    TRAIX (PRWCX) - Moderate Allocation
    PRBLX - Large Cap All Equity
  • Two good fund series for benchmarking are:

    Vanguard LifeStrategy (equity 20%, 40%, 60%,80%) funds of index funds.

    Fidelity Asset Manager (equity 20%, 30%, 40%, 50%, 60%, 70%, 85%) funds of Fidelity Central (internal; not listed) funds.
    https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/asset-manager-funds
  • edited February 19
    Thanks @MikeM. Great question. You & I go way back on this one.

    WOW - Lots of changes for me the past few years.

    - My original benchmark (for 15-20 years) was TRRIX (40/60) - although I deviated away to “buy down” on equities during the ‘07-‘09 meltdown.

    - Beginning in 2021 I switched my benchmark to PRSIX (also 40/60) and for the first time decided to include a small weighting (7%) of the benchmark inside the portfolio. Switching was bad timing. PRSIX, which for years has outperformed TRRIX, lagged badly during 2021.

    - In late 2021 I sold PRSIX and moved to PSMM for a benchmark, also buying a small slice. The advantages were lower cost and ease of trading in and out. It’s 40/60 with the ability to alter its allocation as managers see fit. Yikes - the bond exposure seemed to really jerk this one around, so I quickly exited.

    - Early this year I developed a tri-fund tracker (benchmark) I like so far. This tracker follows three equally weighted funds: AOK (30/70), PRSIX (40/60) and ABRZX. The only one I own is ABRZX to the tune of 7+%. (I’m sure there are superior funds.) It’s a quirky fund you need to follow to appreciate. But, using derivatives it provides a moderate “hedged” exposure to commodities, stocks, and bonds.

    How am I holding up? I’m pleased to be ahead of the benchmark YTD. Below is the performance of those benchmark components this year. Age and circumstance dictate a rather conservative approach - and I’ve never maintained a separate cash stash.

    AOK -4.52%
    PRSIX -4.45%
    ABRZX -3.10%

    YTD benchmark average: -4.02%

    Yesterday, the tracker dropped 0.12% (equally weighted in dollar terms). / My portfolio was right in-line with that (although some days it varies a bit).One reason is I’ve been maintaining a speculative position in TAIL (an inverse fund) to the tune of 6-7%.


    There’s an old cliche about “if you don’t have a road map you’ll never realize by how far you’ve missed your mark.”

    @MikeM - I admire your work with benchmarks. Generally you’ve chosen wisely. One thing I’d toss out is I’ve noticed TRP doing some things in their allocation funds over the past year (assuming you benchmark to them) that indicate hedging on their part. One is overweighting their Dynamic Global Income fund (RPIEX) which appears to short bonds to some extent and also ISTM they’ve beefed up exposure to floating rate bonds. Also, TMSRX is showing up in some. For RPSIX it comprises 4% of holdings.

    In my own case, I’m “playing with fire” having built up a near 10% spec position to hedge what I still perceive as expensive equity markets. Mostly TAIL but also GLDB which holds longer-dated corporates and gold. They haven’t made $$ yet - but they have buffered some of the bigger downdrafts in the markets. “Staying power” is worth something.

    FWIW


  • edited February 19
    Thanks everyone for this thread. Since I am at 31% equity I use VTINX and AOK as my benchmarks. I am -2.01 YTD so slightly beating them. @wxman 123. I too have thought about just putting the whole thing in VWIAX. Have thought about it for years. The long duration of the FI position is off putting but I bet they are smarter than me. So I might.
  • edited February 19
    I like the idea of using a couple of target date funds as benchmarks.
    I use VTHRX and TRRWX for reference since these funds' asset allocations
    and assumed retirement dates roughly correspond with my personal situation.
    Alternatively, I could use a combination of VTSAX, VTIAX, and VBTLX with the same allocation as my portfolio.
    My portfolio consists of U.S. equities, foreign equities, and primarily U.S. high-quality bonds*
    with a smidgen of multi-sector bonds. Finding appropriate benchmarks may be more challenging
    for investors with large positions in alternative assets.


    *large core-plus position temporarily replaced with stable value fund
  • edited February 21
    It is a really good idea to use target date funds as a benchmark. They are actively managed so they follow the “glide path” over time as to lower the risk. Also they can be use as the retirees may not wish or not able to managed their portfolios.

    @bee posted an excellent WealthTrack interview on TDF from T. Rowe Price. These funds also hold some metals and commodities.
  • Two drinks in & I have to question how TBLQX can be called a 2010 retirement fund when inception date is 2021 ? Thinking they looked at other funds (retirement) & determined what they held & made their fund up from a look see ?

    Can someone fill in the blanks ____

    I don't use a bench mark & find my account continues to grow. I'm not trying to keep up with the Jones or Smiths , just sleep good !
    Thanks Derf
  • edited February 19
    “I don't use a bench mark & find my account continues to grow.”

    @Derf - Think of benchmarking as “extra credit” school work. Something some of us “nerds” do hoping to get an “edge” on the rest of the class.

    However, I agree with you the bottom line is make money. I’ll go even farther - Try eating that benchmark or filling up you tank with it!
    :)

    On a more serious note, benchmarking helps me set realistic goals and expectations so I don’t take on too much risk for age, situation etc. I try to achieve as good or better returns over time as my benchmark while experiencing lower day-to-day volatility. Not everyone needs a benchmark.
  • edited February 19
    @Derf, leave to Price to make it confusing to the max.

    So, there were the original TDFs going back to around 2002. These are now called (TRP) Retirement 20xx. These were/are known as the most aggressive among the TDFs.

    To address the criticism (that was LOUD in 2008-09), Price introduced a new but tamer TDF series around 2013 called (TRP) Target 20xx (see the naming trick?)

    In 2020, Price decided to change glide-paths of its TDFs so that they keep higher equity for longer. This opened Price to criticism again that retirees may be hurt in big downdrafts.

    So, Price decided in 2021 to make even softer cousins, "blends" it calls, of its original TDF series, and these were named (TRP) Retirement Blend 20xx (I think Price needs better fund-naming execs).

    So, now Price has 3 variations for each retirement date. For 2010, they are (TRP) Retirement 2010 TRRAX (2002- ), (TRP) Target 2010 TRROX (2013- ), (TRP) Target Blend 2010 TBLQX (2021- ); these 3 are Investor classes, and there are 3 corresponding Institutional classes, so 6 2010 TDFs, or 6x the dates in the TDF series. Do you want add CITs to the count?

    Clear? May be call Price on Tuesday and see if its customer service even has a clue.

    Well, the others have a better system where each TDF is labeled as (BlaBla) Target/Retirement 20xx Aggressive, (BlaBla) Target/Retirement 20xx Moderate, (BlaBla) Target/Retirement 20xx Conservative; most just have one type per TDF date.
  • +1 Thanks @yogibearbull -

    Who’d of thunk target date funds or benchmarking could get so complicated?
  • edited February 20
    A number of posters have referenced possibly investing 100% in their chosen benchmark fund. Not a bad idea. That’s what prompted me to switch from TRRIX to PRSIX in early 2021 and than stake out a modest portfolio position in PRSIX. It’s a very good fund, and I anticipated ramping up the commitment in coming years with an eventual 100% stake in that one fund.

    What changed my thinking? Here’s a few considerations:

    - For one, I’d had some favorite long held funds at several different houses I didn’t want to part with.

    - A second thought was the suspicion that some of PRSIX’s solid past performance was owing to the decades long bond bull market we’ve experienced and that if that trend reversed the fund would cease to post such fine returns.

    - Third, 100% in PRSIX wouldn’t provide the level of exposure to commodities and precious metals I deemed important.

    - Fourth, there was a reluctance to put all the eggs in the same basket.

    - Lastly, while PRSIX’s 5% investment in a Blackstone hedge fund had appeal initially, after moving from TRP to Fidelity many alternative ways to hedge had become available.

    Like most here, I suppose, I occassionally compare my portfolio’s performance to a wide array of funds. Benchmarking to one (or in my case 3) funds is fine - but not an end-all in itself.
  • msf
    edited February 20
    It's impossible to keep track of all these series without a scorecard, and even then, I'm not sure.

    Until 2013, T. Rowe Price offered an aggressive, but stable (unchanged glidepath) product, unlike its leading competitors, Vanguard and Fidelity.
    2011 Ibbotoson Paper, Bait and Switch: Glide Path Instability
    “In 2008 and 2009, there was increased interest in adjusting our glide path more conservatively,” said Jerome Clark, portfolio manager of T. Rowe Price’s retirement funds. “We avoid making glide path changes based upon short-term market environments, which is consistent with the message we communicate to our investors to stay the course when markets swing to extremes.”
    https://www.investmentnews.com/target-date-glide-paths-are-unstable-at-some-major-plan-providers-37617

    By 2013, T. Rowe Price and Vanguard had well outperformed Fidelity over the preceding five years because of their more aggressive glide paths. Consequently, Fidelity again changed its glidepath, bringing it in line with its competitors. It seems like a stretch to say that T. Rowe Price at the same time introduced a less aggressive line of funds because of loud complaints received years ago as it began multi-year run of superior results.
    Still, it is notable that as of Aug. 22, [2013] T. Rowe Price launched new funds that recognize that some investors are more risk averse as a complement its core T. Rowe Price Retirement Funds, which had $88.1 billion in assets as of March 31.
    https://riabiz.com/a/2013/9/27/after-a-lot-of-flak-fidelity-investments-does-a-study-and-pledges-to-change-how-it-manages-its-170-billion-of-target-date-funds

    Meanwhile, Fidelity was not only tinkering with its initial Freedom series, but creating a slew of variants: Freedom Index (same idea, but w/index funds), Managed Payout Funds and Simplicity RMD Funds (originally Income Replacement Funds launched in 2008, with dates every two years). That change came about around 2017.

    You can find those four series on Fidelity's Asset Allocation funds page (click on Asset Allocation tab).
    https://www.fidelity.com/mutual-funds/fidelity-funds/overview

    What Fidelity isn't showing you there is that it has a fifth(!) series of funds. Fidelity Freedom Blend funds, which is a "blend" of active and passive management. See, e.g. FHARX. These date from 2018.

    As Yogi noted, in 2020, T. Rowe Price decided change the glide paths of both of its series to make them more aggressive. Rather than make a quick change, it changed the allocations over a period of two years, which should be complete in the middle of this year.

    In 2021, T. Rowe Price launched a series of blend funds (that appear to make more extensive use of index funds to reduce cost). These follow the same new ("enhanced") glide path that the Retirement Series are migrating to. But since the Retirement Blend series is new, it doesn't need to transition to the new glide path, it starts with that immediately. The two series, Retirement and Retirement Blend, should be tracking the same path within a few months.
    • The Retirement Blend Fund series is designed for investors who prefer a single, simplified, professionally managed solution for retirement investing and who want an approach that marries the benefits of active and passive investment styles, including placing a greater emphasis on managing overall cost.
    • The Retirement Blend strategy has been in place at T. Rowe Price since 2018 but it was previously available only in the collective investment trust format. This mutual fund series extends the firm's Retirement Blend approach to a wider range of investors for whom a mutual fund is the preferred or most appropriate vehicle.
    • The Retirement Blend Funds use the enhanced glide path and the same diversification and tactical asset allocation as T. Rowe Price's existing Retirement series of target date portfolios.
    https://www.prnewswire.com/news-releases/t-rowe-price-adds-retirement-blend-funds-to-target-date-lineup-301343055.html

    I respectfully disagree that T. Rowe Price has made this confusing to the max. IMHO that "honor" goes to Fidelity, with its ever changing glidepaths, its greater multiplicity of series, its "hidden" series of blend funds, and its changing of series names and objectives. And lest I forget, a slew of share classes, including K and K6, and Fidelity Advisor variants with their alphabet soup: A, C, M, I, Z, and Z6.

  • @msf,

    Nice summary of Fidelity and T. Rowe Price retirement funds.
    I agree that it's challenging to keep track of all these series!
  • @yogibearbull : Thanks for the info.
  • edited February 20
    In a nutshell, it sounds like choosing some of these funds as your benchmark is equivalent to trying to track a moving target.

    To the extent those changes reflect a changing investment playing field (ie diminishing fixed income returns) than it’s probably a prudent thing to do. However, it sounds like the rationale is more convoluted than just that.
  • Benchmarks should be simple & stable/static. TDFs are too complicated as general benchmarks. Then, there are wide variations among the same-dated TDFs.

    This is why I like previously mentioned Fido Asset Manager & Vanguard LifeStrategy series for general benchmarking.

    But I understand that posters may choose any benchmark for their personal benchmarking purposes. In fact, PV even allows customized personal benchmarks.
  • edited February 20

    Benchmarks should be simple & stable/static. TDFs are too complicated as general benchmarks. Then, there are wide variations among the same-dated TDFs.

    This is why I like previously mentioned Fido Asset Manager & Vanguard LifeStrategy series for general benchmarking.

    But I understand that posters may choose any benchmark for their personal benchmarking purposes. In fact, PV even allows customized personal benchmarks.

    Yep - I’ve never liked, used, or benchmarked to a TDF. (TRRIX and PRSIX aren’t TD / don’t use glide paths).

    What’s always troubled me about TDFs is the glide path could end up being “out of sync” with valuations at any particular time. So you might end up with 80% in equities at a time of extremely high valuations and than 20-25 years later have only 30% in equities after they’ve become relatively cheap by historical standards. Not a prediction. Just saying …

  • From above post :
    "A number of posters have referenced possibly investing 100% in their chosen benchmark fund. Not a bad idea. "

    Had I done this , put 50 or 100 % in a TDF at Vanguard, I would have blown my fuse do to the LARGE cap gains that were issued for this tax year !
    This subject was discuss about 2 months ago.
    Enjoy your Sunday, Derf
  • Which Vanguard Target Retirement or Life Strategy Fund is best to use as a benchmark for a portfolio that is 34% Cash, 34% US Stocks, 6% Non-US Stocks, and 26% Bonds?

    Thanks!
  • edited February 20
    @mona, Fido AM40 FFANX and VG LS-Conservative VSCGX would be appropriate for that mix (34% Cash, 34% US Stocks, 6% Non-US Stocks, and 26% Bonds). Clearly, no benchmark would have that much cash but you can evaluate later how your decision to hold that much cash turned out. BTW, does that cash include some SVs?
  • Mona, look up TDF retirement & their 2020 TDF. You could use one or the other or split the two. I believe the 2015 TDF is close to rolling into the Retirement fund. You will get tips also. I haven't checked Life Strategy allocation. The 34% cash maybe a problem to find a bench marking fund. If you combine cash & bonds as one , you could luck out & find one.
    FWIW, Derf
  • edited February 20
    One thing on the benchmark TBLQX. I compare to it "now" because it has a very similar equity percentage for where I want to be, where I've been the past couple years. The stated year makes no difference to me.
    I don't use a bench mark & find my account continues to grow. I'm not trying to keep up with the Jones or Smiths , just sleep good !
    @Derf, try a comparison. Just give it a look. What do you have to lose?

    If I found that over the years I was substantially behind a benchmark I would just buy the benchmark. In fact, that was the purpose of putting a good chunk of money, over 1/2 my retirement savings, into Schwab's robo account. Most of us don't trail a benchmark because of the funds we choose or investments we make. I contend fund selection is secondary to portfolio management. We trail because humans tend to be undisciplined and move in and out of funds at the most inopportune times. Benchmarks don't, and they exceedingly win the race over time. I know @hank has mentioned over the years, it is hard to beat a benchmark. But I concede it is fun to try.
  • edited February 20
    Derf said:

    From above post :
    "A number of posters have referenced possibly investing 100% in their chosen benchmark fund. Not a bad idea. "

    @Derf - Since you’ve quoted from my post I should say here (1) “Not bad” doesn’t necessarily mean “good” and (2) I enumerated 5 specific reasons why I chose not to do that.

    That said, folks need to make their own decisions based on needs, risk tolerance, health, etc. Hopefully this discussion will help some.
  • @MikeM : " We trail because humans tend to be undisciplined and move in and out of funds at the most inopportune times."
    I'll be the first two admit to the above sentence as it's rained down on me more than once ! I'm currently holding to much cash to bench mark unless I grouped cash & bonds into the same pile. I'd be 30-35 equity 70-65 C&B's

    Thanks for your comments, Derf
  • @hank As you mentioned in your post, a number of investors , so I was referring more to that instead of you.
    No harm no foul ,Derf
  • edited February 20
    @MikeM said “If I found that over the years I was substantially behind a benchmark I would just buy the benchmark.”

    Ditto … When folks like Mike (and many others) who’s been posting here and at Fund Alarm for perhaps 15 years explain what they do and why they do it, it’s worth listening. One might assume they haven’t been “beating their head against a brick wall” all those years without any incremental advantage … over a single fund approach
  • @yogibearbull said "BTW, does that cash include some SVs?"

    Yes, 9%.


    @Derf said " If you combine cash & bonds as one, you could luck out & find one."

    I am putting my stable value with cash. Combine cash, stable value, and bonds all in VFSUX which is my bond fund?
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