A new year has started, but the performance view for the major asset classes doesnt look
all that different
from the final days of the old year, at least not yet. Lets consider how the numbers stack up with a set of ETF proxies using a 250-trading-day window. By that standard, US equities are still in the lead, although the performance edge has weakened a bit. Meanwhile, theres still plenty of red ink at the opposite end of the return spectrum. Stocks in these United States are up more than 27% through yesterday, January 13, based on the Vanguard Total Stock Market ETF (VTI). At the far end of the losing side of the ledger: a broad measure of commodities, as tracked by the iPath DJ-UBS Commodity ETN (DJP). Seeking Alpha Seeking Alpha Portfolio App for iPad Finance (1) Home | Portfolio | Breaking News | Investing Ideas | Dividends & Income | ETFs | Macro View | ALERTS | PRO Sign in / Join Now
3,656 people decided to get VTI articles by email alert Which cover: new articles | breaking news | earnings results | dividend announcements Get email alerts on VTI Loading... Symbols: Authors: Asset Allocation And Rebalancing Review Jan. 14, 2014 10:36 AM ET | by: James Picerno 2 comments | Includes: BND, DJP, VTI Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 1 of 6 1/15/2014 7:22 PM For another perspective, lets graph the return histories for each of the major asset classes for the past 250 trading days. The next chart shows the performance records through January 13, 2014, with all the ETFs rebased to 100 as of January 15, 2013: (click to enlarge) Now lets review an ETF-based version of a passive, market-value-weighted mix of all the major asset classes -- the Global Market Index Fund, or GMI.F, which is comprised of the ETFs in the table above. Here's how GMI.F stacks up for the past 250 trading days through January 13, 2014. This investable strategy is higher by 11% over that span, or roughly midway between the returns for US stocks (VTI) and US bonds (BND) for the same period. Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 2 of 6 1/15/2014 7:22 PM (click to enlarge) Comparing the overall dispersion of returns for the major asset classes via ETFs suggests that the rebalancing opportunity is relatively middling for GMI.F vs. recent history. Analyzing the components of GMI.F with the rolling median absolute deviation of one-year returns for all the funds -- the GMI.F Rebalancing Opportunity Index, as it's labeled on these pages -- suggests that theres average potential for adding value by reweighting the portfolio in comparison with the past several weeks. (click to enlarge) Finally, lets compare the rolling 1-year returns (defined here as 250-trading-day performance) for the ETFs Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 3 of 6 1/15/2014 7:22 PM in GMI.F via boxplots. (Keep in mind that the historical records for these ETFs vary due to different launch dates). The gray boxes in the chart below reflect the middle range of historical returns for each ETF the 25th to 75th return percentiles. The red dots indicate the current 1-year return (as of Jan. 13) vs. the 1-year return from 30 trading days earlier (blue dots, which may be hiding behind the red dots in some cases). Note that US stocks (VTI) remain in the lead in absolute and relative terms vs. the other asset classes. (click to enlarge) 3,656 people decided to get VTI articles by email alert Get email alerts on VTI Share this article with a colleague 1 Tweet More articles by James Picerno Retail Sales Up A Mild 0.2% In December Tue, Jan 14 U.S. Retail Sales: December 2013 Preview Mon, Jan 13 Is The Falling Rate Of Personal Income Growth A New Risk Factor? Mon, Jan 13 Private Payrolls Increased Far Less Than Expected In December Fri, Jan 10 Comments (2) Register or Login to rate comments About this article Emailed to: 157,848 people who get ETFs & Portfolio Strategy daily. Tagged: ETFs & Portfolio Strategy, Portfolio Strategy & Asset Allocation Problem with this article? Please tell us. Disagree with this article? Submit your own. Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 4 of 6 1/15/2014 7:22 PM TAS Comments (1567)
I had to chuckle at your 250 day return chart of major asset classes. Yikes.... Good article. Re-balancing a portfolio is a good idea on an annual or semi-annual basis. 14 Jan, 03:30 PMReplyLike1 tallguyz Comments (614)
I don't think I understand the "re-balancing" concept as it applies to investing. I think it says "Sell your winners instead of letting them run, and double down on your loser/under performers" or something like that. If that's true, I'll never have any home runs, just singles and maybe a double from time to time, and will bat about .250. Is that right?? 15 Jan, 10:48 AMReplyLike0 Guest Add Your Comment: Publish James Picerno Articles (1,670) StockTalks (13) Profile 1,382 Followers 2 Following Follow Send Message About this author: Visit 'The Capital Spectator' Top Ideas HickoryTech: Buy It Before Someone Else Does, 60% Upside by Alpha Gen Capital 1. Agilent's November Spin-Off To Create Upside For Investors by Kedar Special Situations 2. East West Bancorp: A Stealth China Play And Financial Bridge Between East And West by Ashleigh Rogers 3. Sigma Designs: Appealing At 2x Cash With Catalysts Impending by Nassarius Capital 4. Dividends & Income American Capital Agency's Upcoming Q4 2013 Income Statement Projection (Part 2) by Scott Kennedy 1. 2 Dividend Machines I Purchased Last Week by Dividend Growth Investor 2. Finding Alpha In Discarded 'Dividend Growth' Stocks by Kurtis Hemmerling 3. Dividend Buy Of The Month: Target Corporation by Dividend 4. Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 5 of 6 1/15/2014 7:22 PM Mantra A Real Dividend Growth Machine: 2013 Review by Dividend Growth Machine 5. ETFs & Portfolio Strategy 3 ETF Trends That Might Shock The 'Risk-On' Mindset by Gary Gordon 1. Time To Start Shifting Your Investment Strategy Overseas? by Profit Confidential 2. This Low-Cost ETF Outperforms The S&P 500 And The Dow by David Zanoni 3. Asset Allocation With Value And Momentum by Edwin Choi 4. A One-Way Bet For Eurozone Equities by Cam Hui 5. Macro View Bakken Update's 2014 Bakken Stock Picks: The Bakken Operators by Michael Filloon 1. In-Depth Uranium: Fuel Cycle Technologies, Demand And Other Considerations by Pricechart Guy 2. Halliburton Exemplifies Unconventional And Conventional Oil And Gas Trends by Jennifer Warren 3. Five Major Underreported Economic Threats by Jake Huneycutt 4. Wall Street Breakfast: Must-Know News by Wall Street Breakfast 5. TOP AUTHORS: The Opinion Leaders TOP USERS: StockTalkers | Instablogs Follow us Follow us Mobile Apps | RSS Feeds | About Us | Contact Us Terms of Use | Privacy | Xignite quote data | 2014 Seeking Alpha Asset Allocation And Rebalancing Review [Vanguard Total Stock Market... http://seekingalpha.com/article/1944501-asset-allocation-and-rebalancing... 6 of 6 1/15/2014 7:22 PM