DIVERSITY STUDY- 3 EXAMPLES
We look at systematically increasing a portfolio's diversity with suggestions from three brokerage houses with results gathered from 2002 to 2017. The goal is to identify patterns if they exist-is a more diversified portfolio more stable, do certain types of diversity (eg real estate, international) have measurable benefits?
Spoiler alert: the only consistent pattern is that better returns were obtained from portfolios with a higher percentage of stocks. More diverse portfolios did not even improve stability during the 2007-2009 recession. However, you can use the fund list and suggestions for allocations to create your own diverse portfolio.
Expanding the fixed 60-40 stock-bond portfolio to be more diverse is seen by some as a solution to the relatively poor results of a 60-40 portfolio. Here are the results of portfolios recommended by three sources. All of these portfolios are fixed allocations, rebalanced monthly with dividends reinvested. We present these results up to 6/30/2017 and won't update further. Greater diversity (e.g. spreading your bond and stock allocations among several types of bonds and stocks) does not deliver any clear advantage and the fixed allocations carry some distinct disadvantages (long periods of underperformance during recessions.)
ASSET BUILDER PORTFOLIOS
Spoiler alert: the only consistent pattern is that better returns were obtained from portfolios with a higher percentage of stocks. More diverse portfolios did not even improve stability during the 2007-2009 recession. However, you can use the fund list and suggestions for allocations to create your own diverse portfolio.
Expanding the fixed 60-40 stock-bond portfolio to be more diverse is seen by some as a solution to the relatively poor results of a 60-40 portfolio. Here are the results of portfolios recommended by three sources. All of these portfolios are fixed allocations, rebalanced monthly with dividends reinvested. We present these results up to 6/30/2017 and won't update further. Greater diversity (e.g. spreading your bond and stock allocations among several types of bonds and stocks) does not deliver any clear advantage and the fixed allocations carry some distinct disadvantages (long periods of underperformance during recessions.)
ASSET BUILDER PORTFOLIOS
![Picture](/uploads/6/3/3/7/63373953/6b-asset-builder_3_orig.gif)
A set of portfolios extracted from an old ING website.
A set of portfolios from Oblivious Investor