Author Archive: indexfundfan

Portfolio return for March 2006

2006-08-31_132824.png
March 2006 had been another reasonably good month for my 70%/30% (equity/fixed income) portfolio. The return was 2.07%, bringing my year-to-date portfolio return to 6.76%.

The two closest Vanguard funds that match my portfolio are the LifeStrategy Moderate Growth fund, target 60% equity/40% fixed income, and the LifeStrategy Growth fund, target 80% equity/20% fixed income.

The first fund returned 0.95% in March and 3.63% year-to-date, and the second fund returned 1.61% in March and 5.05% year-to-date. A spliced version (50:50) that matches my 70%/30% allocation portfolio would have returned 1.28% in March and 4.34% year-to-date.

Rebalancing (without tax considerations)

A recent paper “Rebalancing for Tax-Deferred Accounts: Just Do It, Don’t Worry How” in the FPA Journal discusses 21 different technique of re-balancing and tries to quantify which technique is better. According to the authors, it turns out that,

… given our assumptions, none of the techniques tested here are clearly superior when evaluated solely on the basis of average risk and return. The decision to employ one technique over another should ultimately be driven by how closely you want to adhere to the strategic targets that have been established for your client.

The authors’ conclusion was “Just do it, don’t worry how”.