| Model
Portfolios
By IndexFunds.com Staff
1999 |
|
Click here for a summary
of all of the model portfolios
These "Model" portfolios should be used as a relative
guide to measure the risk/return characteristics of different
combinations of asset classes. The asset classes and combinations
of asset classes that are right for you depends on your personal
investment objectives. We strongly suggest you consult an advisor
for guidance.
Allocations are as follows:
- 25%, 50%, 65%, 75%, and 100% Stocks.
- 50%, 60%, and 70% U.S.stocks (of stock total).
- 50%Growth & 50% Value, and 100% Value.
- 60% large company, 40% small company (U.S.) and 100% large
company (Int'l).
We show year-to-year returns to give investors an idea of yearly
volatility and short-tern downside risk. We also show "rolling
five-year" returns (e.g. 1973-1977) to show what patience
with a diversified portfolio will achieve.
We start the series at 1973 in order to dampen the numbers with
the severe, across-the-board bear market of 1973-1974. Beware
of anyone who shows asset class numbers starting in 1975!
Foreign (or "international") small company stocks,
small company value stocks, and emerging markets were not included
for lack of long term returns data. However, investors should
consider adding these higher return/higher risk asset classes
depending on their investment objectives. In this case, consider
taking one-half of the international stock allocation and investing
two-thirds of it in international small and one-third in emerging
markets. Those asset classes could be further divided among growth
and value.
Due to longer returns series back to 1973, the DFA Five-Year
Government Bond index was used as a proxy for Global Fixed Income
and the Morgan Stanley EAFE index was used for 1973 and 1974 as
a proxy for International Large Value Stocks.
By law, advisors must state something like the following: "Past
performance is no guarantee of future returns. This is especially
true of model portfolios, which are not subject to specific economic
and market factors."
We'll be more blunt: If you think you will realize these same
returns over the next 25 years, especially factoring in advisor
fees, fund expenses, and transaction costs, you may have an unpleasant
surprise coming!
| Growth &
Value Allocations (%) |
U.S. stock allocation
|
| Asset Class |
50%
|
60%
|
70%
|
|
| Global Fixed
Income |
75
|
75
|
75
|
| U.S. Large Growth (S&P 500) |
4
|
4.5
|
5
|
| U.S. Large Value (DFA) |
4
|
4.5
|
5
|
| U.S. Small Growth (DFA 9-10) |
2.5
|
3
|
3.5
|
| U.S. Small Value (DFA 6-10 Value) |
2.5
|
3
|
3.5
|
| International Large Growth (DFA) |
6
|
5
|
4
|
| International Large Value (DFA) |
6
|
5
|
4
|
| Value-Only
Allocations (%) |
U.S. stock allocation
|
| Asset Class |
50%
|
60%
|
70%
|
|
| Global Fixed
Income |
75
|
75
|
75
|
| U.S. Large Growth (S&P 500) |
0
|
0
|
0
|
| U.S. Large Value (DFA) |
8
|
9
|
10
|
| U.S. Small Growth (DFA 9-10) |
0
|
0
|
0
|
| U.S. Small Value (DFA 6-10 Value) |
5
|
6
|
7
|
| International Large Growth (DFA) |
0
|
0
|
0
|
| International Large Value (DFA) |
12
|
10
|
8
|
|
Year-to-Year
Returns
|
Growth & Value
Returns (%)
|
|
Value-Only
Returns (%)
|
|
Basic
Index
(%)
|
|
U.S. stock allocation
|
U.S. stock allocation
|
25% S&P
75% LB G/C
|
| Year |
50%
|
60%
|
70%
|
50%
|
60%
|
70%
|
|
| 1973 |
.6
|
.5
|
.4
|
1.4
|
1.4
|
1.4
|
-1.9
|
| 1974 |
1.1
|
1.1
|
1.1
|
1.5
|
1.6
|
1.7
|
-6.5
|
| 1975 |
17.3
|
17.5
|
17.7
|
18.5
|
18.5
|
18.6
|
18.5
|
| 1976 |
15.8
|
16.6
|
17.4
|
17.0
|
17.8
|
18.7
|
17.7
|
| 1977 |
5.7
|
5.4
|
5.1
|
6.8
|
6.3
|
5.9
|
.5
|
| 1978 |
10.3
|
9.9
|
9.4
|
10.8
|
10.2
|
9.7
|
2.5
|
| 1979 |
12.3
|
12.8
|
13.4
|
12.4
|
12.9
|
13.4
|
6.3
|
| 1980 |
12.2
|
12.3
|
12.5
|
10.9
|
11.0
|
11.1
|
10.4
|
| 1981 |
17.4
|
17.3
|
17.3
|
19.3
|
19.2
|
19.2
|
4.2
|
| 1982 |
27.1
|
27.6
|
28.2
|
27.8
|
28.4
|
29.0
|
28.7
|
| 1983 |
12.8
|
12.9
|
13.0
|
13.5
|
13.6
|
13.7
|
11.6
|
| 1984 |
8.5
|
8.4
|
8.4
|
9.1
|
9.1
|
9.2
|
12.8
|
| 1985 |
29.0
|
28.4
|
27.7
|
29.8
|
29.1
|
28.4
|
24.0
|
| 1986 |
23.3
|
22.2
|
21.1
|
23.7
|
22.6
|
21.6
|
16.3
|
| 1987 |
5.8
|
5.2
|
4.6
|
6.1
|
5.5
|
4.8
|
3.0
|
| 1988 |
11.4
|
11.2
|
11.1
|
12.2
|
12.0
|
11.9
|
9.9
|
| 1989 |
12.4
|
12.5
|
12.6
|
13.3
|
13.3
|
13.3
|
18.5
|
| 1990 |
4.0
|
4.1
|
4.2
|
4.1
|
4.1
|
4.0
|
5.4
|
| 1991 |
17.2
|
17.6
|
18.0
|
16.8
|
17.2
|
17.7
|
19.7
|
| 1992 |
7.0
|
7.5
|
8.1
|
8.3
|
8.9
|
9.4
|
7.6
|
| 1993 |
13.0
|
12.6
|
12.3
|
14.8
|
14.3
|
13.8
|
10.7
|
| 1994 |
-1.5
|
-1.7
|
-1.8
|
-1.6
|
-1.8
|
-2.0
|
-2.3
|
| 1995 |
13.3
|
13.7
|
14.2
|
13.1
|
13.5
|
14.0
|
23.8
|
| 1996 |
8.5
|
8.8
|
9.1
|
8.6
|
8.9
|
9.2
|
8.0
|
| 1997 |
8.7
|
9.3
|
9.8
|
8.2
|
8.9
|
9.5
|
15.7
|
| Annual Return |
11.5
|
11.5
|
11.5
|
12.0
|
12.0
|
12.0
|
10.3
|
| Annual Risk* |
7.6
|
7.6
|
7.6
|
7.7
|
7.7
|
7.7
|
9.0
|
|
Five-Year
"Rolling"
Returns
(Annualized)
|
Growth & Value
Returns (%)
|
|
Value-Only
Returns (%)
|
|
Basic
Index
(%)
|
|
U.S. stock allocation
|
U.S. stock allocation
|
25% S&P
75% LB G/C
|
| Year |
50%
|
60%
|
70%
|
50%
|
60%
|
70%
|
|
| 1973-1977 |
7.9
|
8.0
|
8.0
|
8.8
|
8.9
|
9.0
|
5.1
|
| 1974-1978 |
9.9
|
9.9
|
9.9
|
10.7
|
10.7
|
10.7
|
6.1
|
| 1975-1979 |
12.2
|
12.3
|
12.5
|
13.0
|
13.1
|
13.1
|
8.8
|
| 1976-1980 |
11.2
|
11.3
|
11.5
|
11.5
|
11.6
|
11.7
|
7.3
|
| 1977-1981 |
11.5
|
11.5
|
11.5
|
12.0
|
11.9
|
11.8
|
4.7
|
| 1978-1982 |
15.7
|
15.8
|
15.9
|
16.1
|
16.2
|
16.3
|
10.1
|
| 1979-1983 |
16.2
|
16.5
|
16.7
|
16.6
|
16.9
|
17.1
|
11.9
|
| 1980-1984 |
15.4
|
15.5
|
15.7
|
15.9
|
16.1
|
16.2
|
13.3
|
| 1981-1985 |
18.7
|
18.7
|
18.7
|
19.6
|
19.6
|
19.6
|
15.9
|
| 1982-1986 |
19.9
|
19.6
|
19.4
|
20.5
|
20.3
|
20.1
|
18.5
|
| 1983-1987 |
15.5
|
15.1
|
14.7
|
16.1
|
15.7
|
15.2
|
13.4
|
| 1984-1988 |
15.2
|
14.8
|
14.3
|
15.8
|
15.3
|
14.9
|
13.0
|
| 1985-1989 |
16.1
|
15.6
|
15.1
|
16.7
|
16.2
|
15.7
|
14.1
|
