Conservative Portfolio

The Conservative Portfolio aims to preserve your capital with a secondary objective of growth. It may be suitable for people in their 60s, who are in late stage of wealth accumulation and early stage of retirement . The static portfolio targets 40% in risk assets such as equity, commodity, real estate and energy master trust and 60% in bonds as strategic long-term allocations. The dynamic portfolio has 40% in risk asset on average, though the allocations on risk assets vary across different stages of economic and market cycles. Historically, this strategy delivered 12% annual return with a 11% drawdown. The following are the backtesting results based on monthly data since 1970.

Long Term Performance Compared to Benchmark (40% S&P 500 +60% Barclays Aggregate Bond Index)

Portfolio Composition in 12/2011

Equities Static Dynamic
SPY US Large Cap 15% 9%
IWM US Small Cap 15% 9%
EFA Developed Market Equity 15%
VWO Emerging Market Equity 15%
Dividend Assets
IYR US REIT 5%
AMJ US Energy Master Trust 5% 9%
Commodities
GLD Gold 5%
GSG Commodity 5%
Bonds
HYG US High Yield 5% 21%
AGG US Bond 5% 29%
TIP US Treasury Inflation Indexed Bond 5% 11%
IEF US Treasury Bond 5%
TLT US Long Term Treasury Bond 11%
SHY US Short Term Bond

Two-year Monthly Performance

Forty-year Annual Performance

Portfolio Performance Statistics

Static Dynamic Benchmark
Average Monthly Return 0.79% 1.00% 0.72%
Monthly Standard Deviation 2.0% 1.8% 2.1%
Annualized Return 9.4% 12.0% 8.6%
Annualized Standard Deviation 6.8% 6.4% 7.3%
Sharpe Ratio (Risk-free Rate =   5.5%) 0.6 1.0 0.4
Maximum Drawdown (Loss) 24% 11% 18%
Expected Time to Recover (yrs) 2.6 0.9 2.1

Current Portfolio Composition

Be Sociable, Share!

Comments are closed.