While nearly every updated portfolio lost a little ground in absolute terms, all gained when compared to either the customized ITA Index, the Vanguard Total Market Index Fund (VTSMX), or one of the two uncertainty or risk ratios. Absolute terms means that the Internal Rate of Return (IRR) of the portfolio declined. While this is important, the relative measurements are more significant as those measurements tell the picture of how well the different portfolios are performing with respect to their benchmarks. When I update a portfolio, I look for the Sortino and Retirement ratios, SR and RR respectively, to increase.
Portfolio Performance - 05/20/2011
|Portfolio||Last Update||Launch Date||Tracking Tool||Port. IRR||ITA Index||Diff Port. vs. ITA Index||VTSMX IRR||Diff. Port. vs. VTSMX Index||IR||SR||RR|
While I attempt to keep the eleven portfolios current, several do not have all May dividends posted so if anything, those few portfolios would be performing slightly better than the values shown in the data table. Keep in mind the Franklin and Kenilworth portfolios are quite young and the IRR values will vary widely from week to week.
The performance results are a testament to the value of index investing, diversification, minimum of trading, and the style of asset allocation. By style, I am referring to skewing portfolios toward the value and smaller-cap asset classes.
There is a lesson to be learned and that is, it is important to keep the asset classes in balance as much as possible. Check the seventh column or the one that measures the difference between the IRR of a portfolio and the ITA Index. Many values in that column are negative. If a better job of keeping the asset classes in balance occurred, the portfolio would have performed at a higher level. It may be time to lower the threshold level from 25% to 20% in the larger portfolios.
Overall, the performance numbers are very good to excellent.
Platinum membership is available for $5.00 per month. Learn how to construct and manage a portfolio similar to one of the above examples.