The following four security portfolio was recommended for testing by a Platinum member. FTIIX was substituted for other index funds as the first and second choices did not have sufficient historical data for the Quantext Portfolio Planner (QPP) analysis. The following screen shot shows the projections for VTI, VEU, BND, and FTIIX.
QPP Analysis: One quick observation is the lack of diversification. Even though this portfolio includes securities that span the globe, one can never assume the QPP will project adequate diversification when holding only four securities. For this analysis I assumed the S&P 500 would grow at a rate of 7.0% annually. This portfolio will lag that growth rate by approximately 150 basis points annually. The risk is low at 10.5% giving a projected Return/Risk ratio of slightly over 0.5.
This is a sample portfolio to test how well such an allocation might be expected to perform over the next six to nine months. With 50% in bonds, it is definitely a defensive portfolio.
As stated many times over the past few months, I am leery when it comes to bonds. I recently read in the June issue of the AAII Journal that Robert Shiller is recommending investors short bonds. I’m of the same mind, but I have yet to make such a move.
Comments and questions are welcome as you look over this sample portfolio.