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Are you looking for a portfolio that pulls down the projected standard deviation? If so, take a look at the asset allocation mix shown in the following analysis. I would classify this portfolio as conservative.

QPP Analysis: By pulling the projected standard deviation under 10% (the good news), one also pays a price by reducing the projected return to 5.5% (the bad news). Note that this analysis covers three years of data as there were several short history securities in the list. Don't pay attention to VNQI as it has a "short record" and that tends to improve the projected results.

Several choices hold down the performance in this portfolio. As you can see, SHY contributes little to the return. However, it does bring a low correlated ETF to the party. The Diversification Metric at 33% does not meet our goal of 40% or higher. The Portfolio Autocorrelation is excellent.

(click to enlarge)

Correlation Matrix: As mentioned above, scrub VNQI from your thinking as it has too short of a record to be viable in this analysis. I did not go below three years to accommodate VNQI. Many of the holdings are highly correlated as we have seen in many other QPP analysis projects.

Here are a few suggestions to consider.

  • Use GTU instead of GLD so one holds that actual gold through an ETF. The performance is also a bit better.

  • Think about eliminating ETFs that are below 3% of the total portfolio as those small holdings will not impact the portfolio.

  • I would use VTI instead of VV for better diversification and VTI is a commission-free ETF with TD Ameritrade, whereas VV is not commission free.

  • Think about using something other than SHY. Little is expected from SHY in the way of growth. Perhaps add PCY, a sovereign debt holding.

  • Increase the percentage allocated to VWO, emerging markets.

Correlation Matrix

Source: A Portfolio That Reduces Risk