Ted Aronson and his AJO Partners manage about $25 billion of institutional assets. Aronson puts his family's taxable money in this well-diversified portfolio of no-load index funds.
Fund Weight Ticker ETF US Equities 40% VFINX, VEXMX, VISGX, VTSMX, VISXX VTI, TMW, VBK, VBR International Equity 20% VPACX, VEURX VEA Emerging Markets 10% VEIEX EEM US Bonds 30% VIPSX, VUSTX, VWEHX TIP, LQD, HYG
This lazy portfolio will be compared with the same funds with a balanced (i.e. all equity asset classes equally weighted) buy and hold with monthly rebalancing and the ability to rotate styles within the asset classes. This will look at what difference alternative fund balances contribute to the results. We will look at a Six asset class portfolio with Strategic Asset Allocation that will shed light on the benefits of extra asset classes.
Then we will compare the impact of tactical asset allocation on the Aronson funds and also a six asset class SIB to examine the returns delivered by a TAA strategy applied to Aronson and broader funds.
|Annual returns||1 year||3 years||5 yea|
|Six SIB TAA||14||7||14|
The original lazy portfolio performs in a satisfactory manner. The 1 year returns top the table but that is coming from the worst three and five year results. The balanced buy and hold gives better long term results and six asset class SIB has even better results. This is expected as diversification normally beats more funds in fewer asset classes.
- Tactical Asset Allocation reduces downside risk and that wins in the current uncertain environment
- The Aronson lazy portfolio has satisfactory returns but can be beaten
- ETFs can readily be used to implement these portfolios with good performance
- A 11% spread means that it’s worth looking at alternatives
Disclosure: No Positions