Seeking Alpha

Assessing Your Portfolio Performance Through October

by: Ronald Surz
Ronald Surz
Registered investment advisor, ETF investing

You may have succeeded by earning as little as 5%, or success could require a return above 18%. Success is relative.

Evaluating your performance depends on your investment horizon and your risk preference/tolerance.

Target date funds provide a good barometer of your success or failure.

Are you happy with your investment performance? Why? The answer to the question “Is performance good?” requires an answer to another question “Relative to what?” In this article, we provide performance benchmarks tied to your investment horizon and your risk preference. If your horizon is long, traditional wisdom says you can afford to take substantial risk, but you’re certainly not obligated to take a lot of risk. So for each of 5 investment horizons we provide two choices - low and high risk - using the live results for target date funds (TDFs).

Most investors own a diversified portfolio consisting of several asset classes, so you’d like to know how similar multi-asset portfolios have performed and why you’ve succeeded or failed relative to your TDF benchmark.

Target date funds make good benchmarks for evaluating your performance because they are well diversified and vary by horizon/age, being more aggressive for young people and more defensive for older people.

There are two choices of TDF benchmarks: conservative and aggressive. If you’re not sure which you are, you can use this self-assessment guide.

Here’s how TDFs have performed so far this year, and why. We provide a Conservative benchmark that uses the patented Safe Landing Glide Path (SLGP) and an Aggressive benchmark that is followed by the TDF Industry. The results are live. The SLGP is used by the SMART target date fund index collective investment trust, and the “Industry” is essentially the Vanguard TDF mutual fund, since Vanguard manages more than half of all TDF assets.

Evaluating Your Performance for the 10 Months Ending October 2019

It’s been a good year so far through October, 2019. You should have earned a double-digit return, unless you have a short investment horizon and you’re a Conservative investor. In the graph below, locate your horizon, as represented by a target date. Then choose the return associated with your risk – Aggressive or Conservative. Is your return above or below this benchmark? To understand why you’re winning or losing, see the next section below on Asset Class Performance.

Source: Glidepath Wealth Management

You may have succeeded by earning more than 4.38%, or success could require a return above 18.14%, depending on your horizon and risk preference. Long horizon 2050 Aggressive funds have earned 18.14%, capturing much of the US stock market’s 23% rise. As for the shortest horizon investments, the Today Aggressive funds have earned 11.97%. By contrast, the Conservative benchmark has lagged the Aggressive for all horizons. Aggressiveness has won this year so far.

But Aggressive doesn’t always win. The Conservative glidepath has a history of success in the face of challenge. All horizons were the best performing in 2008, 2011 and 2018, and Conservative has won by not losing over the history of TDFs.

As shown in the following “Mountain Chart,” the Conservative path is much more defensive for short horizons and much more diversified at long horizons. Also (not shown) the Conservative path lowered its bond maturities in 2014 because the risks do not justify the rewards.

The next section provides details to determine why you’re winning or losing. If you’ve allocated to better-performing asset classes, you should be winning. But if you’ve concentrated in poorly performing assets, your performance will likely lag. Learning why your performance is good or bad is a good way to start refinements to your asset allocation.

Asset Class Performance

Every asset class has earned positive returns this year so far. The word “bubble” appears every day in numerous articles. US stocks are continuing their unprecedented run. Real estate has surged this year. US interest rates threaten to plunge below zero. At the same time, there may still be bargains in segments that are lagging this year like commodities. What is your outlook for momentum and reversals?


Have you succeeded or failed so far this year? What changes will you be making for the rest of the year? Please post your comments.

Despite the current good fortune, or perhaps because of it, market observers see a recession on the horizon, largely because the current recovery is the longest on record, it’s global, and it’s running out of steam. Also, there is a World Debt Crisis that will not end well. Are you concerned? If so, you may want to move to safety. But what is safe, and what if your portfolio is already as safe as it should be? To answer these questions, please take our risk assessment quiz.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: As CIO and CEO of GlidePath Wealth Management, I help investors deal with life events by charting a lifelong investment path that leads to a successful retirement, including those fortunate to live a long life,