Friday, October 18, 2013

My Portfolio Benchmarks

For my Don't Worry, Be Happy Portfolio, I've decided to use a few benchmarks to gauge how well I am doing.

The first benchmark is the Nikko AM Shenton Short Term Bond Fund. The reason why I chose this is because it's own benchmark is the 3 month SIBOR. It is also clearly investable, it has a small management fee and it is rather safe, stable and steady. This was one of the main funds that I was considering dipping my toes into as a step up from my bank account and more "risky" than a money market fund. The fund has ever had a drawdown of 4.3% before, so it definitely isn't risk free. However, with the short duration and high credit rating, it is quite insulated from shocks in the system.

The second benchmark is actually quite exciting. It is the Nikko AM Eight Portfolio C. This fund is actually a 60/40 mutual fund which is actually quite globally diversified, largely based on market cap. I would think this looks like one of the simplest and yet most comprehensive asset allocation as funds goes. It was one of my top picks in the tactical asset allocation category. I am very sure that this benchmark will give me a run for my money. It looks like a very robust 60/40 strategy.

My last benchmark might be over the top for me, but I consider it the granddaddy of asset allocation, and it is the Blackrock GF Global Allocation Fund. It has had a fantastic run, especially in its longer USD class shares, coming in at about 7.5% annualized returns, which is something that I wish I could hope for! I must say that their strategy is a lot more active than mine, but if I want to roll with the big boys, I at least got to measure how I stand up to one of the biggest ones, eh?

Personally, I would like to have a CPI benchmark, perhaps something like CPI + 4%, but like what Arnott says, that is more of a goal, rather than a benchmark, since it is not investable. I will definitely still be looking to see what my returns are, and hopefully how much above CPI they are returning, most likely at the end of every year once the CPI statistics come out!

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