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The 70/30 portfolio is sometimes seen as a replacement for the 60/40 asset allocation model. With a 60/40 portfolio, 60% of assets are allocated to stocks while 40% are allocated to bonds.
In the inflationary period from 1960 to 1979, the compounded real return of the global market portfolio is 3.24% per year, while this is 6.01% per year in the disinflationary period from 1980 to 2017. The average return during recessions was -1.96% per year, versus 7.72% per year during expansions.
The rate of return on a portfolio can be calculated indirectly as the weighted average rate of return on the various assets within the portfolio. [3] The weights are proportional to the value of the assets within the portfolio, to take into account what portion of the portfolio each individual return represents in calculating the contribution of that asset to the return on the portfolio.
Returns-based style analysis (RBSA) is a statistical technique used in finance to deconstruct the returns of investment strategies using a variety of explanatory variables. The model results in a strategy's exposures to asset classes or other factors, interpreted as a measure of a fund or portfolio manager's investment style .
A 10% total return is in line with historical returns from large-cap value stocks like those found in the ETF. The fund's 30-day yield of 3.6% may also need some adjusting.
The portfolio performance was 4.60%, compared with a benchmark return of 2.40%. Thus the portfolio outperformed the benchmark by 220 basis points.The task of performance attribution is to explain the decisions that the portfolio manager took to generate this 220 basis points of value added.
Of course, past returns are no indication of future returns. Apple It began its stratospheric rise almost immediately and gained 35.93% on a single day in 1987.
Choosing the right asset allocation matters for managing portfolio risk and reaching investment goals. One of the simplest strategies for setting asset allocation is to use a percentage split ...
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