Category Asset Allocation & Portfolio Management

Rebalancing in retirement

In a nutshell The primary application of rebalancing for most DIY investors should be risk management. Most other rebalancing reasons/approaches are essentially active calls on market direction with guaranteed costs without guaranteed benefits. Using appropriate (capitalization weighted) passive broad-market index fund(s), the risky part of the portfolio gets most/all rebalancing achieved automatically; the only required […]

When switch from ‘Taxable-to-tax-free (TSFA)’ and ‘High-to-Low MER funds in taxable accounts’ makes sense?

In a nutshell Selling and re-investing after-tax proceeds in the same or similar stock funds can be a ‘no-brainer’ when going from taxable to tax-free (TFSA) accounts. However when switching from high-to-low MER funds within a taxable accounts additional considerations come into play, such as: the tax on the unrealized capital gain, expected long term […]

Stocks in retirement? Asset allocation considerations in retirement

In a nutshell How much stock allocation can I have, need to have and should I have in my retirement? Asset allocation considerations in retirement are determined by your personal: goals/objectives, overall financial picture (assets/income and fixed/discretionary expenses), risk tolerance (ability/willingness/need to take risk), required returns, withdrawal rates, taxes and capital market expectations. Management of […]

“The Intelligent Portfolio” by Christopher L. Jones

This book offers easy to understand investment advice, explains what’s important and what is not, and how/why things work the way they do based on modern portfolio theory. Well worth your reading time. While the book does a great job on the retirement asset accumulation part of one’s lifecycle unfortunately, it dismisses quite lightly the […]

Asset Allocation II

(Originally posted  October 28 2009) “There is only one free lunch in investing, and this is asset allocation….Over time, it consistently leads to higher returns and lower risk.” (“Krawcheck stakes her new claim” This blog should be read in conjunction with the Asset Allocation blog under the Education tab of this website. The objective here […]

Balanced Portfolio: Simple and Cheap ETF Implementation

(Originally posted July 16, 2008) Why is this important? Because over a lifetime of saving for retirement, total assets accumulated at 1.5% and 3.0% annual fees are respectively 23% and 46% lower than those resulting from 0.4% fees (Ambachtsheer and Bauer)!Or, because in retirement 1.5% extra annual cost can reduce you standatrd of living by […]

Are “target-date” funds or age-independent “fixed-asset allocation” right for you?

Are “target-date” funds or age-independent “fixed-asset allocation” right for you? In “Target-date funds I”  and “Target-date funds II”  I discussed some of the advantages and disadvantages of target-date funds and some simple methods for doing a low-cost implementation. In my May 11, 2008 Hot Off the Web blog I referred to a recent article in […]

Concentration vs. Diversification

Concentration vs. Diversification This topic on “concentration” was triggered by a number of recent articles about managers focusing on concentrated portfolios, the latest a blog by Jonathan Chevreau on “Steadyhand- A fund family for mutual fund sceptics” . Chevreau talks about Tom Bradley’s new actively managed five -fund family which differentiates itself by charging reasonable […]

‘Core-Satellite’ Investment Approach

‘Core-Satellite’ Investment Approach (Originally posted December 13, 2007; re-posted in 2012) The debate about advantages of active vs. passive investing should be over. The overwhelming evidence suggests that it is extremely difficult to beat the indexes on a sustained basis, especially after management expenses, and it just as difficult to identify a priory who will […]

Portfolio Management

Portfolio Management Investment Strategy Given a Strategic Asset Allocation (the proportions/weights of the various asset classes), then you must find the appropriate vehicle to implement each asset class in the portfolio. For each asset class one can choose a passive (composition same as the index of the asset class) or an active approach (whereby composition […]