Time constraints may make it impossible to apply the requisite focus appropriate for doing your own portfolio asset allocation. Investing may not be of interest. In any case, below are some simpler approaches to portfolio allocation.
A well diversified portfolio can be approximated with just a few funds. Consider the following:
|Security||Symbol||Asset class||allocation %|
|vanguard total stock market||VTI||US/private equity||22|
|vanguard total Intl stock index||VGTSX||other advanced/emerging countries||24|
|Vanguard total bond market index||VBMFX/BND||US bonds||5|
|Loomis Sayles Global Bond||LSGLX||International bonds (developed, emerging)||6|
|Harbor commodity real return||HACMX||commodities||30|
We haven't mentioned the life strategy/asset allocation/target date funds. They contain various blends of stocks and bonds. Some adjust the weighting over time to mirror the change in investor risk profile. They could be used as part of a total portfolio as long as attention is paid to the real asset category. Combining a Vanguard target retirement fund with Harbor commodity real return in a 57%/30% allocation (13% cash) would give a good allocation that adjusts stocks and bond allocations over time. One would have to adjust the real asset portion manually.
SINGLE FUND APPROACH
Finally, there is one mutual fund that covers everything. PIMCO Global Multi-Asset (PGAIX) is a relatively new fund (10/08). It is run by three managers including Mohamed El-Erian. This fund invests in all allocation categories. It also uses a "tail risk" hedging strategy to minimize losses in extreme market downturns. This may be a one-stop fund worth considering.
No matter how you proceed, you are ahead of the game by showing an interest in asset allocation. We encourage you to keep moving towards a plan that will achieve your goals and is consistent with your risk tolerance.
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