Benchmarking - Do you and what is your reference?

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midareff
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Benchmarking - Do you and what is your reference?

Post by midareff »

I'm benchmarking my portfolio performance using M* data for YTD, 12 month, 3 year, 5 year and 10 year performance. S&P500 in the same percentage as portfolio equities, Total Bond Market in the same percentage as portfolio bonds and same/same cash. AA has remained within reason constant over the reference period.

Curious as to what others do.. ??
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Sbashore
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Re: Benchmarking - Do you and what is your reference?

Post by Sbashore »

I don't have a real benchmark. I just compare my returns to the Total Stock Market Index and then mentally adjust for my AA. Since it's 50/50 it's easy. :happy
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livesoft
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Re: Benchmarking - Do you and what is your reference?

Post by livesoft »

As I have noted many times on the forum, I like to use benchmarks. I use two different mutual funds as my benchmarks. Both have a 60/40 stocks/bond allocation. One is a total market weights index fund and the other is a small-cap and value tilted fund. They are
VSMGX Vanguard LifeStrategy Moderate Growth fund
DGSIX DFA Global Allocation 60/40 I

With these two benchmarks, I can see how a passively-managed total market weighted portfolio and a slice-and-dice portfolio should be doing. I need to know if my rebalancing, tax-loss harvesting and RBD strategies are doing worse or better than the benchmarks. If they are doing worse, then I might want to change the way I manage the portfolio.

Vanguard also has a benchmarks page on their website: https://personal.vanguard.com/us/funds/ ... arkreturns
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iceport
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Re: Benchmarking - Do you and what is your reference?

Post by iceport »

My portfolio is (virtually) 100% passive. So the most appropriate benchmark is simply my asset allocation. 8-)

I'm also interested in comparing my portfolio to a simpler version, and the Vanguard Target Date Retirement fund with the nearest equity/fixed income split is ideal for that. It is composed of a few total market index funds, with a fairly mainstream foreign/domestic stock split.
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
red5
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Re: Benchmarking - Do you and what is your reference?

Post by red5 »

midareff wrote:I'm benchmarking my portfolio performance using M* data for YTD, 12 month, 3 year, 5 year and 10 year performance. S&P500 in the same percentage as portfolio equities, Total Bond Market in the same percentage as portfolio bonds and same/same cash. AA has remained within reason constant over the reference period.

Curious as to what others do.. ??
Vanguard 2045 retirement fund. If I did not have a slice and dice portfolio then that is the fund I would probably use.

I think it is important to recognize that contributions and withdrawals should be taken into account when comparing one's portfolio with a benchmark.
itstoomuch
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Re: Benchmarking - Do you and what is your reference?

Post by itstoomuch »

Target = SPY less 4%.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
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cheese_breath
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Re: Benchmarking - Do you and what is your reference?

Post by cheese_breath »

Being retired I consider it important to benchmark more than just my portfolio. When I retired in 1997 I developed a projection of my overall financial picture (income and investments minus spending) for the next 40 years. I've been been using this as my benchmark ever since and adjusting my assumptions and financial behavior as appropriate. Currently I'm about 5% over the projection but expect this to shrink some with the next market downturn.
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JoMoney
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Re: Benchmarking - Do you and what is your reference?

Post by JoMoney »

All of my equities are in S&P500 index funds. I check from time to time to see how well the fund is tracking that index.
It makes me :D when I see VFIAX tracking at a rate closer than the expense ratio would imply.
Almost all of my other savings is in cash or savings bonds, which I don't feel the need to compare to anything else.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Sailor36
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Re: Benchmarking - Do you and what is your reference?

Post by Sailor36 »

If you are using a published index as a benchmark, make sure to use the "TR" or Total Return version, which includes dividends, or compare to the total return of an index fund that matches your AA.

For my benchmark I use the Vanguard Balanced Index fund VBIAX, which is basically 60% TSM and 40% TBM, and I include deposits and withdrawals in the comparison. I chose this fund as the benchmark because of its dead-simple portfolio. It has performed very well over the past few years as US stocks have outperformed internationals.
Taggerung
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Re: Benchmarking - Do you and what is your reference?

Post by Taggerung »

I slice and dice and overweight to small value. The benchmark I use is the Vanguard Target Date Fund which matches my equity/fixed income allocation. I use this simply to see if my complexity can do any better. So far, so good.
MathWizard
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Re: Benchmarking - Do you and what is your reference?

Post by MathWizard »

I use Russel 3000 as benchmark for equities.
heyyou
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Re: Benchmarking - Do you and what is your reference?

Post by heyyou »

I do not use a benchmark for my slice and dice portfolio. The allocation and the funds suit me, the ERs are low enough, and I accept that I will just get what I get, on performance. I'm satisfied, so why look at perfection?
Bracket
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Re: Benchmarking - Do you and what is your reference?

Post by Bracket »

I have 8 asset classes, including REITs and U.S. small cap value, int'l small cap, and the G Fund. I'm not sure what an appropriate benchmark would be, but since I use almost entirely index funds I just make sure they are tracking their indices well and leave it at that.

I suppose I could compare it to a three fund portfolio to see if my tilts are benefiting me but I have never bothered to do so. What I don't know can't hurt me.
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Aptenodytes
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Re: Benchmarking - Do you and what is your reference?

Post by Aptenodytes »

For a passive index-fund investor, the only rationale I can see for benchmarking is the one Livesoft articulates, to see if any departures from the pure passive approach are helpful or hurtful. However, for this rationale to be worth acting on, the signal generated has to be strong enough to trigger a clear guide to action. If you are under the benchmark a bit this year, does that justify abandoning your approach? How do you know the underage isn't just noise and that over the long run your approach does better than the benchmark? And if the benchmarking does generate a strong enough signal to permit clear inferences about what to do, then wouldn't you think you could have figured that out in advance, without even running the experiment? To put it another way, for mere mortals who think they might have a slight edge over pure passive investing, isn't a small boost exactly what they are aiming for (because a big boost would signal higher risk)? So therefore you'd never think any one year's results were meaningful.

In any event, I have no available benchmark that I can think of. I am on a custom glidepath that doesn't match any single fund.
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