livesoft wrote: ↑Sat Jan 13, 2018 8:45 am
VBIAX is not a suitable benchmark because it contains zero, (0.00%) of international equities.
Select another time frame where international funds did well and VBIAX should have done worse during that time frame.
Of course, I suppose one could say, "Well, tactical asset allocators should have know to not have international funds when they were not doing well."
I'm not prepared to repeat the work with 57 funds, but I'll try a quick reality check. The fund I will use as representative of tactical asset allocation is Fidelity Asset Manager 50%, FASMX, for the excellent reasons that a) I invested in it for many years, b) there's a good long period of time to look at, and c) it's a Morningstar five-star fund so in the past it was relatively
good of it's kind--it isn't something known in hindsight to have been a dog. In fact in hindsight it was a star. Five stars, in fact.
It describes itself currently:
Maintaining a neutral mix over time of 50% of assets in stocks, 40% of assets in bonds, and 10% of assets in short-term and money market instruments.
The expense ratio is 0.67% which Morningstar calls "below average," so, well, it is what it is. It is currently 31.72% U.S. stock, 19.05% non-U.S. stock. Since your beef is that Delorma compared asset-allocation funds it to a U.S.-only fund, I won't. I'll compare it a portfolio that matches FASMX's current international allocation. If anything, that likely means more international than FASMX might have had in the past. We will use Fidelity's own index funds for U.S. stock, international stock, and bonds, and PortfolioVisualizer's "CASHX" (which is actually 1-month Treasury bills).
PortfolioVisualizer has available data for Dec 1997 - Dec 2017, a respectable twenty-year period. Note that it included both long periods of international outperforming U.S. and U.S. outperforming international, neither dominating.
Fidelity's five-star asset allocation fund, FASMX, was beaten, over a twenty year period, by a fixed allocation of Fidelity index funds in the same proportions as the fund's "neutral mix." And not only did it have lower return, but it had significantly higher risk as measured not only by standard deviation but also by worse year and max drawdown. The professional managers of this fund, five-star-rating or no, obviously failed to anticipate 2008-2009 and not only failed to mitigate its effects, but whatever they did made things worse.
The asset allocation fund
Portfolio 1
FASMX Fidelity Asset Manager 50% 100.00%
Comparable fixed allocation portfolio:
Portfolio 2
FSTMX Fidelity Total Market Index Investor 31.72%
FSIIX Fidelity International Index Investor 19.05%
FBIDX Fidelity US Bond Index Investor 40.00%
CASHX Cash 9.23%
Source
P.S. Over the same time period, FASMX was not only beaten by the portfolio above, in which about 40% of stocks were international. It was also beaten by fixed-allocation portfolios holding 20% of stocks international
FSTMX Fidelity Total Market Index Investor 40.77%
FSIIX Fidelity International Index Investor 10.00% -- (about 20% of stocks international)
FBIDX Fidelity US Bond Index Investor 40.00%
CASHX Cash 9.23%
and no international at all:
FSTMX Fidelity Total Market Index Investor 50.77% -- (i.e. no international)
FBIDX Fidelity US Bond Index Investor 40.00%
CASHX Cash 9.23%
The comparison in this case was not very sensitive to the amount of international holdings in the fixed-allocation portfolio.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.