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1.Assets&Products• Relevantassets• Financialproducts
2.ReferencePortfolios• 100%equity• The60‐40portfolio• Thepermanentportfolio• Variationsofthepermanentportfolio• Aggressiveportfolios• Otherportfolios
WinningInvestmentStrategiesReferencePortfolios
JavierEstradaWinter,2014
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
AVeryCommonMistake
Donotfear‘simple’approaches
Simplemaystillbesophisticated
Simpletypically implieslowcost(Time/$)
Simpletounderstand≠Simpletoimplement
Go
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JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
Assets&Products
Stocks
Bonds
Cash
Gold
∙iSharesMSCIACWI(ACWI)∙VanguardTotalWorldStock(VT)
∙iSharesGlobalInflationLinkedBondFund(GTIP)
∙Moneymarketfund∙Bankdeposit
∙iSharesGoldTrust(IAU)∙SPDRGoldShares(GLD)
Focusonthree(four)assets
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
100%Equity
An‘aggressive/conservative’portfolio
Fullyinvestedinstocks/Broadlydiversified
3
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
The60‐40Portfolio
The‘industrystandard’
Blendofthetwomajorassetclasses
Go
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ThePermanentPortfolio
4
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ThePermanentPortfolio
Prosperity
Recession
Inflation
Deflation
∙Stocks
∙Cash
∙Gold
∙Bonds
Go
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ThePPWithoutCash
25%incash?!
Equally‐weightedportfolioofstocks/bonds/gold
5
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
The60‐30‐10Portfolio
SamethreeassetsasPP withoutcash
Differentweighting(60S‐ 30B‐ 10G)
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ReferencePortfolios
(*)Annualrebalancing
6
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
AMoreAggressivePortfolio?
Enhancingthereturnof100%equity
Aninvestormayneed/wantahigherreturnthan thatexpectedfromthe(world)equitymarket
Core(Neutralposition)
Satellites(Tilts)+
‘Core‐satellite’approach
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
AMoreAggressivePortfolio?
Neutralposition:Worldmarket(Avoidthe‘homebias’)
Introducetiltstoenhancethe return(andrisk)oftheportfolio
Small‐caps
Value
Emergingmarkets
Frontiermarkets
iSharesMSCIACWI(0.34%)
VanguardTotalWorldStock(0.19%)
7
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
TheKISSPortfolio
KeepItSimple, Saver
USstocks
Internationalstocks
USBonds
Invarying‘personalized’proportions
Samegeneralidea:Buy/Hold/Rebalance
Go
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
TheGoneFishin’Portfolio
Buy/Hold/Rebalance (60‐30‐10)
VanguardTotalStockMarketIndex 15%
VanguardSmall‐CapIndex 15%
VanguardEuropeanStockIndex 10%
VanguardPacificStockIndex 10%
VanguardEmergingMarketsIndex 10%
VanguardShort‐TermBondIndex 10%
VanguardHigh‐YieldCorporatesFund 10%
VanguardInflation‐ProtectedSecuritiesFund 10%
VanguardREITIndex 5%
VanguardPreciousMetalsFund 5%Go
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JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
KeepInMind
Simplemaybegood…
…foryou, whichiswhatreallymatters
…andyetdifficulttoimplement
…andevenbetterthanmany(very)costlyalternativesoffered intheindustry
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
InShortSimplemaybegood– andevenbetterthanmanyverycostlyalternativesofferedintheindustry Fewassets/productsareoftenmorethanenoughforindividualinvestors Alwaysask:WhatdoIgain bymakingmyportfoliomorecomplexthansomeofthesesimpleportfolios?
Modelportfolios AresimpleandsophisticatedatthesametimeHaveperformedwell(thoughyoushouldaskwhetherthatisgoodperformanceforyou) Canbeimplementedataverylowcost Considerthemonlyareference(thatmayormaynotbeappropriateforyou)
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JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
Appendix
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
SimpleApproaches
Back
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JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
The60‐40Portfolio
Back
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ThePermanentPortfolio
Go
11
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
ThePermanentPortfolio
Go Back
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
TheKISSPortfolio
12
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
TheKISSPortfolio
Back
JavierEstrada
IESEBusinessSchool
BarcelonaSpain
WININVWinter,2013
TheGoneFishin’Portfolio
BackGo
