Health & Fitness
#1 in 2012 - Balanced Portfolios Still Correlated Strongly to Stocks
Understand the sources of risk and return in your portfolio: it's crucial to a strong investment strategy.
0.99: The correlation of a traditional 60% stock / 40% bond portfolio to the S&P 500
The most popular Daily Stat of 2012 helps address a question on everyone's mind...So what do I do with my money?
The traditional 60/40 allocation to stocks and bonds no longer appears sufficient. Such a "balanced" portfolio, with a 0.99 correlation to stock returns, has moved virtually in lockstep with a 100% equities allocation over the past 15 years. Given that the risks in a so-called balanced portfolio are primarily equity-related, this portfolio approach clearly lacks true diversification.
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Understand the sources of risk and return in your portfolio: it's crucial to a strong investment strategy.
Source: BlackRock, Bloomberg, Informa Investment Solutions.
Traditional 60/40 portfolio composed of 60% S&P 500 Index and 40% Barclays
Aggregate Index, rebalanced annually 1997-2011. Stock returns are represented
by the S&P 500 Index.
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Prepared by BlackRock
Delivered courtesy Joel W. Grams, CRPC®, CLTC,
Registered Representative, Financial Planner, 212 Capital Group
38 Main Street Suite 360, Westlake Ohio 44145
(440) 835-4501 Ext 17, jgrams@212capitalgroup.com
The foregoing discussion is general in nature and not intended as specific advice.
New England Financial nor its representatives are engaged in rendering tax,
accounting or legal advice. A qualified professional should be consulted regarding the effect of such considerations on the matters covered in this publication.
For information on New England Financial insurance or other financial products and services, please contact Joel W. Grams, CRPC®, CLTC, Registered Representative, Financial Planner with /New England Financial 38 Main Street Suite 360, Westlake, OH 44145, at (440) 835-4501 ext. 17, jgrams@212capitalgroup.com
New England Financial is the registered mark for New England Life Insurance Company (NELICO) Boston, MA 02116. Securities and investment advisory services offered through New England Securities, Corp. (NES)(member FINRA/SIPC) a Registered Investment Advisor. NELICO and NES are MetLife companies. L0113299303[exp0613][OH]