Over at the Retired Investor site they use ten asset classes to make up all their recommended portfolios. They have port. that target a 7%, 6%' 5%, 4%, 3%, and 2% Real Return (above inflation). For these port. they use different percentages of the ten asset classes and they do not use all ten for each port. They also have one port. that uses an equal weighting of all ten (10% each). There is good evidence that the equal weighting port. usually does better than all the rest so why bother with trying to weigh equities greater to get higher return when that may not be the case. Here are the ten asset classes:
TIP, AGG, ISHG, RWR, RWX, LSC, (70% PCL & 30% RYN), VTI, EFA AND EEM.
As Larry S. says everyones cyrstal ball is cloddy. Then there is Otar that claims in a distribution port. that broad asset diversication really doesn't matter.
As of 11/30/2010 the equal weighted port. has a return of 5.8% while the more heavely equity weigted 7% port. has a return of 5.9%. Nuff said.
Larry G
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