The Yale endowment is just an example. What is the portfolio recommended by other famous asset allocation masters in such a large market? In my previous article, I collected nine well-known assets and allocation models. It also included a portfolio recommended by Mr. Svenson, the head of the Yale endowment. In fact, according to the integration of significant categories of assets, in fact, these three major categories of assets:
1. Stocks: local stocks, overseas stocks
2. Physical assets: real estate, commodities
3. Bonds: short-term currency, medium, and long-term bonds
You know, since 2012, the Yale endowment has averaged only 4.5% of its local stock (U.S. stock) positions, while the S & P 500 has been rising by 17% annually in the same period, which most hedge funds that claim to be high-yield have not achieved. So you think that most of the Yale endowment's earnings come from investments that are hard for ordinary investors to access?
Unless you're strong on your own or can build a team like the Yale endowment, what most people can invest in and touch is your first choice. To put it bluntly, the best ingredients in the world are not necessarily for you; The most beautiful car is not necessary for you to drive.
The convenient investment positions that most investors can touch are stocks, bonds, and physical assets. The risk exposure of these three positions can also be obtained from standardized products in the secondary market, such as public funds, ETFs, and so on. In doing so, it has the advantage that standardized products have better liquidity than non-standard products, lower rates, more product choices, and can be invested through ordinary securities and fund accounts.
Historical returns on underlying assets
Well, since we have the direction of large categories of assets, we must look at the historical returns of these large categories of assets before asset allocation. In each type of asset, according to the recommendations of the masters, I selected the most representative underlying targets, which are all indexes in the secondary market.
1. Stocks: S & P 500, U.S. Small Cap Index, developed country stock index, emerging market stock index
2. Physical assets: gold index, commodity index, U.S. real estate index
3. Bonds: U.S. short-term currency index, U.S. inflation protection index, U.S. 10-year Treasury bond index, U.S. 30-year treasury bond index
How have these underlying assets performed in the past 45 years?
In terms of return: the annual return of stocks is 10%, bonds are 7%, and physical assets are about 8%.
Risk: the risk of bonds is the smallest, and the annual volatility is much lower than that of stocks and physical goods. Stocks and material goods, although different targets, are actually equally risky. Gold and commodity futures were the most volatile, followed by small-cap and emerging market stocks.
Maximum withdrawal: bond assets obviously have a minor departure. Stocks followed, averaging 55%. Physical assets showed a significant complete withdrawal: an average of 70%.
Risk-adjusted quick ratio: the average stock is 0.35, the tangible assets are 0.27, and the bonds are also 0.35. In fact, everyone is not much different.
