Rieger Report®: Is Balanced “Old School”?

Is Balanced “Old School”?

  • Lots of conversation on balanced portfolios lately with some perspectives considering the concept of “balanced” equity and bond portfolios to be somewhat old school. The performance may warrant another perspective and current yields raise other concerns.
  • Year-to-date the SPDR 500 ETF (SPY) has returned about 18%. Using that as a base line some balanced indices tracking different allocations to fixed income have performed moderately well due to the continuation of the low interest rate environment.
  • I looked at five different balanced indices (equities and bonds) to explore the returns, risks and opportunities:
    • Performance: YTD 2019 performance has been robust with higher equity exposure and longer duration exposure combinations performing well.
    • Risk: Near term risk is muted due to low expectations of rising rates in the next 12 month. The risk is elevated for longer term horizons were rising rates can take a bite out of bond prices and returns can turn negative.
  • Old school? Equity and bond balanced investment objectives have been around for ages and have proven to still work. No one has seen this rate environment before so predicting outcomes or timing of outcomes is a challenge. Balancing a portfolio for uncertain risks still seems to work.

Source: S&P Dow Jones Indices, LLC. Data as 8/20/2019.

Various Equity & Bond Balanced Perspectives Year-to-Date


Sources: S&P Dow Jones Indices LLC. Table is provided for illustrative purposes only. Past performance is not a guarantee of future results. Data as 8/20/2019.

Data Resources Used in this Report

Analyst Disclosure

  • At this time, JR Rieger does not own balanced funds or ETFs.

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