Sunday, February 1, 2009

Lazy Portfolios (4): Detailed Analysis of the Individual Funds

The eight famous Lazy Fortfolios consist of a mix of 3-11 funds from 21 individual Vanguard funds. Seven of them are bond funds, eight are stock funds including a speciality real estate fund, and six are international funds. The funds in each group are listed below:

Bond Funds:

Vanguard Short-Term Investment-Grade (VFSTX)
Vanguard Short-Term Treasury (VFISX)
Vanguard Interm-Term Treasury (VFITX)
Vanguard Long-Term U.S. Treasury (VUSTX)
Vanguard Total Bond Market Index (VBMFX)
Vanguard Inflation-Protected Secs (VIPSX)
Vanguard High-Yield Corporate (VWEHX)

Stock Funds:

Vanguard Small Cap Index (NAESX)
Vanguard Small Cap Value Index (VISVX)
Vanguard Small Cap Growth Index (VISGX)
Vanguard Extended Market Idx (VEXMX)
Vanguard Value Index (VIVAX)
Vanguard 500 Index (VFINX)
Vanguard Total Stock Mkt Idx (VTSMX)
Vanguard REIT Index (VGSIX)

International Funds:

Vanguard Emerging Mkts Stock Idx (VEIEX)
Vanguard Pacific Stock Index (VPACX)
Vanguard Developed Markets Index (VDMIX)
Vanguard European Stock Index (VEURX)
Vanguard International Value (VTRIX)
Vanguard Total Intl Stock Index (VGTSX)


Results:


The following table shows the YTD return (1/30/09) of these individual funds. (Note: data from finance.google.com)

(1) The bond funds performed better as a group, except the Vanguard Long-Term U.S. Treasury (VUSTX) fund which returned -8.49%, similar to the Vanguard Total Stock Mkt Idx (VTSMX) .















(2) The stock and international funds all performed not well for the first month of the year, returned an average of -10% YTD.















(3) The risk of the fund is normally reflected by the STD (standard deviation) of the fund. The larger the STD, the risker the fund. When compared the one year STD of the funds to the one year returns, the bond funds (with an average STD of 9.98) returned an average of -0.29%.






















(4) The stock funds with a average STD of 27.11, returned an average of -38.97% last year. However, the REIT index lost -47.82%.

(5) Although the average STD (28.91) of the international funds was similar to that of the stock funds, the international funds performed worst (with an average return of -45.26% last year). Again proved the common notion that the international funds were generally more risky.






















Conclusion:

Although the returns of the assets in a group are generally variable, the differences of the returns among the different investment classes (bonds, stocks, international stocks) are generally greater. The asset allocation among these investment classes would be a bigger factor to determine the final return of a portfolio.





Related Posts:

Lazy Portfolios: 2009 YTD Performance Update
Lazy Portfolios (1): A 10 year Performance Comparison
Lazy Portfolios (2): Risk Analysis
Lazy Portfolios (3): Surprise, Surprise, the total bond portfolio beats them all
Which is better? An Index Fund Portfolio or An Actively Managed Fund Portfolio?

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