I’ve been following Pimco’s “New Normal” meme for a while.
Basically, sometime ago, Mohammed El-Erian gave an interview spelling out how he thought a portfolio should be allocated given their take on things in this era of the “New Normal”.
Below is the initial mix & securities I used to emulate the allocation he suggested & re-balanced quarterly:
- 15% US Large EQ (Vanguard Total Stock Index)
- 15% Developed Non-US EQ (Vanguard FTSE All World)
- 18% Emerging Market EQ (Vanguard MSCI Emerging Market)
- 03% US Investment Grade Corporates (iShares iBoxx $ Invest Grade Corp Bond) –
- 03% US Hi-Yield (iShares iBoxx $ High Yield Corporate)
- 09% Non US Bonds (SPDR Barclays Capital Intl Treasuries)
- 05% US TIPS (iShares Barclays TIPS Bond)
- 06% US Real Estate (Vanguard REIT Index)
- 11% Commodities (PowerShares DB Commodity Index)
- 05% Infrastructure (iShares S&P Global Infrastructure)
- 10% Cash (1% yield assumption)
And, here’s the latest reporting of how that portfolio is doing vs. the S&P 500.
Disclosure: This is not investment advice or an endorsement of any of the products used for this post.