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Wed. Apr. 9, 2008

Measuring Asset Allocation Across Your Entire Portfolio *

It is important to periodically review your asset allocation across all your holdings. In yesterday’s post “2008-Q1 Progress Review“, I presented the results of a significant project I undertook to measure my asset allocation over all my investment holdings using three different measures (origin, capitalization and sector). As I pointed out yesterday, I was surprised that some of the areas I thought would be over-allocated were not when evaluating the portfolio as a whole (financials and real-estate), while other areas came up short (international).

When I started this project, I had visions of wading through annual reports for mutual funds, ETFs and trying to figure out a way to get the allocation for investments in my 401(k). I started with my 401(k) since I thought it would be the most difficult. I found my 401(k) had outsourced this tedious-task to Morningstar. As it turns out, Morningstar became my one stop source for all my investments (mutual funds, ETFs and individual stocks). By using only one source provider, the data was consistent. Here is an example of SPDR S&P Dividend ETF (SDY).

The style box will tell you if it is large, mid or small cap (also value, blend or growth, if you are tracking that). You will notice the sector breakdown is exactly what I used in my sector presentation. The asset allocation provides a split between cash stocks bonds and other. The weakest link is international vs. domestic, For my 401(k) funds, the percentage is presented in the report. For others, such as HOTFX, you have to look at the category listed under key stats. HOTFX is listed as “World Stock” so I treat it as international.

I spent a great deal of time designing a new tab in one of my two massive spreadsheets. It is now set up so that I can cut-and-paste the above information from Morningstar into my spreadsheet and the data for the PDF presented will automatically be updated. From start to finish, the whole process can be completed in about 20 minutes. This is something I plan on looking at quarterly.

Are you currently reviewing your asset allocation across all your investments?

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2 Responses to “Measuring Asset Allocation Across Your Entire Portfolio *”

  1. Anonymous says:

    Any chance you’d care to share your spreadsheet? That sounds like a great timesaver; and if your previous spreadsheets are any indication, you are far more capable at Excel than I am!
    Thanks for all the great info!

  2. Dividends4Life says:

    Anon: It is currently integrated in my two massive spreadsheets, which wouldn’t be useful to anyone. I will see if I can carve out a portion of the spreadsheet, generalize it and post it as an example.

    Thanks for reading Dividends4Life.

    Best Wishes,
    D4L