About four months ago, I wrote about the Simple Retirement Portfolio, meant to provide retirees with, well, a simple retirement portfolio, but one meant to outperform comparable indexes and funds, while providing retirees with a strong yield and all the diversification they need. I thought an update on the portfolio’s performance might be of interest to readers and investors, especially considering recent heightened market volatility.
The portfolio as a whole has performed as expected, moderately outperforming its index with gains of 9.30%.
The portfolio’s equity picks have also slightly outperformed the S&P 500, due to a greater focus on international equities and the mid-cap sector.
The portfolio’s fixed income picks have significantly outperformed the broader bond market, due to a savvy selection of funds and management alpha.
Strong results these past few months, expect more of the same in the coming years. That is the goal at least.
What follows is an overview of the portfolio, its performance since inception, and some alternatives to possibly boost the portfolio’s yield further.
Simple Retirement Portfolio – Overview and Analysis
The Simple Retirement Portfolio is based on, and benchmarked to, the Vanguard Target Retirement 2020 Fund (VTWNX). VTWNX invests in a diversified portfolio of low-cost fixed income and equity index funds, and is aimed towards recent retirees.
Balanced funds, including VTWNX, generally provide retirees with superior returns than equity index funds, including those indexed to the S&P 500, as the latter are simply too volatile to fund the monthly income needs of the average retiree. I’ve done the math on this here.
VTWNX seemed like a perfect low-risk fund for retirees, so I used it as the basis for my model portfolio. I simply took VTWNX’s holdings, and swapped the fixed income funds for some with higher yields and stronger track records of