Yesterday’s Financial Post carried an article by Richard Croft, who writes a regular column about constructing diversified portfolios. The column referred to the FPX Balanced Index (Cash: 10%, Bonds: 40%, Equities: 50%), which has returned an annualized 8.33%, despite all the market turmoil of the past 10½ years. The equity portion of the FPX Indexes are invested in seven ETFs: XIU (Canada), SPY (U.S), EWG (Germany), EWJ (Japan), EWU (U.K), EWQ (France) and EWW (Mexico).
There are two other FPX Indices: Income (Cash: 20%, Bonds: 50% and Equities 30%) and Growth (Cash: 10%, Bonds: 20%, Equities: 70%). The Income and Growth indices also have similar returns as the Balanced over the same time frame. As Mr. Croft notes in his column despite the ups and downs “diversified investment portfolios do make money over the long term”.
See also: Diversification 101 in The Wealthy Boomer blog.
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