An Update on the Core Portfolio

Its 9 months into the year and about 6 months since my post where I laid out the core portfolio. I wanted to give an update on the core portfolio to show how it is doing so far this year (through mid-September 2021). Is performance in-line with what one would expect? Has it kind of done what we were hoping for or are there things that could have been done better?

If you recall, the portfolio from my last post (Building a Core Portfolio) it was a mix of US and international stocks, as well as some Real Estate and Commodities to diversify the exposure. The six month and Year-To-Date returns for the portfolio are as follows.

Metals and Mining, U.S. Real Estate handily outperformed the S&P500, while the International Markets and ex-U.S. Real Estate underperformed.

Another way to look at the Year-To-Date return for the portfolio is in terms of the dollar gain in the portfolio. The table below shows the basis (or cost basis) of each ETF and the current value, and then calculates the percentage gain and the dollar gain for each one. This has been a very good year for the stock market generally, and the total return for our portfolio till mid-Sept comes to 17%.

In addition, as you can see, the two best performing ETFs have been the VNQ U.S. Real Estate and Metals and Mining. Coming out of 2020, it would have been hard to make this call. Which is why it’s a good idea to have a diversified portfolio that can balance things out from year to year.

Of course once again it is worth asking, why not just stick to the S&P500 Index and be done with it? There is some value to that simplicity, but given that this portfolio is not that much more complex, I would personally stick with it still.

Such outperformance by the U.S. market will eventually end, and so it’s better to take slightly lower returns in exchange for peace of mind. Psychologically, its much harder to deal with your whole portfolio seeing negative performance. It’s much easier to sleep at night know that at least some parts of your portfolio are doing okay. That’s probably the only advice I can give on this.