reduce risk
Asset Class Descriptions
US Equities
"MKT-TSM", "VTSMX", 0.19% expense ratio, Total US stock market, more small companies than S&P500. VTSMX is an example fund that invests in this asset class. Example ETF: VTI
"LCV", "VIVAX", 0.21, Large "Cap" value stocks. Example ETF: VTV
"500 Idx", "VFINX", 0.18, S&P500. Example ETF: SPY
"LCG", "VIGRX", 0.22, Large cap growth. Example ETF: IWF
"MCB", "VIMSX", 0.22, Mid-cap blend (which means both growth and value stocks). Example ETF: VO
"SCV", "VISVX", 0.23, Small-cap value. Historically has excellent risk/reward characteristics, try adding some to your portfolio. Example ETF: VBR
"SCB", "NAESX", 0.23, Small-cap blend. Example ETF: VB
"SCG", "VISGX", 0.23, Small-cap growth. Historically has poor risk/reward characteristics. Example ETF: VBK
"D10", "BRSIX", 0.67, Micro-cap: small companies. Median $156.7M capitalization. Example ETF: PZI
Real Assets
"GOLD", "GOLD", 0, Ductile Yellow metal. Excellent time-tested diversifier, try adding some to your portfolio. Example ETFs: GLD, GTU
"COMM", "PCRIX", 0, Commodities, good diversifier, not as un-correlated to the broad market as gold though. Example ETF: DBC
"REIT", "VGSIX", 0.21, Real Estate investment trusts. Example ETF: VNQ
"S-TIPS", "VIPSX", 0.2, "Synthetic" TIPS, TIPS didn't exist until recently, but it is simple to compute how the should have performed. Example ETF: TIP
Bonds
"LTGB", "VUSTX", 0.26, Long term government bonds. Non-callable debt issued by the US government. This is an excellent diversify that provides income as well. Try adding some to your portfolio. (Note that there has been a 27 year bull market in bonds that probably can't continue indefinitely, I wouldn't eliminate this asset class entirely though.) Example ETF: TLT
"5 Yr T", "VFITX", 0.26, 5 year treasuries. Debt issued by the US government. Example ETF: ITE
"ST Trsry", "VFISX", 0.26, Pretty good risk/reward characteristics, some portfolios benefit from the diversification benefit of holding longer duration bonds though. Example ETF: SHY
"TBILL", "VMPXX", 0.24, Treasury bills. Very short term so there is little risk to principle due to interest rate swings. Example ETF: BIL
"ITB", "VBMFX", 0.2, Total Bond Index. Includes corporate bonds which yield just a little more than treasuries. During a panic or "flight to quality" corporate bonds drop while everyone flees into treasuries. Example ETF: BND
International Equities
"EAFED", "VDMIX", 0.27, Foreign Large Blend. International developed stocks. Example ETF: EFA
"EM", "VEIEX", 0.42, Emerging markets. Excellent historical returns, try adding this to your portfolio. If the optimizer gives you more of this than you are comfortable with then just hard code the value you want 10%, 15%, 30% - whatever makes you more comfortable - then re-run the optimization. Example ETF: VWO
"EAFE85/EM15", "VGTSX", 0.29, International stocks including some weighting in emerging countries. Example ETF: VEU
"Intl Value", "VTRIX", 0.46, International value stocks. Example ETF: EFV
"Pacific", "VPACX", 0.27, Japan stocks mostly, plus Australia, Hong Kong, etc. Example ETF: VPL
"Europe", "VEURX", 0.27, European stocks. Example ETF: VGK
Diversified
Popular diversified mutual funds:
"Wellington", "VWELX", 0.3,
"Wellesley", "VWINX", 0.25,
"Windsor", "VWNDX", 0.36,
An ETF that might be somewhat similar to this group of funds is PCA.
Acknowledgments
The dataset used in this demo was collected by "Simba" and other Diehards over at BogleHeads.org