ACZoom  ·  Archive-2016

Asset Allocation is a key factor in analyzing an investment portfolio.
Surprisingly, it does not seem very easy to get an asset allocation analysis done based on a particular set of specific asset classes. Every financial web site seems to have a portfolio analyzer - but they use a predetermined set of asset classes.

Self-directed investors will likely need more than just knowing about percentages allocated to "stock, bonds, cash", for example, following the lazy portfolios, one might settle on the following classes in 2007:
Large-cap US
Small-cap US
Europe
Emerging Markets
International
Inflation-Indexed Securities
Bonds
CDs/MoneyMarket

Getting any of the portfolio analyzers on the web to provide analysis based on above set is not possible. But with just a little amount of research, it is very easy to get the data and create a spreadsheet to help with the analysis. Assuming a portfolio of around 10-20 mutual funds (which seems to be a popular recommendation), it should not take more than a hour or two to collect this data which is reasonable time to spend once every year on portfolio analysis.
As an example, here is a Microsoft .xls format spreadsheet that determines the asset allocation for a portfolio based on the asset classes shown above. The spreadsheet also has formulas that can be used to enter actual amount invested in each fund, and it will print out total percentages for each asset class. The basic instructions for using the spreadsheet are:
Step 1: In the first section - "Percentage Holdings" - create a row for each fund, enter unique code, and with information gleaned from Annual Reports, enter the distribution of holdings in that fund. Create new rows by copying or replacing one of the existing rows.
Step 2: In the second section - Invested Amount" - create a row for each fund, enter fund code, and in first column, enter amount invested in that fund. The row "Current Asset Allocation" is calculated based on the invested amounts and the fund holdings, all totalled up.
Step 3: In the "Target Goal %" row - enter your targets for each asset class.
Step 4: The last row "To Rebalance" shows how much has to be subtracted or added from each asset class to meet your target goals.

Of course, this is all useful only for those familiar with spreadsheets and have experience editing the rows and formulas in a spreadsheet.

Disclaimer: clearly, there is no claim to any financial advice here. Use at your own risk - no guarantee, no warranty. Financial topics can be enjoyable, and there is no point investing on your own unless it can be done easily, simply, and yet be on track to beat the "actively managed" funds crowd.