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In another thread I wrote: Right now, I am projecting that with a 6% inflation-rate, my customary tax-rates, and a pre-tax gains-rate of 5%, I get to age 105 before my investment-net worth that year is less than the prior year. Thus, 5% becomes my benchmark. If, on average across my portfolio --which includes 10% cash-- I am obtaining that much, then I'm on target. If I can pick up investments that offer twice that, or three times, or six times that, I do so.

With those higher returns come higher loss-rates as well. But if, across a basket of risks, my average return runs around 8%, then two things have been accomplished. Future gains can be lower (and accepted risks can be lower). But more importantly, skills are acquired which lower the risks of pursuing those higher returns if higher returns ever become needed. So the pursuit of higher returns than I would seem to need is a double insurance policy. And given the craziness of the world we now live in, I don't think I'm being overly cautious.


Like the so-called “Great Communicator”, I’m never one not to make up my facts as I go along. But unlike Ronnie, I eventually check them. So that’s the intent of this post, to set the record straight. I’m running an all-bond portfolio that invests “across the yield-curve and up and down the credit-spectrum.” Morningstar recognizes this as a distinct asset-class/investment objective, and they list 200 such funds. So the question becomes, “How am I doing?” Below is a quick overview.

5.00% My Targeted Portfolio YTM
7.29% The 10-yr Average Return for this category according to Morningstar
7.92% My Presently-Achieved, Dollar-weighted, Average YTM

These are the details:

YTM Dollar-weighted Percentage of the Portfolio
26%+ 0.1%
20%-25% 1.1%
15%-19% 2.6%
11%-14% 7.0%
8%-10% 30.5%
6%-7% 46.2%
5% 10.7%
3%-4% 1.2%
0%-2% 0.1%
-1% 0.1%
-6% 0.3%

My comment is this. If you’re an archer, or a marksman, and you want to hit your target, you aim higher than the target. The same is true in investing. Upside tracking-errors aren’t errors. They are rain-checks you can cash when you need them.
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