Rebalance’s backtested models are simulations using proprietary software that uses the exchange-traded funds (ETFs) included in Rebalance models after 1/1/2010 and benchmark indices prior to 12/31/2009 similar to the ETFs used in the Rebalance portfolios. The returns are intended to show the effects on risk and returns of different asset allocations over time that correspond to the allocations in Rebalance (“RBI”) model portfolios – not to indicate performance of our models – past or future. Portfolio returns are cumulative and annualized. Portfolio risk is calculated as the annualized volatility of returns. RBI often uses different ETFs for the certain asset classes in Schwab and Fidelity. This may result in slightly varying performance results because RBI’s simulation models are built using the ETFs found in client Fidelity accounts. The simulation uses the following parameters:
- ETF dividends were reinvested into the ETF from which they were generated, which increases the share count over time.
- Full year and year-to-date portfolio returns reflect portfolio rebalancing with any capital gains from rebalancing reinvested into the entire portfolio. No taxes are deducted from any portfolios. Portfolios are rebalanced in October and in April each year.
- Simulations are based on a portfolio value of $350,000.
- The indices used as proxies for ETFs are unmanaged, do not incur fees or expenses, and cannot be invested in directly. To make them better proxies, a weighted average ETF fund fee estimate of 0.15% was applied to each model portfolio and deducted from the index returns through 12/31/2009. These ETF fund fees were calculated as of January 2019 and may differ from actual future fees. After 2009, we used ETFs in the simulation and their fund fees are accounted for.
- Returns are net of all fees including: ETF fund fees, and the RBI annual 0.7% advisory fee. RBI advisory fees are billed quarterly in advance, and this timing difference could create a variation from actual results.
- Since launching these portfolios, RBI has made several changes to them over time. These simulations do not attempt to model these changes. Rather, we simulate our portfolios as they are currently offered. For example, until April 2018, RBI used a fixed income proxy of VYM in the Income portion of our portfolios and later removed it and replaced it with LQD. In these back-tested models, we assume LQD had been used for the entire period instead of VYM. This is to illustrate the volatility and performance of today’s portfolios, and is not an attempt to re-create portfolio performance as past results are no guarantee of future performance.
| Asset Class | Until 12/31/2009 | Beginning 1/1/2010 |
| U.S. Stocks | Russell 3000 Index | VTI |
| U.S. Small Cap | Russell 2000 Index | IJR |
| All World Foreign | MSCI ACWI ex-US Index | VEU |
| Foreign Developed | MSCI EAFE IMI Index Gross Return USD Index | VEA |
| Emerging Markets | MSCI Emerging Markets Gross Total Return USD Index | VWO |
| Real Estate | MSCI US REIT Index | VNQ |
| US Aggregate Investment Grade Bond Market | Bloomberg Barclays US Aggregate Bond Index | AGG |
| US Investment Grade Corporate Bonds – Medium Term | Bloomberg Barclays US Credit Corp 5-10Y Total Return Index Value Unhedged USD | VCIT |
| Inflation Protected Treasuries | Bloomberg Barclays US Treasury Inflation Notes TR Index Value Unhedged USD | TIP |
| US High Yield Corporate Bonds | Bank of America Merrill Lynch US High Yield Master II Index | HYG |
| Emerging Market Bonds | J.P. Morgan EMBI Global Index | EMB |
| Preferred Stock | Bank of America Merrill Lynch Fixed Rate Preferred Securities | PFF |
Data Sources: MSCI Inc., U.S. Federal Reserve Economic Data (FRED), Center for Research in Securities Prices (CRSP) at The University of Chicago Booth School of Business, Bloomberg Inc.
