Step 11 - Risk Exposure


ANALYZE YOUR FIVE DIMENSIONS OF RISK EXPOSURE

About 97% of the returns of diversified portfolios of index funds are explained by their exposure to five dimensions of risk. They include market, size, and value for equities, and term and default for fixed income. Once investors determine their risk capacity, they will be matched to an asset allocation which corresponds to an index portfolio. Index funds are best for minimizing fees and taxes, while maximizing diversification and expected returns. A simulated index portfolio has beaten the S&P 500 Index by about 2.5% annualized for the last 50 years at a similar risk level and net of fund and investment advisory fees.

 

IFA’s 20 risk-appropriate Index Portfolios enable institutions to invest according to their own unique risk capacity as measured by the risk capacity score. Each Index Portfolio is comprised of risk-appropriate blends of as many as 15 indexes. IFA’s Index Portfolios provide substantial global diversification with investments in 18,000 companies in 40 different countries. The risk and return statistics for various time periods for the 20 IFA Portfolios and the S&P are detailed below.

 

 

Additional Charts and Graph from Step 11


Step 11		 Twenty Index Portfolios
F11-1
Twenty Index Portfolios		 Efficient Portfolio Analysis
F11-2
Efficient Portfolio Analysis		 Concentration Risk: One Stock vs Indexes
F11-3
Concentration Risk: One Stock vs Indexes		 Global Market Share
F11-4
Global Market Share		 Overall Rating of Mutual Fund Companies by Registered investment Advisors
T11-1
Overall Rating of Mutual Fund Companies by Registered investment Advisors
  Twenty Index Portfolios
T11-2
Twenty Index Portfolios		 Risk Reward Optimization
F11-5
Risk Reward Optimization		 Index Portfolios Distribution of Monthly Returns
F11-6
Index Portfolios Distribution of Monthly Returns		 20 Index Portfolios and S&P 500
T11-3
20 Index Portfolios and S&P 500
DFA
Returns Table

 

< Step 10 - Risk Capacity Step 12: Invest and Relax>

 

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WARNING: Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any mutual fund, index or actively managed, does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. Actively managed funds sometimes outperform index funds. You just don't know in advance which actively managed fund will outperform the appropriate index. Just because a mutual fund is an index mutual fund, it does not guarantee a performance superior to an actively managed mutual fund. There are no absolute guarantees in investing. When reviewing any backtested performance information on this internet site, please read the Disclosure for Backtested Performance Information (click here to read the Disclosure for Backtested Performance Information.)


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