Ready-to-Go Folios: Target 2010 Conservative Folio

Target 2010 Conservative Folio

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Objective

The Target Date 2010 Conservative Folio was developed for investors who plan to retire on or around 2010 and who prefer to target less than average risk.

Strategy

The Target Date Folios are designed to provide investors with a diversified portfolio through their working and retirement years. Each Folio maintains a strategic balance between expected return and risk. The expected risk of the Target Date Folios decreases as the expected retirement date approaches. The expected risk levels continue to decrease in post-retirement in some cases.

Each Target Date Folio is composed of ETFs in major asset classes such as stocks, bonds, and REITs, with additional asset class exposure that may include sector-specific, country-specific, and commodity asset classes. These allocations are reviewed periodically to maintain an appropriate diversified asset allocation as the target date approaches by increasing the conservative elements of the Folio, thereby decreasing its overall risk level. Each Folio also includes asset classes (again using ETFs) specifically selected to keep up with inflation, including inflation-indexed bonds and commodities.

The specific risk levels for a given Target Date Folio are based on assumptions about an average investor at each of the three model risk levels of Conservative, Moderate and Aggressive. One assumption is that an investor will invest in the specific Target Date Folio during their working years, and not make any contributions to the Folio after retirement. A second assumption is that the investor will draw an annual inflation-adjusted income from the Folio in each year after the expected retirement date. Consequently, the Folios are generally designed as investments to be held not only to the retirement date but also for many years thereafter, as opposed to as an investment to be cashed out on the retirement date.

The choice of the appropriate risk level (Conservative, Moderate, or Aggressive) must be determined by the investor based on his or her specific needs and risk tolerance. The Moderate Folio at a target date is designed for the investor who will remain invested to and then through retirement. The Conservative risk level is designed to be more appropriate for an investor who plans to remain invested through retirement, but who wants to maintain the possibility of liquidating their portfolio and annuitizing it at some point (either at retirement or later). The Aggressive risk level is designed to be more appropriate for an individual who has a high risk tolerance and who intends to remain invested for the long-term. These are only examples, and there are a variety of other reasons why an investor might choose between these three options.

Of course, and importantly, all investments carry risk. Even the Conservative Target Date Folios carry significant investment risk, and the potential for material loss. In addition, during periods of increased volatility, all the Target Date Folios may experience higher than average losses than would be explained by the risk/return characteristics of their allocations.

Last Updated: April 22, 2014

Category: Target Date

Inception Date: December 21, 2007

Date Funded: August 31, 2009*

One Month 1.83% 0.83%
Three Month 3.03% 2.4%
Year to Date 3.72% 2.29%
One Year 2.89% 22.85%
Three year (Annualized) 4.43% 14.46%
Five Year (Annualized) 8.31% 19.88%
Since Inception 4.48% N/A
Volatility 3.75% 11.39%

Past performance is no guarantee of future results.
See how returns are calculated

* Returns reflect model performance from the Inception Date to the Date Funded, and funded performance since the Date Funded, if funded. Your returns may deviate significantly from the values displayed here, due to many factors, including how long after a strategy has been updated that you place orders to update your holdings.

#SymbolCompanyWeight
(% of Folio)
1BILspdr barclays capital 1-3 month t-bill e45.00%
2BSVvanguard short-term bond index fund2.00%
3DBCpowershares db commodity index tracking5.00%
4EDVvanguard extended duration treasury inde5.00%
5PZApowershares insured national municipal b17.00%
6QQQpowershares qqq trust, series 14.50%
7TLTishares barclays 20+ year treasury bond3.50%
8VDEvanguard energy index fund18.00%

Steps to Create This Folio

  1. We selected a series of ETFs that captured the range of key asset classes we determined were necessary to build an optimally diversified portfolio.
  2. We used the low expense ratio of the ETFs as a selection criteria when multiple ETFs were available that capture an asset class.
  3. We then ran a quantitative analysis identifying the optimal allocations to each ETF targetting the maximum expected return for a target risk level.
  4. We created a series of Folios for target risk levels appropriate at each stage in an investors life.

Number of Securities

There are generally between 5 and 12 securities in the Folio.

Update Frequency

Quarterly.

If the characteristics of the Folio have changed substantially, the securities included may change. Also, corporate actions, such as a merger, or other events may cause changes to the securities held at any time. Your returns may deviate significantly from the values displayed here, due to many factors, including how long after a Folio has been updated that you place orders to update your holdings.