In the investing world, a gone-fishing portfolio is a simple asset allocation which performs well with only infrequent rebalancing.
We have been offering the Marotta’s Gone-Fishing Portfolio as a free portfolio recommendation intended for people who are just getting started with investing since 2012. This portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity, but a secondary virtue is that it avoids the worst mistakes of the financial services industry.
Last year, our 2022 Marotta’s Gone-Fishing Portfolio was a recommendation of 12 stock investments. It is a paired down version of our actual managed investing strategy, which has over 40 low-cost ETFs to target our 32 sectors.
This article is to report on the 2022 performance of those twelve stocks.
In this analysis, we have used returns ending December 31, 2022 as reported by Morningstar for the 100% Stock allocation invested at the start of the relevant period and then permitted to drift throughout the period.
|iShares MSCI ACWI||ACWI||9.89%||1.96%||-13.46%||-18.37%|
|All-Stock Default Gone-Fishing||11.55%||3.30%||-9.91%||-14.27%|
|All-Stock Vanguard Gone-Fishing||11.63%||2.80%||-9.93%||-13.71%|
Without rebalancing, the all-stock Marotta 2022 Gone-Fishing Portfolio had a return of -14.27% and the all-stock Marotta Vanguard 2022 Gone-Fishing Portfolio had a return of -13.71%.
For comparison, iShares MSCI ACWI ETF (ACWI) saw a 2022 return of -18.37%. MSCI ACWI All Cap represents every stock in the world at exactly its cap weight. Any deviation from this index is a choice of investment strategies. Sometimes those choices will increase or reduce risk. They may also increase or reduce returns.
This past year, our choices increased returns for both our default and Vanguard portfolios.
U.S. Stock Returns
Vanguard | Default
|Vanguard Total Stock Market||VTI||7.05%||2.30%||-14.91%||-19.51%|
|Default Gone-Fishing U.S. Stock||9.52%||3.33%||-10.04%||-13.31%|
|Vanguard Gone-Fishing U.S. Stock||10.19%||4.00%||-9.09%||-11.66%|
|SPDR® MSCI USA StrategicFactors||0%||7.80%||QUS||9.68%||3.12%||-10.00%||-14.14%|
|Vanguard Mid-Cap Value||8.90%||VOE||11.97%||5.86%||-7.97%||-7.95%|
|Vanguard Small-Cap Value||9.70%||VBR||11.52%||7.31%||-8.18%||-9.36%|
|Vanguard Information Technology||10.60%||VGT||4.19%||-1.70%||-22.78%||-29.70%|
|Vanguard Health Care||9.50%||VHT||11.32%||6.12%||-1.43%||-5.62%|
|Vanguard Consumer Staples||6.30%||VDC||12.35%||4.81%||-0.19%||-1.80%|
|Vanguard Real Estate||4.00%||VNQ||4.34%||-7.18%||-21.48%||-26.24%|
Note: We have included Vanguard Real Estate in our U.S. Stock reporting here for our Gone-Fishing portfolios. In our full Asset Allocation Design though, we typically section real estate ETFs into a separate asset class of Resource Stocks and report on it separately. That being said, this U.S. Stock portfolio is fairly compared to Vanguard Total Stock Market (VTI) because VTI includes U.S. REITs.
The U.S. Stock portion of our 2022 Gone-Fishing portfolio also saw returns higher than its benchmark. Without rebalancing, the U.S. Stock portion of the Marotta 2022 Gone-Fishing Portfolio had a return of -13.31% and the U.S. Stock portion of the Marotta Vanguard 2022 Gone-Fishing Portfolio had a return of -11.66%.
This can be compared to Vanguard Total Stock Market ETF (VTI), every stock in the U.S. exactly at its cap weight, which saw a 1-year return of -19.51%.
Last year, we discussed how those who concentrated their 2021 allocations in large-cap growth saw the best returns, but that for 2022 we thought investors may be glad that we don’t have everything in these stocks. Indeed, that turned out to be true as the large-cap growth of Vanguard S&P 500 (VOO) saw a one-year return of -18.19% compared to the value-tilt of Vanguard Value (VTV) posting a -2.07% return and SPDR® MSCI USA StrategicFactors (QUS) posting a -14.14% return.
In our default 2022 Marotta’s Gone-Fishing Portfolio and in our managed portfolios, we showed preference to QUS over VTV so as to make only half a mistake.
Vanguard | Default
|iShares MSCI ACWI ex US||ACWX||15.65%||1.94%||-10.69%||-16.04%|
|Full Freedom Investing Strategy||15.73%||3.51%||-10.52%||-15.28%|
|Default Gone-Fishing Foreign Stock||14.21%||3.25%||-9.74%||-15.52%|
|Vanguard Gone-Fishing Foreign Stock||13.53%||1.23%||-11.03%||-16.40%|
|Vanguard FTSE Developed Markets||26.10%||0.00%||VEA||16.79%||4.39%||-10.17%||-15.36%|
|Franklin FTSE Switzerland||0.00%||6.50%||FLSW||11.65%||1.48%||-12.09%||-18.13%|
|iShares MSCI Singapore||0.00%||6.50%||EWS||11.11%||7.53%||-7.41%||-9.79%|
|iShares MSCI Denmark||0.00%||6.50%||EDEN||30.58%||12.43%||-2.34%||-11.44%|
|iShares MSCI New Zealand||0.00%||6.50%||ENZL||18.47%||9.70%||-10.27%||-16.17%|
|Vanguard FTSE Emerging Markets||17.10%||17.20%||VWO||8.56%||-3.60%||-12.33%||-17.99%|
Without rebalancing, the Foreign Stock portion of the Marotta 2022 Gone-Fishing Portfolio had a return of -15.52% and the Foreign Stock portion of the Marotta Vanguard 2022 Gone-Fishing Portfolio had a return of -16.40%.
These returns can be compared to iShares MSCI ACWI ex US ETF (ACWX), every stock in the foreign world exactly at its cap weight, which saw a 1-year return of -16.04%.
It can also be compared to our full Freedom Investing strategy (a different model portfolio which represents our static targets), which would have had a 1-year return of -15.28%. Our Freedom Investing Strategy outperformed in part thanks to its overweight to Chile, which uniquely posted positive returns.
Reminder: Stay the Course
While we are currently still in the bear market that began in 2022, it is important to continue to stay the course. We have a saying, “It is always a good time to have a balanced portfolio.”
Regardless of what happens, we believe volatile markets are the times when it is most important to stay invested.
It is easy to get out of the markets when they look risky but difficult to know when to get back in.
We believe that it is better to be invested in the markets at the wrong time than trying to time the markets.
Mermaid illustration by Zoe Russell (age 6). Returns data gathered from Morningstar Advisor Workstation.