This project is an example of using my investing skills to screen stocks that fit my risk
tolerance and making a diversified portfolio for myself based on that risk tolerance.
Morgan Johnston
FINA 3904 Sec 001
Project 2
B.a. Blackboard version=25 (in the middle of moderately conservative)
Textbook version=33 (higher end of moderately conservative)
After averaging out these two scores I have determined that my overall risk
tolerance is high moderately conservative.
B.b. Asset Allocation: Moderately conservative leaning towards conservative
Cash, 15%
Stock, 32%
Govt. Bonds,
25%
Corp. Bonds,
28%
B.c.1.
Percent
Ticker
Asset Type
Style Box Cell
1
18.0%
VDIGX
Stock Fund
Large/Blend
2
10.0%
APHKX
Large/Blend
3
4.0%
PRBLX
Int’l Stock
Fund
Stock Fund
4
32.0%
15.0%
Total Common Stock
DBLSX
5
8.0%
WOBDX
6
5.0%
HIABX
7
28.0%
18.0%
Total Corporate Bonds
CUGZX
8
7.0%
FLBIX
25.0%
Total Government
Bonds
9
15.0%
100.0%
B.c.2.
Short-Term
Bond Fund
IntermediateTerm Bond
Fund
IntermediateTerm Bond
Fund
Large/Growth
Mid/Limited
Mid/Moderate
Stock/Fund/ETF
Name
Vanguard Dividend
Growth Inv
Artisan International
Value Instl
Parnassus Core
Equity Investor
DoubleLine Low
Duration Bond I
JPMorgan Core
Bond Select
Low/Moderate
Hartford Total
Return Bond HLS
IA
Govt Fund
Mid/Moderate
Govt Fund
High/Extensive
Columbia US
Government
Mortgage Z
Fidelity Spartan L/T
Tr Bd Idx Inv
Cash
T-Bills (Cash)
Total
After creating my portfolio and allocating my assets according to my risk tolerance, I
realized that it did not 100% match my allocation goal from the beginning. My portfolio
turned out to be a little more risky than a moderately conservative investor would hold. I
did classify my risk tolerance on the higher end of moderately conservative therefore my
portfolio should be more risky than an average moderately conservative investor.
Although my portfolio was riskier than my goal, I still believe I managed to achieve
adequate diversification across asset categories. I hold most of my securities in bond
funds, which is normal for an investor with my risk tolerance. The stock funds that I
invested in allow my portfolio to be more risky even though I don’t have a huge
percentage in that category. The overall mixtures of securities in my portfolio are a close
representation of allocating assets according to my risk tolerance.
B.d.
1. Fund Ticker Symbol and Name: VDIGX; Vanguard Dividend Growth Inv
2. Morningstar Style Box Cell: Large Blend
3. Morningstar Analyst Rating: Gold
4. NAV and Date of this NAV and Number of Shares Purchased: $23.42 on
11/19/14; 3,847.80 shares purchased
5. Number and Type of Securities in the Fund: 1,601; Cash, U.S. Stock, Non U.S.
Stock
6. Morningstar Stewardship Grade: A
7. Asset Allocation:
8. Morningstar Rating:
9. Morningstar Risk Ratings:
10. Morningstar Return Ratings:
11. Load Percent: None
12. 12b-1 Fee Percent: None
13. Net Expense Ratio: 0.31%
14. Turnover Percent: 18%
15. Trailing Total Return and Rank:
Ratings
Ranks
16. 3-year MPT’s: Beta=0.87; Alpha=5.48; Sharpe Ratio=2.04; Sortino Ratio=3.83
17. Premium Fund Screener:
B.e.
1. Fund Ticker Symbol and Name: DBLSX; DoubleLine Low Duration Bond I
2. Morningstar Style Box Cell: Mid Limited
3. Morningstar Analysis Rating: Not Available
4. NAV and Date of this NAV and Number of Shares Purchased: $10.18 on
11/19/14; 7,360.16 shares purchased
5. Number and Type of Securities in the Fund: 519; Government, Corporate,
Securitized, Municipal, Cash & Equivalents
6. Morningstar Stewardship Grade: Not Available
7. Asset Allocation:
8. Morningstar Rating:
9. Morningstar Risk Ratings:
10. Morningstar Return Ratings:
11. Load Percent: None
12. 12b-1 Fee Percent: None
13. Net Expense Ratio: 0.47%
14. Turnover Percent: 53%
15. Trailing Total Return and Rank:
1-year=1.89%; Rank 13
3-year=2.37%; Rank 30
5, 10, 15-years= N/A
16. 3-year MPT’s: Beta=0.65; Alpha=1.24; Sharpe Ratio=3.35; Sortino Ratio=7.20
17. Premium Fund Screener:
B.f.a.
Within Category Discussion
My portfolio is diversified within each category (stock funds, bond funds, cash) based on
the percentages I assigned to each fund. After determining my risk tolerance, I decided
what percentage of each asset type I should purchase. As you can see in my stock style
diversification, I hold assets in almost every cell for the valuation chart. But, the majority
of these assets belong in the first row. This is due to the percentages I chose to invest in
these funds after screening which ones would be best suited for me. Because stocks are
more risky, I had to carefully allocate my money into these funds. I invested more into
the lower-risk funds and less into the higher-risk funds. For bond funds, I chose a little
differently. As you can see in my stock style diversification, I only hold assets in four of
the nine cells for the interest rate sensitivity chart. Some of the bond funds I invested in
may be of higher risk than a moderate conservative would invest in, but since they are
less risky than stock funds I decided to up the risk a little. As a result, this made my
portfolio mid/limited and large/growth.
B.f.b.
International Diversification
Investing internationally in a fund is key to having a diversified portfolio. I invested in
APHKX, Artisan International Value Instl. The world regions that this int’l stock fund is
invested in are shown in the diagram below. They include North America, United
Kingdom, Europe Developed, Japan, Asia Developed, and Asia Emerging. This allows
me to be a part of the growth in emerging and international markets while diversifying
my assets at the same time. International stock funds tend to be more risky which is why
I only invested in one. Although it increases the risk of my portfolio, it allows stability
that a domestic-only portfolio would not typically receive. Investing internationally can
lead to higher returns and a decrease in volatility for the whole portfolio. This is because
of the direct relationship between risk and return: higher risk, higher return.