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Portfolio Strategies – What to Consider When Building One

Analysis by Ullrich H. Angersbach

1. Introduction – The Myth of “Beating the Market”

Ullrich H. Angersbach, experienced wealth manager and marketing expert for financial products, points out: Since benchmarks like the DAX or S&P 500 exist, managers have tried to outperform them. Yet studies show: over 10–25 years, fewer than 10–25% of actively managed funds outperform their benchmark – and the number drops further if closed funds are included.

[Chart 1: Long-term performance of active funds vs. indices]
Source: dasinvestment.com

2. The Revolution of Index Funds – Bogle & ETFs

In 1974, John C. Bogle founded Vanguard and launched index funds. ETFs (exchange-traded funds) replicate markets cost-effectively, without trying to outperform them. Their simplicity and low cost have made them increasingly popular.

3. How Much Stocks, How Much Bonds?

Bogle’s Rule

  • Age = percentage allocated to bonds
  • Example: A 25-year-old → 25% bonds, 75% stocks

Buffett’s Advice

  • 10% short-term U.S. Treasuries
  • 90% S&P 500 index fund

[Chart 2: MSCI World performance 1969–2025]
Source: Stiftung Warentest

4. The 60/40 Portfolio – A Classic Approach

  • 60% stocks, 40% bonds
  • Growth + stability
  • Recently challenged by inflation and rising interest rates
  • Still regarded as a robust long-term allocation

[Chart 3: US stocks 60% vs. US bonds 40% performance]
Source: Advisorpedia.com

5. All Weather & Risk Parity – Ray Dalio’s Approach

  • Risk parity: weight assets so each contributes equal risk (volatility)
  • Stocks underweighted, bonds overweighted
  • Advantage: stable performance across scenarios
  • Limitation: based on historical data, future may differ

6. Sustainable Investments – ESG ETFs

  • ESG = Environment, Social, Governance
  • Funds that meet ESG criteria have gained traction, particularly in Europe
  • Often less volatile, but demand-driven performance could reverse if the trend weakens

7. Conclusion – Which Strategy Fits You?

  • Safety: 40% bonds, 60% stocks
  • Growth: 80–100% stocks
  • Crisis resilience: All Weather / Risk Parity
  • Sustainability: ESG funds

Key factors remain: low cost, broad diversification, and patience.

8. Recommended Literature

  • John C. Bogle – The Little Book of Common Sense Investing (2023)
  • Ray Dalio – Principles for Dealing with the Changing World Order (2021)
  • Morgan Housel – The Psychology of Money (2020)
  • Meb Faber – Global Asset Allocation (free PDF)

FAQ: Portfolio Strategies

Is active or passive better?

Passive ETFs tend to outperform most active managers over long horizons.

Is the 60/40 model outdated?

No – despite recent challenges, it remains a proven core strategy.

What is the All Weather portfolio?

A diversified, risk-balanced approach that stabilizes across environments.

Do ESG funds outperform?

Not always – strong demand has boosted performance, but risks remain.

Further Articles by Ullrich H. Angersbach

Disclaimer

The insights of Ullrich H. Angersbach presented here are intended for educational purposes only. They are not financial or investment advice. All investments involve risk, and past performance does not guarantee future outcomes. Investors should seek independent professional guidance before making decisions. The author assumes no responsibility for losses arising from the use of this content.

© 2025 Ullrich H. Angersbach. All rights reserved.