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Rekenthaler Report

Rebalancing: A Practical Lesson

Let's take one more look at the "gold shares or bullion" question.

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2 Paths Diverged...
Last Friday's column compared the performance of two portfolios that diversified by holding gold. One owned precious-metals stocks, the other used bullion. When preparing the numbers, I noticed several interesting features that I could not address at the time because they were not relevant to that article's question of "gold equities or bullion?" Hence, today's installment.

Each portfolio was a variation of a 60/40 balanced fund, investing 60% of its assets into Vanguard 500 Index (VFINX), 20% into the Bloomberg Barclays U.S. Aggregate Bond Index, and 20% into its version of gold. The "Gold Shares Portfolio" held Fidelity Select Gold (FSAGX), while the "Bullion Portfolio" owned the LMBA Gold Price Index. The time frame was from Jan. 1, 1986, through April 25, 2020.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.