Know-Nothing Portfolio

Sgfunds 2007 Funds Portfolio

Here's the $100,000 portfolio:

$40k Infinity US 500 Stock Index (ER 0.99%)
$24k Infinity European Stock Index (ER 1.06%)
$16k UOB United Regional Growth Fund (ER 1.26%)
$15k Legg Mason Global Bond Trust (ER 0.91%)
$5k DBS Enhanced Income SGD (ER 0.47%)

80% equity (50% US, 30% Europe, 20% Asia incl Japan)

20% fixed income (75% global investment grade medium-term bond, 25% local short-term bond)

This portfolio is for people in their 20s who do not want to spend too much time investing and not interested in knowing investment details. The investor of this portfolio admits that he knows nothing about market direction and predicting stock market is not practical. Hence, it covers major stock markets and does not overweigh any sector or country.

The 20% fixed income allocation derives from the simple rule of thumb that uses age as fixed income %. The choice of bond fund invests only in investment grade bonds (rated BBB to AAA), no emerging market bond or junk bonds. It also captures the medium-term bond, while DBS Enhanced Income SGD captures the short-term bond.

It can be implemented in FSM and enjoy the free switch between the two equity funds (Infinity funds) and the global bond fund (Legg Mason glbal bond) because they belong to the same tier in sales charge (1.0-1.5%). This is something you don't get between normal equity funds and bond funds.