Freedom Portfolio

July is a month that makes us think of freedom. I've never lived anywhere that I didn't feel free. It is an amazing gift that we must remember to be thankful for and for which we must continue to fight. Not everywhere in the world has individual rights, but what if you focused your investing where freedom does exist?

The "Freedom Portfolio" is a portfolio I created that is 52% exposure to US stocks and 48% in 12 international country funds that represent nations that have a high ranking on the Heritage Economic Freedom Index. I used the 52/48 allocation to mirror the US presence in the Vanguard global equity ETF VT.

Heritage Economic Freedom Index

The top countries include: Hong Kong, Singapore, New Zealand, Switzerland, Australia, Ireland, United Kingdom, Canada, Denmark, Taiwan, Sweden, and the Netherlands. Some countries are not available for investment, so a few substitutes had to be made with countries that were next on the list. So how does such a portfolio compare to the performance of Vanguard's Total World ETF, VT?

Beginning in 2013 and ending in May 2018, the Freedom Portfolio generated an annualized return of 11.5% per year versus 10.27% per year for the Vanguard World Index. It must be noted, I also represented the US with a combination of Vanguard Total Stock Market Index (VTI) and Vanguard Extended Market Index (VXF) so that small caps were present in the portfolio.

Standard deviation is the statistical measure of how much volatility is present in a portfolio. The Freedom Portfolio had a standard deviation of 10.22 versus 10.15 for the Vanguard World ETF. Thus, the portfolio had over 1% increased return with very little additional volatility.

Contact me if you'd like a copy of the portfolio report. I'm glad to send you a pdf that shows the ETF symbols, percentage invested in each, as well as many statistical measures of the portfolio performance.