Portfolio Spring Cleaning

Written by Pat Rosvold, Associate Wealth Management Advisor

Springtime – ‘Tis the season that we all find ourselves taking inventory of the to-dos or projects on the home front for the upcoming year, but also reflecting on our financial lives from the previous year. Many of us have that one spot in our home that accumulates assorted financial documents, and we find ourselves doing our “annual spring cleaning” to pull everything together to forward on to our tax professionals. This presents investors a great opportunity to check in on their portfolio, make any course corrections, or realign investment allocations to align with your updated financial goals.

Much like taking vehicles in for annual maintenance, portfolios require the same level of attention. Coming off a year of strong returns in the capital markets, it’s fairly common that investors find their portfolios to be overweight the “winners” of 2020 and underweight other holdings. As depicted by the chart below, asset classes tend to move in and out of favor and proper diversification becomes a key driver towards balancing volatility with the desired investment returns to meet your long-term goals.

Step 1: Find and manage your “sleep well at night” cash position

Personal finance 101 tells us that this should be 3-6 months of expenses; however, each of us has a certain amount of cash that we require to feel comfortable and confident in our financial situation. Once you have this number tightened up, earmark remaining cash to be put to work across your portfolio.  For more on this topic, see How Much Cash is Too Much Cash?

Step 2: Stage Risk in your portfolio

Create portfolio buckets and align their investment allocations based on each bucket’s projected future cash-flow needs or other goals. By time-segmenting portfolios, an investor can “compartmentalize” their investments based upon anticipated future cash needs from the portfolio, while managing overall volatility.


Step 3: Have a plan for reviewing and rebalancing your investments

Whether you take an active or passive approach to managing your portfolio, rebalancing may be beneficial to enhancing your long-term performance and help manage risks in your underlying asset classes after periods of investment success or underperformance.

Take the time to look at your financial life comprehensively, have a disciplined process in place to guide your investment decisions, and expect course corrections as your life goals change and the markets throw you curveballs.

If we can help you walk through these steps, please don’t hesitate to reach out.





The returns and return patterns of the asset classes shown in the chart above represent past performance, are not a guarantee of future performance and future returns and return patterns may vary from those shown in the chart. The information is sourced from Bloomberg, LLC, which it derived from various market indices, as more fully described below. In each case, the asset class is followed by the name of the index from which Bloomberg derived the returns shown in the chart above, followed by a description of the index.

An investor cannot invest directly in an index. An index’s performance does not reflect the deduction of transaction costs, management fees, or other costs which would reduce returns. The index performance results provided in this presentation represent past performance and are not a guarantee of future performance. For additional information regarding these indices, please refer to the sponsor websites at www.standardandpoors.com, www.ftserussell.com, www.msci.com and www.bloombergindices.com.


REITs The Dow Jones U.S. Real Estate Index is designed to track the performance of real estate investment trusts (REITs) and other companies that invest directly or indirectly in real estate through development, management, or ownership, including property agencies.

Small Cap The Russell 2000 Index is a small-cap stock market index of the smallest 2,000 stocks in the Russell 3000 Index, which is made up of 3,000 of the largest U.S. stocks.

EM Equity The MSCI Emerging Markets Index captures large and mid-cap representation across 26 Emerging Markets (EM) countries.

High Yield The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed rate corporate bond market.

Large Cap The S&P 500 Index is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or the NASDAQ Stock Market.

Commodities The S&P GSCI Index is one of the most widely recognized benchmarks that is broad-based and production weighted to represent the global commodity market beta.

DM Equity The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the US and Canada.

Fixed Income The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.