|
Simple example
illustrating the timing effect
|
Year |
Fund |
Fund Return |
Timing Portfolio Value |
Average Weighted Portfolio |
|
1994 |
I |
7.50% |
$107,500.00 |
$107,600.00 |
|
1995 |
C |
37.41% |
$147,715.75 |
$115,777.60 |
|
1996 |
C |
22.85% |
$181,468.80 |
$124,576.70 |
|
1997 |
C |
33.17% |
$241,662.00 |
$134,044.53 |
|
1998 |
C |
28.44% |
$310,390.67 |
$144,231.91 |
|
1999 |
S |
35.49% |
$420,548.32 |
$155,193.54 |
|
2000 |
F |
11.67% |
$469,626.31 |
$166,988.24 |
|
2001 |
F |
8.61% |
$510,061.14 |
$179,679.35 |
|
2002 |
F |
10.27% |
$562,444.41 |
$193,334.98 |
|
2003 |
S |
42.92% |
$803,845.56 |
$208,028.44 |
TSP historical rates of return by fund |
Which portfolio
would you prefer?
Obviously timing results cannot predict with this level
of accuracy, but this example illustrates the power of this
concept.
Undertaking this strategy is rewarding but does require
weekly monitoring of your positions. Most people can
accomplish this in a few minutes a week with the Sector
Timing Report |