How To Track Your Asset Allocation

Knowing your asset allocation is an important step to control and manage your investments. In a perfect world, you should be able to easily calculate and see your asset allocation. Simply press the button and voila! The reality is not that simple. Not all accounts you may have easily work together and that usually leaves you in charge of figuring out your asset allocation across all your accounts.

Consolidate Your Account Statements

Sounds simple? It can be but it can also require some work. If your finances have evolved to multiple accounts with different investments, it’s probably not that simple. Accounting software can greatly ease the pain of consolidating your statements but not all of them are online. For starter, not all investment providers allow you download statements not to mention that not all investments are publicly tracked openly. For examples, my company RRSP plan has mutual funds that aren’t trackable trough public markets. They are proprietary to the company and often times catered for the company they provide the service for.

With that said, the solution for me is manual tracking with Google Spreadsheet. A spreadsheet is perfect for the job as you can leverage its graphing capabilities and the math functions to group your investments under the appropriate allocation. You just need to build a table to categorize and track the information you need for the asset allocation graphs you want.

I’ll warn you up front that mutual funds are not easy to track within many other accounts. The fund company’s report will easily report your allocation for what you hold with them but you may have to do a bit of work to fit it within the different asset allocation graphs you desire. As mutual funds hold many other investments such as cash, bonds or equities, you may have to either classify the mutual fund as one asset or group the holdings within the fund.

The Different Asset Allocation Graphs

There is more than one way to look at your allocation. Some may be more important than others depending on your investments but it’s nice to see your portfolio from different angles. If you use a spreadsheet, it’s pretty easy to classify your allocation differently as shown below.

Just as an example, I am showing my dividends investment allocation below. The first graph represents my overall portfolio allocation otherwise it represents the dividend producer of my portfolio.

Allocation By Investment Types

To my surprise, I thought my fixed income ratio would have been higher. I put it together just recently and while I thought it was too high, seeing it this way changes my perception. If I look at my company RRSP account, it’s almost 60% but when I look at it across my entire portfolio, 31% isn’t too high.
How To Track Your Asset Allocations

Allocation By Sector

The asset allocation by sector allows you to see if you are more exposed to cyclical or risky companies. For example, I am overweight in the energy sector and it’s compounded by the fact that my holdings are only in one company. I have a plan to reduce my exposure here, I just have not pulled the trigger yet.
How To Track Your Asset Allocations

Allocation By Location

As the saying goes, Canada represents only a small fraction of the economic pie of the world. To benefit from the world economies, it’s often recommended to hold international investments. Personally, I understand Canada and the U.S. and that’s enough for me. I prefer to invest in a North American conglomerate that does business all over the world to get more international exposure. In any case, a graph by allocation can tell you if you are increasing your risk and may indicate that it is time to rebalance.
How To Track Your Asset Allocations

Allocation By Capitalization

Depending on your investment strategy, market capitalization may give you a hint as to how you want to rebalance your portfolio. I am quite happy with my current ratio here. My guidelines for the graph were:
  • Large Cap > 10B$
  • Mid Cap > 2B$
  • Small Cap < 2B$
Feel free to set your own guidelines.
How To Track Your Asset Allocations

Reviewing Your Asset Allocation

My primary focus in reviewing my asset allocation is to identify potential risks and future rebalancing. I would recommend you review your allocation at least once per year, and if possible, twice. One of the benefits of rebalancing based on percentage is that it indicates when one allocation does better than the other and it forces you to take your profits and redirect them towards your less performing investments.

Readers: How do you track your asset allocation? What do you look for?

17 Responses to "How To Track Your Asset Allocation"

  1. Hi everyone,
    As a dividend investor and in order to have more canadian stocks in my portofolio ,i am about to choose 2 stocks between four which are :TA.TO,NWF.TO ,ENF.TO ,AGBF-B.TO.
    Please give your thoughts
    Have a nice day

  2. I was using this post as a guideline in analyzing my portfolio. Was wondering which sector a couple of companies would fall under?
    Russell Metals and Exchange Income

  3. The Passive Income Earner · Edit

    A quick look in Globe Investor online and the classification comes out as "Merchandising and Lodging" for Russell Metals and "Transportation and Environmental Services" for Exchange Income.

    Now, you can organize it differently. For example, BCE comes up as Utilities but I classify it as Telecoms. My utilities are all energy utilities providing energy to consumers such as electricity and natural gas.

  4. You always have great graphs to get your point across. We share a similar investment type when comparing to my RRSPs.
    In fact my fixed income allocation fell to 25% with the recent market run, I am gonna have to rebalance and bring it back up to 35% this time.

  5. TPIE, I recently forced myself to determine asset allocation by writing a post on it, and boy howdy was it a lot of work. The obvious benefit is that now I know better where our money is stashed.

  6. Once you’ve determined the asset allocation that is best for you, you have to implement it via the investments you choose for your portfolio. At this point, the most important question you have to answer is whether you are going to take an active or a passive approach to investing. In a nutshell, the active investor believes that he or she can regularly generate (or choose fund managers who can generate) returns that are above the returns generated by some benchmark portfolio. In contrast, the passive (or index) investor wants only to match those benchmark returns at the lowest possible cost.

  7. I have to agree, diversifying is always best as it provides the less minimal risk when investing. Passive income is always good too. I recently asked my trader at scottrade to move my portfolio to a different broker though, didnt like them all to much 🙁

  8. We absolutely love your blog and find most of your post’s to be what precisely I’m looking for. Does one offer guest writers to write content for yourself? I wouldn’t mind creating a post or elaborating on a number of the subjects you write related to here. Again, awesome weblog!

  9. RE: Asset (Sector) Allocation

    I am seeking a spreadsheet template to track my sector allocations.

    The tool used for this article and its output would be perfect. I would appreciate getting some links.

      1. Hi,

        Did you happen to make this already? Been looking for a good tool to track my sector allocations but all the tools seem to only track asset class allocations which is not specific enough for me. Any help or hints towards a good tool would be greatly appreciated 🙂

        Best regards.

  10. ” One of the benefits of rebalancing based on percentage is that it indicates when one allocation does better than the other and it forces you to take your profits and redirect them towards your less performing investments.”

    Many guides say that it is a typical beginner’s mistake to sell the best stocks from the portfolio and leave the worst. And I kind of agree, although I see many experts also say the same as what you said.

    Any way. That is how you can end up with only bad or mediocre stocks in your portfolio, as you would have sold all the best ones. As you continue down this path, you go more and more down…

    I’m not saying you are completely wrong, but I think this point needs to be made here. When you are re-balancing your portfolio, perhaps don’t sell the best stocks… but buy more of them if they are still going up…? Sell the stock if the trend of the stock turns downwards!

    You should ride the trend for as long as it’s going up. Use for example the 200-day simple moving average technical analysis for this. Only sell the best stocks from your portfolio “if the big ship has really turned”. Look at buying them back when the same analysis shows a turn back up.

    Why do you want to sell your best stocks? Why don’t you balance the portfolio buy buying stocks of companies that you don’t yet own, but think they could be great? And sell the ones that have factually performed the worst…

    Anyway. Thanks for a great website! I’m reading through the articles as quickly as I can. Great stuff.

    1. @Aki

      One point to note is that you don’t sell your full position but rather take some profits. So you still have the great stock. Now, I would assume that really bad stocks don’t make it in your portfolio and all of them are worth holding for the long term. It’s also another way to diversify rather than piling up on just your best performers for the moment. The reality is that in the span of 10 years, all stocks will perform differently so it should average out.


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