Fund Definitions – Portfolio Charts (2024)

When learning to bake a cake you first have to understand the ingredients. Portfolio Charts focuses on low-cost index funds (sometimes called “trackers”) that provide convenient exposure to a wide variety of stocks, bonds, and real assets. Here you can learn what the various acronyms mean, study how index funds work, and identify a good option suitable for your own personal asset allocation.

Categories /// Regions /// Asset Classes /// Funds

Regions

Portfolio Charts is a little different from most investing sites because it is not solely focused on US markets. The calculators include domestic stocks and bonds from your home country as well as a variety of options for international stocks and global real assets. In addition, all numbers are automatically translated to domestic currency and inflation to track local purchasing power. The countries and regions covered include:

AUS: Australia

CAN: Canada

Asset Classes

Portfolio Charts data tracks the most common high-level asset class definitions in the financial industry. So while individual index funds may vary and you should always check the contents of any fund you purchase, if it is a passive index that uses these terms then the tools here should model the asset reasonably well.

Domestic and International Stocks

Total Stock Market : The entire cap-weighted market with no size or value filter applied

Large Cap: The largest 85% of the market sorted by company size. Consistent with most real-world index funds, the large cap data includes both large and mid-sized companies.

Small Cap: The smallest 15% sorted by company size (excluding the very smallest 2% that qualify as micro caps)

Value:The cheap half of the market sorted by book-to-market

Growth:The expensive half of the market sorted by book-to-market

Blend:The total market segment with no value or growth filter applied. Note that this differs from the Morningstar definition, which classifies “blend” as stocks that are neither growth nor value. Portfolio Charts uses the definition preferred by most index funds.

Mix and match the size and valuation filters and you’ll get seven different types of stock index funds. I use acronyms to save space, but here are the detailed definitions:

	TSM : Total Stock Market
LCV : Large Cap Value	LCB : Large Cap Blend	LCG : Large Cap Growth
SCV : Small Cap Value	SCB : Small Cap Blend	SCG : Small Cap Growth

Bonds

Portfolio Charts bond data tracks the returns of the highest-grade government treasuries, bunds, or gilts with very little default risk. Every bond fund is a little different, but the most important thing to look for is the weighted average maturity of the fund.

LT: Long Term — Matures in 10-30 years

IT:Intermediate — The data varies a bit based on the most common local definition driven by fund availability. In the US, IT bonds mature in 3-10 years. In Europe, it’s 3-7.

ST: Short Term — Matures in 1-3 years

BIL: Tbills / Cash — Matures in < 3 months

10Y : Ten Year bonds — This tracks the performance of fixed 10-year bonds in a given country. 10-year bonds generally fall somewhere between intermediate and long in terms of average maturity and can be a decent substitute for either. The recommended funds are not single-maturity, but their weighted average maturities are close to 10 years and the performance should be reasonably similar.

While the data does not explicitly contain corporate bonds, most high-grade corporate bonds will have very similar returns to government bonds of the same average maturity. This also applies to popular total bond market funds.

Europe bonds represent the common currency Euro area only. The numbers use all credit ratings and changing EU composition as defined by the European Union. Numbers prior to the Euro are measured in ECU.

All bond funds on Portfolio Charts are unhedged.

Real Assets

Real Assets are a special subset of investments that have a tangible physical component to their value. They are often global and are independent of any single market.*

COM: Commodities

Commodity funds invest in a wide variety of items such as energy, agriculture, metals, livestock, and timber through the use of futures, stocks, and other financial instruments.

REIT: Real Estate Investment Trusts

Real estate investment trusts are companies that own or finance income-producing real estate including residential mortgages, commercial properties, and even timber land.

(*) REIT data is based on the United States REIT market, although a good global REIT fund is also a good option. Because the US comprises over 60% of a typical global REIT fund, the numbers should be reasonably close in normal portfolio percentages.

GLD: Gold Bullion

Gold funds track the price of physical gold bullion,NOTgold miners. In fact, the numbers are the exact same if you purchase bullion coins or if you buy a gold ETF. There’s also a gold ETF called GLD, but the asset can work with any gold fund.

Funds

Index funds are the real-world financial instruments you purchase to build a portfolio. There are two types of index funds — ETFs, and index-tracking mutual funds. The main difference to the end user is how they are traded. ETFs are priced like stocks and are traded in real-time, while mutual funds are more like accounts and usually settle at the end of the day. But as long as they are tracking the same index, the performance should be very similar.

Fund Finder

Portfolio Charts offers its own tool called the Fund Finder to help investors identify the cheapest combination of ETFs to build any portfolio. The Fund Finder contains recommendations from many of the largest ETF issuers around the world. These include:

Vanguard
iShares
SPDR
Schwab
Xtrackers
Amundi
Lyxor
UBS
BMO
Franklin Templeton
and more

The list is selective to only show fund options that I believe accurately reflect the data shown on the site. But it’s also NOT all-inclusive of every good fund out there. So just because something is shown does not mean you should buy it, and just because something is not on the list does not make it a poor option. Think of the list as a starting point for your own research, and plan responsibly.

Other fund resources I like

ETF Database: An excellent resource for ETFs available to US-based investors.

justETF: A full list of ETF options for European investors. Be sure to check the country setting at the top of the page.

Fund Definitions – Portfolio Charts (2024)

FAQs

What is the 5 portfolio rule? ›

The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.

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What are funds in a portfolio? ›

A portfolio is a collection of funds (or sometimes other investments) owned by an individual. A fund is a pool of investments (usually shares) that is managed by a professional fund manager. Individual investors buy "units" in the fund and the fund manager invests the money directly in shares and bonds.

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What is the 3 portfolio rule? ›

The three-fund portfolio consists of a total stock market index fund, a total international stock index fund, and a total bond market fund. Asset allocation between those three funds is up to the investor based on their age and risk tolerance.

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What are the four basic categories of funds list with definition? ›

There are four broad types of mutual funds: Equity (stocks), fixed-income (bonds), money market funds (short-term debt), or both stocks and bonds (balanced or hybrid funds).

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What is the 10 5 3 rule of investment? ›

Understanding the 10-5-3 Rule

The 10-5-3 rule is a simple rule of thumb in the world of investment that suggests average annual returns on different asset classes: stocks, bonds, and cash. According to this rule, stocks can potentially return 10% annually, bonds 5%, and cash 3%.

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What is the 70 30 portfolio strategy? ›

The 70/30 portfolio targets a 70% long term allocation to equities and 30% in all other asset classes – the actual portfolio allocation at any point in time will fluctuate to reflect prevailing investment opportunities.

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How many funds is too many in a portfolio? ›

You should therefore only keep as many funds in your portfolio as you're comfortable monitoring. For example, if you hold 10 or 20 different funds, you'll need to keep a close eye on the changing value of all these investments to make sure your asset allocation still matches your investment goals.

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What are funds vs stocks? ›

Stocks represent shares in individual companies while mutual funds can include hundreds — or even thousands — of stocks, bonds or other assets. You don't have to choose one or the other, though. Mutual funds and stocks can both be used in a portfolio to help you grow your wealth and meet your financial goals.

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How do you explain fund of funds? ›

Sometimes known as a multi-manager investment, a fund of funds is an investment fund made up of a portfolio that contains different portfolios of other funds. In other words, it is a pooled investment fund that acts as an alternative to investing directly in securities such as stocks and bonds.

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What is 80 20 rule in portfolio management? ›

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth. On the flip side, 20% of a portfolio's holdings could be responsible for 80% of its losses.

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What is the 60 40 portfolio rule? ›

The “60/40 portfolio” has long been revered as a trusty guidepost for a moderate risk investor—a 60% allocation to equities with the intention of providing capital appreciation and a 40% allocation to fixed income to potentially offer income and risk mitigation.

What are the major four 4 assets of an investors portfolio? ›

There are four main asset classes – cash, fixed income, equities, and property – and it's likely your portfolio covers all four areas even if you're not familiar with the term.