Realistic Portfolio Allocation Decision-Making for the Small U.S. Retail Investor

Abstract

This study introduces new domestic mixed-asset and international equity securities that allow for exact portfolio replication even by small U.S. retail investors. Using these new series, various return characteristics are examined. Finally, three sets of mean-variance analyses are conducted: a domestic equity sector-only portfolio, a domestic mixed-asset portfolio, and an international mixed-asset portfolio. Real estate warrants inclusion to varying degrees in all three portfolios. International equity inclusion was also demonstrated.

Keywords: International real estate, portfolio analysis, retail investor