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In this podcast, we look at how you can increase your returns without increasing the overall risk to your portfolio. I call it the asset class swap, and it’s incredibly easy to do. Here’s how it works.

From time to time an asset class becomes significantly overvalued or undervalued. This happened last year with REITs. The Vanguard U.S. REIT index fund (VGSLX) was up more than 30% in 2014 and its P/E soared to more than 40. In contrast, Vanguard’s global REIT fund (VGRLX) was up less than 3% and had a P/E under 15.

At the start of the year, 10% of my portfolio was in REITs. Fifty percent of this allocation was in the Vanguard U.S. REIT fund, and 50% was in the global REIT fund. Because of the valuations of each of these investments, I transferred the money in the U.S. REIT over to the global REIT.

My asset allocation hadn’t changed. I still had 10% of my portfolio in REITs. But now it was all in a global REIT fund. The decision wasn’t based on a prediction of future prices. It was based entirely on valuation.

So far it has paid off. The U.S. REIT fund is off 1.72% this year, while the global fund is up 7.52%.

Author Bio

Total Articles: 1080
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments



If your Asset Class Swap (perhaps you should call it Global Rebalancing?) was effective for REITs, I would assume you would immediately examine all the other asset classes you hold for similar opportunities.

Have you done so? If not, why not?

Thanks for your podcasts! I love the way you clearly and calmly help us understand personal finance. And I particularly love the way you use your own investments as helpful examples.

George Cohen says:

Rob–I like this simple idea–I might call it the “Asset Class Shuffle” for a little swagger, but it’s a good idea.
Q–Are there any more recent asset shuffles?

I use Vanguard & other ETs, but what other vanguard funds do you hold, in what proportion,
if you care to share?
(Dan Wiener has a longterm Vanguard newsletter which has a few portfolios but I think they can be improved upon).

Thanks, George of Berkeley

Rob Berger says:

George, that’s really the only asset class shuffle I’ve made recently. I tend to wait until asset classes are significantly mis-priced.

Arthur Gravitz says:

You actually LOST money because you had to pay U.S. and state tax on the built in gain.

Instead of selling, you should have bought more of the Global reit.

Rob Berger says:

Arthur, I don’t own REITs inside taxable accounts. So there were no tax consequences from the trade.