What are the HiddenLevers Benchmarks?

In order to effectively measure the performance of a portfolio it is helpful to have a benchmark to compare it against.  It is even more helpful if you have a benchmark that reflects the specific characteristics of the mix of holdings in a portfolio. Typically, measuring against a base benchmark such as the S&P 500 alone may give an unrealistic view of how successfully or unsuccessfully a portfolio could be in comparison with a different strategy and a different mix of holdings.

When measuring how successful one of those strategies is it is beneficial to measure against a benchmark for the typical projected performance of a similar mix of holdings.  With this in mind, HiddenLevers has produced a range of benchmarks based on ratios of SPY (the SPDR S&P 500 ETF) and AGG (iShares Core US Aggregate Bond).  These range from the ultra-aggressive HL Equity Benchmark (100% SPY), through the aggressive HL 80/20 (80% SPY and 20% AGG) and 70/30 (70% SPY and 30% AGG) Benchmarks, to the more cautious HL 60/40 (60% SPY and 40% AGG) and 50/50 (50% SPY and 50% AGG), to the conservative HL 40/60, 30/70, 20/80 Benchmarks (40%:60%, 30%:70% and 20%:80% SPY:AGG respectively), and finally the HL Bond Benchmark (100% AGG).

When a portfolio is created in HiddenLevers there is the option to select which HiddenLevers benchmark is preferred for that portfolio.  If that is left blank then the system calculates the aggregate percentge of stocks and bonds in the portfolio and matches it to the closest HiddenLevers benchmark.