In Diehards Conversations #52817, reply 10, Larry Swedroe mentioned taking REIT and commodities away from equity allocation because they are separate asset class. My target portfolio has 10% REIT and 5% commodities within the equity allocation, as shown in (A):
25% fixed income
|—— 85% equity
|—— 10% REIT
|—— 05% commodities
If I take out REIT and commodities to form separate asset class, it will look like (B). The 21% fixed income vs 64% equity in (B) still maintain the target of 25% fixed income vs 75% equity ratio in (A).
21% fixed income
If I calculate the bond:equity ratio in (A) according to the way in (B), the ratio is 28:72 [72 = (75*0.85)/(75*0.85+25)]. This is not much different from the original 25:75 ratio in (A). I just need to be aware of the higher fixed income allocation when doing rebalancing. I think I will stick to (A) and save my time in updating my spreadsheet, again.