12/20/2010

Major asset trends are critical to tactical asset allocation strategies such as our Tactical Asset Allocation. We track the trends weekly.

Last week, municipal bonds (MUB) had the strongest recovery. Credit bonds (investment grade bonds, CFT, CIU, LQD) also recovered some. With Bill Gross at PIMCO putting his own money to beaten down closed end bond funds (see here), investors were encouraged and flocked back to bonds.

The most noticeable trend shuffling is that commodities were strong and inched up to the top five spots. Among other risk assets, U.S. stocks continued to be strong while investors should pay attention to emerging market stocks' performance: they were lackluster in the past several weeks due to inflation concerns in China and India as well as the Korean peninsula tension.

click to enlarge

labels:investment,

Symbols:AGG,BND,BWX,CFT,DBA,DBC,EEM,EFA,EMB,FRN,GLD,GSG,HYG,ICF,IEF,IWM,IYR,JNK,MBB,MUB,PCY,PHB,RWX,SHV,SPY,TLT,VEU,VNQ,VTI,VWO,

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12/16/2010

As bond markets continue their turbulence, from Dividend Stock ETF Trend table on MyPlanIQ 360 Degree Market View, one can clearly see that in the last week, U.S. stock ETFs have outperformed S&P 500 (SPY). U.S. REITs (IYR), however, has become a loser during this yield market unrest. 

This is not surprising as  currently, high yield ETFs have similar or greater yields than 10 year treasury yields. For example, SPDR S&P Dividend (SDY)'s one year yield is about 3.33% compared with 10 year treasury rate 3.49%. In fact, Dow Jones Select Dividend Index fund DVY has even higher annual dividend: 3.56%. As stocks are outperforming bonds, high dividend ETFs are logical choices for yield seekers. 

From the following trend table, one can see US high dividend ETFs are ranked in the top spots (with an exception of international REITs RWX). The preferred stock ETF, treated as a close cousin of bonds, is pushed to the bottom spot.

Looking forward, high quality dividend ETFs are good places to be: with so many companies being cash rich these days, dividends are safer than the coupons from bonds.

labels:investment,

Symbols:IYR,RWX,EEM,PID,IDV,PEY,EFA,SPY,SDY,PFF,DVY,FVD,VYM,VIG,

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12/14/2010

Samsung is an aggressive and innovative company. Samsung Electronics Co., Ltd. engages in the manufacture and sale of semiconductors, LCDs, telecommunication products, and digital media products. It has operations in Korea, the Americas, Europe, Asia, and China. The company was founded in 1938 and is based in Seoul, South Korea

Their 401K plan is one of the best we have seen and demonstrates employee concern. This report reviews Samsung 401K plan. We will discuss the investment choices and present the plan rating by MyPlanIQ.

Plan Review and Rating

Samsung 401K's plan consists of 33 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Emerging Market Equity, REITs, Fixed Income.

With 11 target date funds, there are plenty of alternatives for those who don't want to mess with investments but there is also plenty of upside for those who do.

The list of minor asset classes covered:

Diversified Emerging Mkts: EEM, GMM, PXH, DEM, SCHE
Equity Precious Metals: DBP
Foreign Large Blend: EFA, VEU, GWL, PFA
Global Real Estate: IFGL, RWX
High Yield Bond: HYG, JNK, PHB
Intermediate-term Bond: AGG, CIU, BIV, BND
Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
Large Growth: IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG
Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV
Mid-cap Blend: IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV
Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
Natural Resources: IYM, IGE, VAW, XLB, XME, PYZ, DBN, RTM, UYM
Retirement Income:
Short Government: SHY, SHV, VGSH, PLK, USY
Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
Small Value: IJS, IWN, JKL, VBR, DSV, PWY, RZV, UVT
Target Date 2000-2010: TZD
Target Date 2011-2015: TZE
Target Date 2016-2020: TZG
Target Date 2021-2025: TZI
Target Date 2026-2030: TZL
Target Date 2031-2035: TZO
Target Date 2036-2040: TZV
Target Date 2041-2045:
Target Date 2050+:

As of Dec 13, 2010, this plan investment choice is rated as great based on MyPlanIQ Plan Rating methodology that measures the effectiveness of a plan's available investment funds. It has the following detailed ratings:

Diversification -- Rated as above average (80%)
Fund Quality -- Rated as great (97%)
Portfolio Building -- Rated as great (98%)
Overall Rating: great (92%)

Keys to the success of this portfolio

• US funds ideal balance in terms of the number of range of choices
• Strong fixed income choices
• Five asset classes in total
  

Current Economic and Market Conditions

With the current market uncertainties with bonds and stocks going through continuous shifts, it is even more critical to properly diversify and respond to market changes.

The Samsung 401K plan is well positioned to provide strength in equities and fixed income classes and to provide a great platform for building a high performance portfolio.

MyPlanIQ offers two asset allocation strategies: strategic and tactical asset allocation strategies (SAA and TAA for participants in Samsung 401K).

Strategic Asset Allocation is based on well known modern portfolio theory and its key features include: diversification, proper fund selection and periodically re-balancing.

Tactical Asset Allocation works on a diversified array of assets provided by funds in a plan and adjusts asset mixes based on market conditions such as asset price momentum utilized by TAA.

Portfolio Discussions

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical 5 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

US Equity: SPY or VTI
Foreign Equity: EFA or VEU
REITs: IYR or VNQ or ICF
Emerging Market Equity: EEM or VWO
Fixed Income: AGG or BND

Performance chart (as of Dec 13, 2010)

Performance table (as of Dec 13, 2010)

The five asset SIB is one of the best performing benchmarks and over the long haul, the Samsung plan has beaten the benchmark although in recent months, the five core SIB has slightly outperformed the Samsung 401K plan.

Currently US Equity, Commodities and Emerging Market are doing well. US Equity and Emerging Market are available to Samsung 401K participants.

In summary, Samsung are to be congratulated in putting together such a good plan for the US employees. Those who don't want to get involved with any investing decisions have several choices and those who want to get involved will certainly be rewarded for their efforts.

labels:investment,

Symbols:SPY,VTI,EFA,VEU,EEM,VWO,IYR,VNQ,ICF,AGG,BND,HYG,JNK,PHB,CIU,BIV,IYM,IGE,VAW,XLB,XME,PYZ,DBN,RTM,UYM,GWL,PFA,IVE,IWW,JKF,VTV,ELV,PWV,RPV,SCHV,TZD,IFGL,RWX,TZE,TZG,TZI,TZO,TZL,TZV,IVV,IYY,IWV,VV,DLN,RSP,SCHX,SHY,SHV,VGSH,PLK,USY,IVW,IWZ,JKE,VUG,ELG,QQQQ,RPG,

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12/13/2010

Last week, we continued to observe major weakness in fixed income markets. From our Market View, one can see that most bond ETFs underwent 1-2% loss. Municipal bonds and intermediate term treasuries were the biggest losers. Municipal bonds were avoided due to the concerns on the dire financial situations of state and local governments, let alone the extreme low yields to begin with. Investors were also worried about longer term bonds, including treasuries and corporate bonds based on inflation outlook.

Based on the major asset price trends in the following table, other noticeable developments include:

1. US Stocks were very strong, now placed in the third spot among all other major asset classes.
2. US REITs continued their weakness, losing 1.3% last week and were out of top five spots.
3. all fixed income asset classes were at the bottom of the ranking: the lower the perceived risks based on conventional wisdom, the lower their rankings were.
4. Broad base commodities were relatively intact while gold continued its correction.

The takeaway is that investors continued their strong risk appetite. Among risk assets, US stocks stood out as worries in European debt markets and inflation pressure in emerging markets dampened demands on those assets.

labels:investment,

Symbols:AGG,BND,BWX,CFT,DBA,DBC,EEM,EFA,EMB,FRN,GLD,GSG,HYG,ICF,IEF,IWM,IYR,JNK,MBB,MDY,MUB,PCY,PHB,QQQQ,RWX,SHV,SLV,SPY,TLT,VEU,VNQ,VTI,VWO,

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11/30/2010

Asset trends provide insights into underlying economic and market segments and are critical to tactical asset allocation strategies. We use ETFs that represent the asset class indices.

Last week, as the European debt situation started to unfold, risk assets continued their downtrend while fixed income recovered somewhat (especially in safer bonds such as investment grade credit bonds), reflecting a reduced risk appetite. It is another watchful week. Given the uncertainty in world economics, investors should be in a heightened alert state on the markets.

click to enlarge

The riskiest asset, frontier market stocks, remains in the top spot while emerging market stocks had a much bigger drop than the U.S REITs.

Inflation in China, the Korean peninsula tension and the Irish debt problem were some major reasons behind the drops of emerging market stocks and international developed stocks.

Municipal bonds recovered a bit while international treasury bonds had another decrease mostly due to the debt situation and dollar's strength. Treasury bills remained unchanged, which is expected. Emerging market bonds had a little drop, but are still pointing to an up trend.

In conclusion, the market continued its gyrations, trying to figure out the next trend. It might or might not be a trend turning point. Since the world economics is not out of the woods yet, it pays to keep monitoring events closely.

labels:investment,

Symbols:AGG,BND,BWX,CFT,DBA,DBC,EEM,EFA,EMB,FRN,GLD,GSG,HYG,ICF,IEF,IWM,IYR,JNK,MBB,MUB,PCY,PHB,RWX,SHV,SPY,TLT,VEU,VNQ,VTI,VWO,

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11/29/2010

11/23/2010

11/15/2010

11/12/2010

11/12/2010

11/08/2010

10/24/2010

10/19/2010

10/08/2010

10/08/2010

09/17/2010

12/07/2010

Retirement investing is an integral part of American personal finance. With $8.9 trillion parked in over 800 thousand retirement plans such as 401K, millions of Americans will increasingly rely on their 401K accounts to fund their future retirement needs. This article is part of a series of case studies we are conducting for various 401K plans. In this article, we will discuss how participants in TD Ameritrade Commission Free ETFs can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today’s market environment.

TD Ameritrade (Ticker: AMTD) offers 100+ commission free ETFs for its clients. The main restriction is that customers have to hold these ETFs for more than 30 days to make such trades eligible for commission free.

In this plan, the minimum holding period for each fund is set to be 1 month, which is equivalent to 30 days.

See the official TD Ameritrade offering for more details.

TD Ameritrade Commission Free ETFs's 401K plan consists of 101 funds. These funds enable participants to gain exposure to 6 major assets: US Equity , Foreign Equity , Commodity , Emerging Market Equity , REITs , Fixed Income . The list of minor asset classes covered:

Commodities Broad Basket: GSG , DBC
Conservative Allocation: AOK
Diversified Emerging Mkts: EEM , GMM , PXH , DEM , SCHE
Emerging Markets Bond: PCY
Equity: VTI , VT
Europe Stock: IEV , VGK , PEF , DEB
Foreign Large Blend: EFA , VEU , GWL , PFA
Foreign Large Growth: EFG
Foreign Large Value: EFV , PID , DWM
Foreign Small/mid Growth: IFSM , VSS , SCHC
Foreign Small/mid Value: SCZ
Global Real Estate: IFGL , RWX
High Yield Bond: HYG , JNK , PHB
Inflation-protected Bond: TIP
Intermediate Government: IEI , VGIT , ITE
Intermediate-term Bond: AGG , CIU , BIV , BND
Japan Stock: EWJ , JPP , PJO , DXJ
Large Blend: IVV , IYY , IWV , VTI , VV , SPY , DLN , RSP , SCHX
Large Growth: IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG
Large Value: IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV
Latin America Stock: ILF , GML
Long Government: TLT , TLH , IEF , EDV , VGLT , TLO , PLW
Long-term Bond: CLY , LQD , BLV , VCLT
Mid-cap Blend: IJH , IWR , JKG , VO , MDY , EMM , PJG , DON , EZM , MVV
Mid-cap Growth: IJK , IWP , VOT , EMG , PWJ , RFG , UKW
Mid-cap Value: IJJ , IWS , JKI , VOE , EMV , PWP , RFV , UVU
Moderate Allocation: AOM
Multisector Bond: AGG , GBF , BND , LAG
Muni National Interm: ITM
Muni National Long: MUB , TFI , PZA , MLN
Muni National Short: SUB , SHM , PVI , SMB
Pacific/asia Ex-japan Stk: EPP , AAXJ , GMF , PAF , DND
Real Estate: IYR , ICF , VNQ
Short Government: SHY , SHV , VGSH , PLK , USY
Short-term Bond: CSJ , BSV , VCSH
Small Blend: IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA
Small Growth: IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK
Small Value: IJS , IWN , JKL , VBR , DSV , PWY , RZV , UVT
Specialty-real Estate: RWR , PSR , URE
World Allocation: AOR , AOA
World Bond: IGOV , BWX , WIP
World Stock: IOO , VT

As of Dec 3, 2010, this plan investment choice is rated as above average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

Diversification -- Rated as great (97%)
Fund Quality -- Rated as below average (21%)
Portfolio Building -- Rated as great (87%)
Overall Rating: above average (70%)

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical 6 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

US Equity :( SPY or VTI )
Foreign Equity :( EFA or VEU )
Commodity :( DBC )
Emerging Market Equity :( EEM or VWO )
REITs :( IYR or VNQ or ICF )
Fixed Income :( AGG or BND )

Performance chart (as of Dec 3, 2010)

Performance table (as of Dec 3, 2010)

Currently, asset classes in US Equity ( SPY , VTI ) and Emerging Market Equity ( EEM , VWO ) are doing relatively well. These asset classes are available to TD Ameritrade Commission Free ETFs participants.

To summarize, TD Ameritrade Commission Free ETFs plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. Currently, the tactical asset allocation strategy indicates overweighing on US Equity and Emerging Market Equity funds.


Disclosure:

Symbols: , SPY , VTI , EFA , VEU , EEM , VWO , IYR , VNQ , ICF , AGG , BND , DBC , VT , HYG , JNK , PHB , AOM , AOK , CIU , BIV , ITM , SUB , SHM , PVI , SMB , AOR , AOA , MUB , TFI , PZA , MLN , EFG , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , SCZ , EFV , PID , DWM , IFGL , RWX , IGOV , BWX , WIP , RWR , PSR , URE , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IOO , SHY , SHV , VGSH , PLK , USY , TLT , TLH , IEF , EDV , VGLT , TLO , PLW , IEV , VGK , PEF , DEB , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJJ , IWS , JKI , VOE , EMV , PWP , RFV , UVU , IJH , IWR , JKG , VO , MDY , EMM , PJG , DON , EZM , MVV , IFSM , VSS , SCHC , IJS , IWN , JKL , VBR , DSV , PWY , RZV , UVT , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , GMM , PXH , DEM , SCHE , CLY , LQD , BLV , VCLT , GBF , LAG , PCY , CSJ , BSV , VCSH , IEI , VGIT , ITE , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , ILF , GML , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , TIP , EPP , AAXJ , GMF , PAF , DND , EWJ , JPP , PJO , DXJ , GSG

12/07/2010