 |
Vanguard ETF: |  |
7.4%* |
|
Diversified Core: | |
8.1%* |
|
Six Core Asset ETFs: | |
7.3%* |
Articles on WIP
- Using Morningstar's Top Bond Manager to Build a Low Stress Portfolio
11/19/2010
Conventional wisdom is that risk based assets as the main engine of portfolio growth. While this remains true in the long run, recent history has caused us to question some of the concepts we thought sacrosanct.
We present here a very simple investment strategy -- pick the top five bond managers and own the top performing bond fund which you review on a monthly basis (or quarterly if you prefer).
Every year you review the list of top performers and you update your list of funds to maintain only the top performers in your list. We will call this Best of Bonds (BoB).Bond Fund
Ticker
PIMCO Total Return
TCW Total Return Bond
Western Asset Core Bond
Metropolitan West Total Return Bond
Loomis Sayles Bond
Dodge & Cox Income
FPA New Income
We built a portfolio of these funds and every month we scored the funds and selected the best fund.
We will then compare this with a Five asset class SIB (Simpler is Better) that has
index funds for five different asset classes and is an ideal benchmarking vehicle.
Portfolio Performance ComparisonPortfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe P Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year`s Funds Monthly 9% 194% 12% 199% 11% 165% Five Core Asset Index Funds Tactical Asset Allocation Moderate 8% 58% 7% 57% 12% 98% Five Core Asset Index Funds Strategic Asset Allocation Moderate 13% 100% 2% 9% 7% 34%
So BoB delivers very reasonable returns over the period -- comparable with a five asset class portfolio using tactical asset allocation.
The benefit is going to be peace of mind -- or lack of volatility.
Comparison of Drawdown ratios between 5SIB TAA and BoB
This comparison of the drawdown ratios over the last decade between the SIB and BoB shows that BoB is going to be easier to live with.
We can also look at the BoB's transaction history
Compared to the Five SIB History
We can see from this that there has been less trading activity -- making it a lazier portfolio and easier to manage. Of course this is not guaranteed going forward.
Note that this is a simple strategy but it does not follow the classical diversification of risk based and fixed income assets.
In the next article we will look into the bond fund that is currently being held in this portfolio and compare it with the bond trends that track the movement of different bond styles.labels:investment,
Symbols:PCY,JNK,TLH,IEF,LQD,CIU,TIP,WIP,TLT,MBB,BWX,BND,MUB,CMF,NYF,CSJ,SHY,SHV,
- ETF Based Bond Trend Indicators For The Week of November 15
11/15/2010
Fixed income is a key asset class categories in portfolio building. The main risks are represented by long/intermediate/short maturity bonds and high yield (junk), credit bonds. These indices provide important insight into debt market conditions that are key to asset allocation strategies. MyPlanIQ tracks detailed weekly bond trend movement. We use ETFs that represent the bond classes. For more information, please visit MyPlanIQ 360 Degree Market View.
The Federal Reserve's low rate policy has driven down bond yields to historical low. The Fed's QE2 announced last week showed Fed's committed action to maintain a long period of low rates to stimulate the economy. Investors should take a note on the 20+ year treasury bonds that has had trouble recently: reflecting a belief that eventually, Fed's action will result in much higher inflation. International fixed income bonds are rising because of the US dollar weakness.
Description
Symbol
15-Nov Trend Score
Direction
8-Nov Trend Score
High Yield
JNK
5%
v
8%
Emerging Mkt Bonds
PCY
5%
v
9%
International Inflation Protected
WIP
4%
v
7%
Intermediate Treasury
IEF
3%
v
5%
International Treasury
BWX
3%
v
6%
Long Term Credit
LQD
3%
v
5%
Intermediate Term Credit
CIU
3%
v
4%
Inflation Protected
TIP
2%
v
4%
10-20Year Treasury
TLH
2%
v
4%
MBS Bond
MBB
1%
v
2%
US Total Bond
BND
1%
v
2%
Short Term Credit
CSJ
1%
v
1%
Short Term Treasury
SHY
0%
v
1%
Treasury Bills
SHV
0%
v
0%
New York Muni
NYF
0%
v
2%
20+ Year Treasury
TLT
-1%
v
1%
National Muni
MUB
-1%
v
2%
California Muni
CMF
-1%
v
1%
Top Five Indicators
There is weakness across the board without any indication of what is
Bottom Five Indicators
The worst performers are treasury bonds, especially in the 20+ year ones. Again, it is telling that investors definitely have a negative outlook in a long term for fixed income. Other bottom performers all have less risky nature, reflecting investors' chase for high yields and increasing risk appetite.
In conclusion, bonds in general continue to do well. Investors should keep an eye on such euphoria outlook and watch carefully on the possible turn that eventually will happen: exceptional low rates have to come with a price and can only sustain for so long.labels:investment,
Symbols:AGG,BND,SHV,SHY,IEF,TLH,TLT,TIP,WIP,HYG,JNK,PHB,CSJ,CIU,LQD,BWX,CMF,NYF,MUB,MBB,PCY,EMB,
- Retirement Income Portfolio Building Using ETFs and Asset Allocation Strategies
11/12/2010
Building a steady and safe income producing portfolio is paramount to retirees. High yield stocks, preferred stocks, convertibles and bonds are the basic building blocks for such portfolios. Research results indicate that blue chip stocks with high dividends, unlike highly volatile and low dividend or no dividend stocks (such as many high tech stocks and small company stocks), have produced comparable or even slightly higher returns with less risk in long term.
In this article, we present a high income investment plan (Retirement Income ETFs) that is based on asset allocation strategies. Both MyPlanIQ Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA) strategies are used to construct model portfolios.
This plan is designed for income producing purpose: high dividend (yield) stock ETFs are chosen for both US stocks and international stocks asset classes. We have decided to use general emerging market stocks ETFs (EEM or VWO) instead of some thinly traded high dividend emerging market stock ETFs. This situation will be changed once the high yield emerging market stock ETFs become more liquid and tradable.
The plan uses 34 ETFs that represent the following five key asset classes:
U.S. stocks: VIG, DVY, SDY, FVD, VYM, PEY, PFF
International stocks: PID, IDV
Emerging market stocks: EEM, VWO
Real Estate Investment Trusts (REITs): IYR, ICF, VNQ, RWX
Fixed Income:- US Fixed Income: HYG, LQD, VCLT, CIU, CORP, CSJ, VCSH, IEI, IEF, SHY, TLT, TIP, MBB, MUB, SHM
- International Fixed Income: BWX, EMB, PCY, WIP
Notice that preferred stocks PFF is classified under U.S. stocks.
We compared the back tested performances of the SAA and TAA moderate model portfolios with the corresponding SIB (Simpler Is Better) five core asset ETF portfolios. As of 11/9/2010, the performance is:Performance table (as of Nov 10, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Retirement Income ETFs Tactical Asset Allocation Moderate 16% 105% 8% 57% 12% 84% Retirement Income ETFs Strategic Asset Allocation Moderate 14% 108% 1% 5% 6% 28% Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate 15% 105% 8% 57% 16% 106% Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate 19% 146% 4% 16% 10% 42% From the above chart, one can see that since the portfolio inception (12/31/2000),the Retirement Income ETFs Strategic Asset Allocation Moderate has outperformed its corresponding Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate while in the meantime, the Retirement Income ETFs Tactical Asset Allocation Moderate has outperformed its corresponding Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate. In fact, in the past ten years, the Retirement Income portfolios had lower standard deviation than the Five Core SIB. Please visit the corresponding portfolios for more detailed performance information.
Currently, the SAA Moderate Portfolio has the following holdings and yields:Asset ETFs Allocation Yield REAL ESTATE ICF (iShares Cohen & Steers Realty Majors) 11.96% 2.88% FIXED INCOME LQD (iShares iBoxx $ Invest Grade Corp Bond) 18.40% 4.80% Emerging Market VWO (Vanguard Emerging Markets Stock ETF) 13.31% 1.20% US EQUITY DVY (iShares Dow Jones Select Dividend Index) 5.92% 3.53% US EQUITY PEY (PowerShares HighYield Dividend Achievers) 4.87% 4.28% INTERNATIONAL EQUITY IDV (iShares Dow Jones Intl Select Div Idx) 16.50% 4.25% High Yield Bond HYG (iShares iBoxx $ High Yield Corporate Bd) 16.47% 8.40% INTERNATIONAL BONDS BWX (SPDR Lehman Intl Treasury Bond) 12.57% 0.70% Total Yield 4% Compared with current sub-zero interests in a cash account, the above portfolio's yield is very attractive.
In conclusions, using effective asset allocation strategies (especially the tactical asset allocation strategy), one can build an income producing portfolio that is less risky and achieve higher returns. Retirees or anyone who needs supplemental income can benefit from learning more on these investment plans.labels:investment,
Symbols:VIG,DVY,SDY,FVD,VYM,PEY,PFF,SPY,IWM,PID,IDV,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,RWX,HYG,LQD,VCLT,CIU,CORP,CSJ,VCSH,IEI,IEF,SHY,TLT,TIP,MBB,MUB,SHM,AGG,BND,BWX,EMB,PCY,WIP,
- TD Ameritrade Commission Free ETFs: Comprehensive Portfolio Building Blocks
10/19/2010
TD Ameritrade (Ticker: AMTD) just announced that it offers 100+ commission free ETFs for its clients.The 100+ (a precise number is 101) ETFs were selected by Morningstar that include ETFs from iShares, Vanguard, State Street, PowerShares, and others. In comparison, Schwab's free ETFs include only 11 of its own funds. Similarly, Vanguard offers 47 Vanguard ETFs for free. Fidelity was the first one that offers 25 iShares ETFs for free. See the official TD Ameritrade offering for more details.
MyPlanIQ views this is a very significant step for small investors (well we are not sure whether TD Ameritrade would still offer such a deal to very large accounts). We have constructed an investment plan TD Ameritrade Commission Free ETFs to take advantage of these ETFs. Though for the trades of these ETFs to be eligible for commission free, TD Ameritrade's customers have to hold these ETFs for more than 30 days, such a restriction is not significant for our plan since the plan only rebalances at most once per month. In this plan, the minimum holding period for each fund is set to be 1 month, which is equivalent to 30 days.TD Ameritrade Commission Free ETFs's 401K plan consists of 101 funds. These funds enable participants to gain exposure to 6 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , Commodity , REITs . We view this is the most comprehensive coverage of major asset classes.
The list of minor asset classes covered are: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 , VTAs of Oct 15, 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 (29%)
Portfolio Building -- Rated as great (90%)
Overall Rating: above average (74%)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 five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:
REITs:( IYR or VNQ or ICF )
Fixed Income:( AGG or BND )
Commodity:(DBC)
Foreign Equity:( EFA or VEU )
Emerging Market Equity:( EEM or VWO )
US Equity:( SPY or VTI )
Performance chart (as of Oct 15, 2010)Performance table (as of Oct 15, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe TD Ameritrade Commission Free ETFs Tactical Asset Allocation Moderate 13% 87% 13% 86% 20% 128% TD Ameritrade Commission Free ETFs Strategic Asset Allocation Moderate 10% 85% -1% -6% 9% 47% Six Core Asset ETFs Tactical Asset Allocation Moderate 10% 65% 9% 66% 17% 114% Six Core Asset ETFs Strategic Asset Allocation Moderate 11% 84% 2% 9% 9% 42% To summarize, TD Ameritrade Commission Free ETFs plan is very comprehensive and allows investors to achieve significant performance with reasonable risk. With now all of the top discount brokers (Fidelity, Schwab and TD Ameritrade) offering such commission free ETFs, investors are now free from trading cost and focus on portfolio building in terms of better asset allocation strategies.
labels:investment,
Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,
- Top Tier ETF Providers Playoffs II
10/19/2010
Based on an article published by Bank Investment Consultant by Matt Ackermann, Vanguard, one of the largest index fund and ETF providers, will offer commission-free trading to its brokerage clients that use its lineups of 46 proprietary ETFs. This represents a comparable move as Fidelity and Schwab.
In addition to Fidelity and Schwab plans, MyPlanIQ now has a Vanguard major ETF plan. Notice since most Vanguard ETFs have short history, the performance data of the model portfolios are meaningful since 2003 (before that, most ETFs did not exist).
The following is the list of the ETFs supported in this plan (for up to date info, please see the Vanguard ETF page.
Consumer Discretionary VCR Consumer Staples VDC Dividend Appreciation VIG Emerging Markets VWO Energy VDE Europe Pacific VEA European VGK Extended Duration Treasury EDV Extended Market VXF Financials VFH FTSE All-World ex-US VEU FTSE All-World ex-US Small-Cap VSS Growth VUG Health Care VHT High Dividend Yield VYM Industrials VIS Information Technology VGT Intermediate-Term Bond BIV Intermediate-Term Corporate Bond VCIT Intermediate-Term Government Bond VGIT Large-Cap VV Long-Term Bond BLV Long-Term Corporate Bond VCLT Long-Term Government Bond VGLT Materials VAW Mega Cap 300 MGC Mega Cap 300 Growth MGK Mega Cap 300 Value MGV Mid-Cap VO Mid-Cap Growth VOT Mid-Cap Value VOE Mortgage-Backed Securities VMBS Pacific VPL REIT VNQ Short-Term Bond BSV Short-Term Corporate Bond VCSH Short-Term Government Bond VGSH Small-Cap VB Small-Cap Growth VBK Small-Cap Value VBR Telecommunication Services VOX Total Bond Market BND Total Stock Market VTI Total World Stock VT Utilities VPU Value VTV Vanguard ETFs's 401K plan consists of 43 funds. These funds enable participants to gain exposure to 5 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , REITs . The list of minor asset classes covered:
Communications: IXP , PTE , DGG , LTL
Consumer Discretionary: RXI , VCR
Consumer Staples: KXI , VDC , PSL , DPN , RHS
DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE
DIVERSIFIED PACIFIC/ASIA: EPP , VPL , GMF , PAF
Equity Energy: ITE,IXC , IPW , DBE , RYE , DKA
EUROPE STOCK: IEV , VGK , PEF , DEB
Financial: IYF , VFH , IPF , PFI , DRF , RYF
Foreign Large Blend: EFA , VEU , GWL , PFA
FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC
Health: IYH,IXJ , VHT , XBI , PBE , DBR , RYH
Industrials: IYJ,EXI , VIS
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
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
Natural Resources: IYM,IGE , VAW , XLB,XME , PYZ , DBN , RTM , UYM
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
Technology: MTK , PTF , DBT , RYT , ROM
Utilities: GII , PUI , DBU , RYU , UPW
WORLD STOCK: IOO , VTAs of Oct 15, 2010, this plan investment choice is rated as averagebased 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 above average (74%)
Fund Quality -- Rated as below average (33%)
Portfolio Building -- Rated as average (37%)
Overall Rating: average (47%)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 five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:
REITs:( IYR or VNQ or ICF )
Fixed Income:( AGG or BND )
Foreign Equity:( EFA or VEU )
Emerging Market Equity:( EEM or VWO )
US Equity:( SPY or VTI )
Performance chart (as of Oct 15, 2010)Performance table (as of Oct 15, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Vanguard ETFs Tactical Asset Allocation Moderate 10% 67% 6% 39% 13% 84% Vanguard ETFs Strategic Asset Allocation Moderate 13% 92% 3% 9% 8% 39% Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate 10% 65% 7% 48% 15% 103% Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate 14% 99% 3% 10% 9% 41% Currently, asset classes in REITs( IYR , VNQ , ICF ) , Fixed Income( AGG , BND ) and Emerging Market Equity( EEM , VWO ) are doing relatively well. These asset classes are available to Vanguard ETFs participants.
To summarize, Vanguard 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 reits , emerging market equity and fixed income funds.
labels:investment,
Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,
- Top Tier ETF Provider Playoffs
10/19/2010
- Bernstein's No Brainer and Smart Money Portfolios Reviewed
10/08/2010
- Diversification, Style AND Asset Rotation Improve Portfolio Performance without Incurring Extra Risk
10/08/2010
- Capital Accumulation Plan of The Chubb Corporation Report On 12/03/2010
12/03/2010
This report reviews Capital Accumulation Plan of The Chubb Corporation plan. We will discuss the investment choices and present the plan rating by MyPlanIQ. Current economic and market conditions are discussed in the context of the investment portfolios in the plan. We will then show how participants in Capital Accumulation Plan of The Chubb Corporation can achieve reasonable investment results using asset allocation strategies.
Plan Review and Rating
Chubb Corp (Ticker:CB) has the "Capital Accumulation Plan of The Chubb Corporation".
Capital Accumulation Plan of The Chubb Corporation's 401K plan consists of 24 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income. The list of minor asset classes covered:
Diversified Pacific/asia: EPP, VPL, GMF, PAF
Foreign Large Growth: EFG
High Yield Bond: HYG, JNK, PHB
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 Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
Moderate Allocation: AOM
Retirement Income:
Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
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 2041-2045:
Target Date 2050+:
World Bond: IGOV, BWX, WIP
As of Dec 2, 2010, this plan investment choice is rated as 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 (30%)
Fund Quality -- Rated as (9%)
Portfolio Building -- Rated as (54%)
Overall Rating: (33%)Current Economic and Market Conditions
We have experienced an uncertain 2010: plenty of worries on whether the US economy will climb out of the great recession and recover.
- The Federal Reserve embarked on Quantitative Easing II (QE2) to stimulate the economy.
- The housing market is still at its low but largely stabilized.
- The unemployment rate is stuck at 9%.
Americans continue to face an uncertain future, given (among others) the high unemployment rate, large federal and local government debts and global trade imbalance. With such an economic backdrop, the stock and debt markets are going to be volatile. Despite this, markets have been resilient and appear positioned to rebound.
In this market it is even more critical to properly diversify and respond market changes. MyPlanIQ offers two asset allocation strategies: strategic and tactical asset allocation strategies ( SAA and TAA for participants in Capital Accumulation Plan of The Chubb Corporation).
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 4 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)
Emerging Market Equity: (EEM or VWO)
Fixed Income: (AGG or BND)
Performance chart (as of Dec 2, 2010)Performance table (as of Dec 2, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Capital Accumulation Plan of The Chubb Corporation Tactical Asset Allocation Moderate 7% 69% 6% 73% 9% 83% Capital Accumulation Plan of The Chubb Corporation Strategic Asset Allocation Moderate 7% 91% 2% 12% 5% 40% Four Core Asset ETF Index Funds Emerging Markets Tactical Asset Allocation Moderate 1% 6% 6% 49% 12% 78% Four Core Asset ETF Index Funds Emerging Markets Strategic Asset Allocation Moderate 10% 75% 2% 6% 7% 31% Currently, asset classes in US Equity (SPY,VTI) and Emerging Market Equity (EEM,VWO) are doing relatively well. These asset classes are available to Capital Accumulation Plan of The Chubb Corporation participants.
To summarize, Capital Accumulation Plan of The Chubb Corporation plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: CB , SPY , VTI , EFA , VEU , EEM , VWO , AGG , BND , HYG , JNK , PHB , AOM , EFG , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , TZD , TZE , TZG , TZI , TZO , TZL , IGOV , BWX , WIP , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJJ , IWS , JKI , VOE , EMV , PWP , RFV , UVU , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , EPP , VPL , GMF , PAF
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