Vanguard ETF: | 7.4%* | ||
Diversified Core: | 8.1%* | ||
Six Core Asset ETFs: | 7.3%* |
Articles on SPY
- Inflation Prospects to Pressure Bonds Soon?
01/07/2011
Our smart money indicator reports funds' aggregate asset exposure to U.S. equities and bonds. It is derived based on comprehensive analysis of the top asset allocation Gurus' recent asset exposure. We track two separate indicators:
- Top 3 Moderate Allocation Funds (Smart Money)
- 481 Moderate Asset Allocation Mutual Funds (Pro Money)
This is calculated weekly, and the chart covers the last one year. For the week ending 12/31/2010, our proprietary model reported equity exposure for the two set of funds was 77% and 66%, respectively.
Trends for the Top 3 Moderate Allocation Funds (Smart Money)
481 Moderate Asset Allocation Mutual Funds (Pro Money)
click to enlarge chartsTwo weeks ago, we saw that the continued stabilization of investor appetite for equity was driving inflow into the stock market. This trend remained little changed last week as improved economic data continued to feed positive sentiment.
Rising interest rates will hurt fixed-income assets, and this trend of funds pulling out of bonds and being in favor of stocks is not surprising as many investors believe that the low-interest-rate environment will not last for too long. Some economists are predicting that the U.S. economy will grow at a rate close to 4% for the next two years. Inflation expectations are bound to rise and the Fed won’t be able to keep subsidizing borrowers at the expense of savers forever. Bond investor Bill Gross has recently suggested the end of the bull bond market may be at hand. Warren Buffett also echoed a similar viewpoint, indicating “short-term and long-term bonds are a very poor investment at the present time”.
That said, not all the doubts about the direction of the economy are completely removed yet, and the Fed’s own predictions are that the unemployment rate will stay in the 9%+ range for all of 2011. It’s hard to see the Fed would begin any credible discussion about raising rates until we see some meaningful downward movements in the unemployment figures.
labels:investment,
Symbols:AGG,BBND,CIU,EEM,EFA,GSG,HYG,ICFI,IEF,IWM,IYR,JNK,MBB,MDY,MUB,PHB,QQQQ,SHV,SHY,SPY,TLT,VEU,VNQ,VWO,
- American Flies Above United in Plan Structure, Below United in Returns
01/06/2011
AMR Corporation, through its subsidiaries, operates as a scheduled passenger airline in the United States. The company, through its principal subsidiary, American Airlines, Inc., provides scheduled airline service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe, and Asia. The company was founded in 1934 and is headquartered in Fort Worth, Texas.
Their 401K plan consists of 27 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income.
Asset Class Number of funds REITs 0 Balanced Fund 2 Fixed Income 6 Commodity 0 Sector Fund 1 Foreign Equity 3 Emerging Market Equity 2 US Equity 12 Other 1 Total 27 The list of minor asset classes covered:
Diversified Emerging Mkts: EEM, GMM, PXH, DEM, SCHE
Foreign Large Blend: EFA, VEU, GWL, PFA
Foreign Large Value: EFV, PID, DWM
High Yield Bond: HYG, JNK, PHB
Inflation-protected Bond: TIP
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
Moderate Allocation: AOM
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
As of Jan 4, 2011, this plan investment choice is rated as 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 (87%)
Fund Quality -- Rated as average (51%)
Portfolio Building -- Rated as below average (34%)
Overall Rating: average (55%)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 Jan 4, 2011)Performance table (as of Jan 4, 2011)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe American Airline 401k Super Saver Plan Tactical Asset Allocation Moderate 4% 35% 3% 31% 8% 68% American Airline 401k Super Saver Plan Strategic Asset Allocation Moderate 9% 104% 3% 22% 6% 43% Four Core Asset ETF Index Funds Emerging Markets Tactical Asset Allocation Moderate 1% 9% 7% 61% 11% 71% Four Core Asset ETF Index Funds Emerging Markets Strategic Asset Allocation Moderate 11% 80% 3% 13% 7% 30% Currently Commodities, US Equity and Emerging Market are doing well.
The plan gives participants access to two of those three classes: US Equity and Emerging MarketOver the long haul, this plan comes in under the 4 asset class benchmark which is a cause for concern. Four asset classes are good, the number of funds in the US and fixed income are good. Foreign equity and emerging markets could benefit from a couple of extra funds. There has to be some question on the performance of the individual funds.
When we compare the American Plan with the United plan which only has good funds in three asset classes, we see that the additional asset class does not deliver higher returns.
Performance chart (as of Jan 4, 2011)Performance table (as of Jan 4, 2011)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe American Airline 401k Super Saver Plan Tactical Asset Allocation Moderate 4% 35% 3% 31% 8% 68% American Airline 401k Super Saver Plan Strategic Asset Allocation Moderate 9% 104% 3% 22% 6% 43% United Airlines 401K Plan 2010 Tactical Asset Allocation Moderate 5% 62% 6% 89% 9% 102% United Airlines 401K Plan 2010 Strategic Asset Allocation Moderate 11% 103% 4% 30% 7% 49%
To summarize, American Airlines 401k Super Saver Plan participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.American Airlines 401k Super Saver Plan would do well by their employees to consider reviewing their existing funds to take full advantage of the extra asset class.
labels:investment,
Symbols:AMR,UAUA,SPY,VTI,EFA,VEU,EEM,VWO,AGG,BND,HYG,JNK,PHB,AOM,CIU,BIV,MTK,PTF,RYT,ROM,GWL,PFA,IVE,IWW,JKF,VTV,PWV,RPV,SCHV,EFV,PID,DWM,IVV,IYY,IWV,VV,DLN,RSP,SCHX,IVW,IWZ,JKE,VUG,QQQQ,RPG,SCHG,IJJ,IWS,JKI,VOE,PWP,RFV,UVU,IJH,IWR,JKG,VO,MDY,EMM,PJG,DON,EZM,MVV,
- Country ETFs Flat While South Korea and South Africa Spike
01/06/2011
Last week, indices around the globe showed a more positive trend with only a few countries showing a negative trend.
South Korea sees a significant jump as its economy continues to look strong and is a major player in the non-BRIC growth economies. South Africa also continued with strong growth and is aligned with South Korea as a high growth emerging economy outside the BRIC club.
The balance of the other national economies were flat or modestly up as we rounded out the end of the year.
Spain continues to be a concern and it will likely take some time to work through the national debt concerns.
We will see if the upward trend continues early in 2011 -- this data can regularly be reviewed at the 360 Degree Market View.
Assets Class Symbols 12/31
Trend
Score12/24
Trend
ScoreDirection South Korea EWY 18.02% 13.68% ^ South Africa EZA 18.0% 15.93% ^ Taiwan EWT 16.58% 13.5% ^ Austria EWO 15.63% 12.26% ^ Russia RSX 15.42% 15.55% v Mexico EWW 14.94% 12.9% ^ Malaysia EWM 13.99% 11.11% ^ Canada EWC 11.28% 9.37% ^ Australia EWA 10.79% 9.33% ^ Switzerland EWL 10.66% 9.87% ^ Singapore EWS 10.08% 6.41% ^ Hong Kong EWH 9.86% 10.14% v India INP 9.83% 8.91% ^ Japan EWJ 8.76% 6.95% ^ United Kingdom EWU 8.25% 7.42% ^ Germany EWG 7.92% 8.63% v The Netherlands EWN 6.79% 3.66% ^ Brazil EWZ 5.39% 2.45% ^ France EWQ 4.06% 3.46% ^ Belgium EWK 4.05% 2.89% ^ China FXI 2.11% 0.62% ^ Italy EWI -0.82% -0.51% v Spain EWP -5.58% -5.74% ^ labels:investment,
Symbols:AGG,BND,CIU,CSJ,DBA,DBC,EEM,EFA,EWA,EWC,EWG,EWH,EWI,EWJ,EWK,EWL,EWM,EWN,EWO,EWP,EWQ,EWS,EWT,EWU,EWW,EWY,EWZ,EZA,FXI,GSG,HYG,ICF,IEF,INP,IWM,IYR,JNK,LQD,MBB,MDY,MUB,PHB,QQQQ,RSX,SHV,SHY,SPY,TLT,USO,VEU,VNQ,VWO,
- Hussman Index Says Stocks are Overvalued
01/04/2011
John Hussman, manager of Hussman Strategy Growth Fund (HSGFX) has a price to peak 10 year average earnings as a long term stock market valuation metric.
Compared with the normal one year price to earning ratio, Price to Peak Earnings would eliminate short term noise. he proposes to "buy when Price to Peak Earnings is lower than 15 and sell when it exceeds 19.5"
MyPlanIQ has been tracking this index and present the current status. This will be reported every other week (bi-weekly)
On Dec 31, 2010, the ratio of Real Price to the average of the last 10 years' Peak Real Earnings(14.1) to its long term average (11.93) is 1.18. This index points to the US stock market being over valued.
The Shiller Index agrees that the market is overvalued whereas the Buffet Index points to the market being in the fair range.
While we have enjoyed strong gains in the US market -- perhaps buoyed by QEII, there are continuing concerns about a correction and having assets in multiple major asset classes remains critical.labels:investment,
Symbols:SPY,QQQQ,IWM,MDY,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,GSG,DBC,DBA,USO,LQD,CSJ,CIU,HYG,JNK,PHB,TLT,IEF,SHY,SHV,BND,AGG,MUB,MBB,
- Commodity Trends: 2010 Year End Review
01/03/2011
Commodities, along with major risk assets such as U.S. stocks, emerging market stocks and REITs, have gone on a rage since Fed's QE2 announcement. Two major themes stood out in 2010:
1. The Fed's QE2 action ($600 billion treasury purchase) flooded the market with money, the unintended (or implicitly intended?) result is that investors fled away from fixed income market, revived animal spirit for risk and drove U.S. dollars down, especially against the currencies of commodity exported countries such as Canada and Australia. This so called currency over-shoot caused commodities' prices go up and stoke inflation for emerging markets like China. As a result, precious metals such as Gold (GLD) and silvers (SLV) acted as the hard currencies of choice while the prices of agriculture commodities (DBA) went up in anticipation of upcoming inflation (on agriculture commodities, Jim Rogers and others have argued there is a secular fundamental trend also since the demand for food worldwide has been going up due to the better quality life in the developing countries).
2. With the QE2 and the year end tax deal between Republican and Obama administration, investors were encouraged to see the end of tunnels for the economy. Recent positive unemployment and ISM numbers added hope that U.S. economy growth will accelerate (both PIMCO and Goldman Sachs have upped their 2011 GDP growth to 3%-3.5%). As a result, industrial metals (DBB) and silvers (SLV), both sensitive to industrial activities, shot up.
The above two themes are related but not necessarily the same. Going forward, they will continue to drive commodities' prices until they are proved otherwise. We are tracking the commodity trends weekly (details can be found here)Assets Class Symbols 12/31
Trend
Score12/24
Trend
ScoreDirection Silver SLV 41.15% 33.83% ^ Agriculture DBA 17.08% 17.03% ^ Precious Metals DBP 16.54% 12.88% ^ Base Metals DBB 13.5% 10.42% ^ Commodity DBC 12.4% 12.35% ^ Gold GLD 11.49% 8.58% ^ Energy DBE 7.22% 8.61% v US Oil USO 6.05% 9.19% v Natural Gas UNG -11.63% -19.5% ^ labels:investment,
Symbols:SLV,DBP,GLD,DBB,DBA,DBC,DBE,USO,UNG,SPY,QQQQ,IWM,MDY,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,GSG,LQD,CSJ,CIU,HYG,JNK,PHB,TLT,IEF,SHY,SHV,BND,AGG,MUB,MBB,
- Risk Appetite in Major Assets Increases
01/03/2011
- Simple ETF Portfolio Demonstrates the Limits of Momentum Strategies
01/01/2011
- Most U.S. Sector End Sharply Higher For The Year
01/01/2011
- ATT Dials Up A Mediocre Plan
12/30/2010
- Smart Money Trend: Bonds Retreat, Equities Edge Back
12/30/2010
- Country ETF Trends Largely Unchanged: Russia Shines, Spain Tumbles
12/29/2010
- Major Asset Movements Muted, Bonds Continue to Stabilize
12/27/2010
- Smart Money Trend: Capital Preservation Driving Market Flows
12/23/2010
- Country ETFs Trend: Global Markets Remain Mixed, weighed by Korean Tensions and Europe Debt Concerns
12/22/2010
- Shiller Index Close to Triggering a Move to Bonds
12/22/2010
- Major Asset Trends: Municipal and Other Bonds Recover Some, Commodities Strong
12/20/2010
- U.S. Sectors Trend: Cautious Gains Amid Mixed Catalyst
12/19/2010
- Silver and Gold Continued to Shine While Other Commodities Largely Stable
12/19/2010
- Yield Quest Turns from Bonds to High Yield Stocks
12/16/2010
- Smart Money Trend: Stocks May be Winners of Bond Turbulence
12/16/2010
- Aflac Incorporated 401(k) Savings and Profit Sharing Plan Report On 12/03/2010
12/03/2010
This report reviews Aflac Incorporated 401(k) Savings and Profit Sharing Plan 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 Aflac Incorporated 401(k) Savings and Profit Sharing Plan can achieve reasonable investment results using asset allocation strategies.
Plan Review and Rating
AFLAC Inc (Ticker:AFL) has the "Aflac Incorporated 401(k) Savings and Profit Sharing Plan".
Aflac Incorporated 401(k) Savings and Profit Sharing Plan's 401K plan consists of 11 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. The list of minor asset classes covered:
Foreign Large Blend: EFA, VEU, GWL, PFA
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 Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
Moderate Allocation: AOM
Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
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 (35%)
Fund Quality -- Rated as (33%)
Portfolio Building -- Rated as (36%)
Overall Rating: (35%)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 Aflac Incorporated 401(k) Savings and Profit Sharing Plan).
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 3 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)
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 Aflac Incorporated 401(k) Savings and Profit Sharing Plan Tactical Asset Allocation Moderate 4% 34% 5% 64% 8% 81% Aflac Incorporated 401(k) Savings and Profit Sharing Plan Strategic Asset Allocation Moderate 10% 100% 2% 8% 6% 31% Three Core Asset ETF Index Funds Tactical Asset Allocation Moderate -4% -35% 1% 9% 4% 27% Three Core Asset ETF Index Funds Strategic Asset Allocation Moderate 9% 60% -0% -3% 4% 13% Currently, asset classes in US Equity (SPY,VTI), Foreign Equity (EFA,VEU) and Fixed Income (AGG,BND) are doing relatively well. These asset classes are available to Aflac Incorporated 401(k) Savings and Profit Sharing Plan participants.
To summarize, Aflac Incorporated 401(k) Savings and Profit Sharing Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: AFL , SPY , VTI , EFA , VEU , AGG , BND , AOM , CIU , BIV , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK
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