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Articles on IFGL

  • International REIT Rapidly Becoming A Key Area For Investors

    04/21/2011

    Global REIT (Real Estate Investment Trust) markets showed major growth in 2007 capturing $900 billion of equities capitalization according to the stats of National Association of Real Estate Investment Trusts (NARIET). Previously U.S and Australia were the major market but today REITs are adopted by many foreign countries. In fact a REIT portfolio should have a strong international flavor and as this gives you better diversification offering better risk adjusted returns.

    These are the major country international REITS

     (Source: Ernst & young – Global Real investment trust report 2010)

    In the recent recession where investors dumped their equity positions and unemployment accelerated, international REITS did not have such a sever shock. Even with the global economic crisis in the past years, we have only seen a few REIT bankruptcies. Recent development in Japan and U.S show the true growth prospect of REIT. Banks have worked with REITs to modify or extend maturities on existing loans rather than force sales in a demanding market.

    We show a table of the leading international REIT ETF’s.

    Description

    Symbol

    1 Yr

    3 Yr

    5 Yr

    Avg. Volume(K)

    1 Yr Sharpe

    SPDR Dow Jones Intl Real Estat

    RWX

    20.47%

    -5.23%

    NA

    385

    88.47%

    SPDR Dow Jones Global Real Estate

    RWO

    19.99%

    NA

    NA

    76

    104.5%

    WisdomTree International Real Estate

    DRW

    18.39%

    -5.85%

    NA

    32

    82.37%

    iShares S&P Dev ex-US Property

    WPS

    11.25%

    -5.94%

    NA

    25

    52.74%

    iShares FTSE EPRA/NAREIT Dev Real Estate

    IFGL

    8.59%

    -7.37%

    NA

    91

    42.21%

    Most of the REITS have similar results except IFGL and WPS. RWX is the best with a one year yield of 20.47%, best of the three year returns (although not good) and the highest volume. RWX volumes are also very good but all these ETF are new and none them has 5 year yields.

    Ernst and young research stats clearly shows the International REITS diversification

     

    (Source: Ernst & young – Global Real investment trust report 2010)

    Government also help REITs – for example, U.S REITs are given special tax status to avoid corporate taxes, the corporates will be exempt from taxes if they distribute their 90% of income by way of dividend to investors.

    In the UK, the government encourages REITs to own residential property. In Germany government are rescinding their rules of prohibiting REITs from investing in residential property not only this they also provide an incentive of 50% exemption on capital gains tax for institutional and corporate property owners that sell assets to REITs.

    In Japan the government also provides a facility for J-REITs to purchase or re?nance bonds coming due and has thereby shored up investor con?dence.

    International REITs provides diversity in the real estate sector. By diversifying the portfolio with international REITs we can not only hedge the risk but we can increase our returns too. REITS are a necessary element of a portfolio. Without REITs ETF we lose a major growth opportunity as increasing world population and the demand for property. With the appropriate diversification from International REIT we can increase the potential for better risk adjusted returns.

     

    Symbols: RWX, RWO, DRW, WPS, IFGL

    Tickers: (NYSE: RWX), (NYSE: RWO), (NYSE: DRW), (NYSE: WPS), (NYSE: IFGL)

    Disclosure:

    MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical

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  • Schwab Mutual Funds Beat out ETFs

    04/06/2011

    l

    Retirement investing is a "hair on fire" problem -- especially for baby boomers for whom retirement is a near and present danger. There is a real lack of consistent, unbiased information that a retiree can use to help improve risk adjusted returns. Blogger Jenny Hollingworth has been teaching herself about investing and has come to the point where she is going to choose a plan and make her first investments.

    In her recent post New Steps she sorted through a list of alternatives and chose the Schwab OneSource Select List Funds.

    The reason for her choice was:

    • The highest possible rating for each plan is 5 stars.  So I bypassed anything that didn’t have 5 (because really, why go for less?)
    • Picked out a name I knew: Schwab.  Specifically: Schwab OneSource Select List Funds. I selected it.  
    • This is an application to Charles Schwab's OneSource Select List mutual funds. These funds are  No Load and No Transaction Fee (NTF) mutual funds. Based on Schwab's policy, the no load NTF funds have 90 days redemption fee period. As of 1/1/2010, there are total  140 OneSource Select List funds available from Schwab.

    We are going to review the Schwab OneSource Select List Funds  to see whether she chose a good plan. The plan consists of 137 funds. These funds enable participants to gain exposure to 6 major assets: US Equity, Commodity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.

     

    Asset Class Ticker Name
    LARGE VALUE AAGPX American Beacon Lg Cap Value Inv
    Foreign Large Value AAIPX American Beacon Intl Equity Inv
    Retirement Income AANPX American Beacon Retire Inc & Apprec Inv
    High Yield Muni ABHYX American Century High-Yield Muni Inv
    Inflation-Protected Bond ACITX American Century Infl-Adj Bond Inv
    Muni National Long ACLVX American Century Long-Term Tax-Free Inv
    MID-CAP VALUE ACMVX American Century Mid Cap Value Inv
    Conservative Allocation AONIX American Century One Choice: Vry Cnsrv I
    MID-CAP VALUE ARDEX Aston/River Road Dividend All Cap Val N
    Target Date 2011-2015 ARFIX American Century LIVESTRONG 2015 Inv
    Retirement Income ARTOX American Century LIVESTRONG Inc Inv
    Target Date 2021-2025 ARWIX American Century LIVESTRONG 2025 Inv
    Target Date 2031-2035 ARYIX American Century LIVESTRONG 2035 Inv
    SMALL VALUE AVPAX American Beacon Small Cp Val Inv
    EUROPE STOCK AXEAX Threadneedle European Equity A
    Muni National Interm BMBSX Baird Intermediate Muni Bd Inv
    Technology BOGSX Black Oak Emerging Technology
    Small Growth BSCFX Baron Small Cap
    Moderate Allocation BUFBX Buffalo Balanced
    Technology BUFTX Buffalo Science & Technology
    DIVERSIFIED EMERGING MKTS CEMVX Causeway Emerging Markets Investor
    MID-CAP BLEND CHTTX Aston/Optimum Mid Cap N
    Intermediate Government CPTNX American Century Government Bond Inv
    Small Growth CSMVX Century Small Cap Select Inv
    REAL ESTATE CSRSX Cohen & Steers Realty Shares
    Long-Short CVSIX Calamos Market Neutral Income A
    SMALL BLEND DISSX Dreyfus Small Cap Stock Index
    Bank Loan EABLX Eaton Vance Floating Rate Adv
    Conservative Allocation EXDAX Manning & Napier Pro-Blend Cnsrv Term S
    Foreign Large Blend EXWAX Manning & Napier World Opportunities A
    Moderate Allocation FAGSX First American Strat Growth Allc A
    Financial FBRSX FBR Small Cap Financial
    ULTRASHORT BOND FEUGX Federated Adjustable Rate Secs Instl
    Intermediate Government FICMX Federated Income Instl
    Muni National Interm FIMTX Federated Intermediate Municipal Instl
    LARGE BLEND FMIHX FMI Large Cap
    Long-Short FMLSX Wasatch-1st Source Long/Short
    SHORT GOVERNMENT FSGVX Federated US Govt 1-3 Yr Instl
    Muni Short FSHIX Federated Shrt-Interm Dur Muni Instl
    Short-Term Bond FSTIX Federated Short-Term Income Instl
    Intermediate-Term Bond FTRFX Federated Total Return Bond Instl Svc
    SMALL BLEND GABSX Gabelli Small Cap Growth AAA
    Communications GABTX GAMCO Global Telecommunications AAA
    LARGE GROWTH HCAIX Harbor Capital Appreciation Inv
    Foreign Large Blend HIINX Harbor International Inv
    WORLD STOCK HLMGX Harding Loevner Global Equity Advisor
    Foreign Large Growth HLMNX Harding Loevner International Equity Inv
    Equity Energy ICENX ICON Energy S
    China Region ICHKX Guinness Atkinson China & Hong Kong
    LARGE VALUE INDZX RiverSource Diversified Equity Inc A
    Moderate Allocation JABAX Janus Balanced T
    Health JAGLX Janus Global Life Sciences T
    LARGE GROWTH JAMRX Janus Research T
    Small Growth JATTX Janus Triton T
    Foreign Large Blend JETAX Artio International Equity II A
    Target Date 2021-2025 JNSAX JPMorgan SmartRetirement 2025 A
    LARGE BLEND JRMSX INTECH Risk-Managed Core T
    Target Date 2011-2015 JSFAX JPMorgan SmartRetirement 2015 A
    Target Date 2026-2030 JSMAX JPMorgan SmartRetirement 2030 A
    Target Date 2016-2020 JTTAX JPMorgan SmartRetirement 2020 A
    LARGE BLEND JUEAX JPMorgan US Equity A
    LARGE VALUE JVLAX JHancock3 Disciplined Value A
    Small Growth KGSCX Kalmar Growth-with-Value Small Cap
    LARGE GROWTH LGILX Laudus Growth Investors US Large Cap Gr
    WORLD BOND LIFNX Laudus Mondrian Intl Fixed Income
    Foreign Large Blend LISOX Lazard Intl Strategic Equity Open
    Multisector Bond LSBRX Loomis Sayles Bond Retail
    DIVERSIFIED PACIFIC/ASIA MAPIX Matthews Asia Pacific Equity Income
    PACIFIC/ASIA EX-JAPAN STK MAPTX Matthews Pacific Tiger Investor
    China Region MCHFX Matthews China Investor
    Muni National Interm MITFX Marshall Intermediate Tax-Free Inv
    JAPAN STOCK MJFOX Matthews Japan Investor
    Foreign Large Blend MKIEX McKee International Equity Instl
    DIVERSIFIED PACIFIC/ASIA MPACX Matthews Asia Pacific Investor
    High Yield Bond MWHYX Metropolitan West High Yield Bond M
    Short-Term Bond MWLDX Metropolitan West Low Duration Bond M
    Intermediate-Term Bond MWTRX Metropolitan West Total Return Bond M
    MID-CAP BLEND NMMCX Northern Multi-Manager Mid Cap
    SMALL VALUE NOSGX Northern Small Cap Value
    Muni National Long NOTEX Northern Tax-Exempt
    Small Growth NSPAX ING Small Cap Opportunities A
    Foreign Small/Mid Value OAKEX Oakmark International Small Cap I
    WORLD STOCK OAKGX Oakmark Global I
    COMMODITIES BROAD BASKET PCRDX PIMCO Commodity Real Ret Strat D
    Emerging Markets Bond PEMDX PIMCO Emerging Markets Bond D
    LARGE BLEND PEOPX Dreyfus S&P 500 Index
    WORLD BOND PFODX PIMCO Foreign Bond (USD-Hedged) D
    Intermediate-Term Bond PGBOX JPMorgan Core Bond A
    Multisector Bond PONDX PIMCO Income D
    LARGE BLEND PRBLX Parnassus Equity Income - Inv
    Inflation-Protected Bond PRRDX PIMCO Real Return D
    SMALL VALUE PSOAX JPMorgan Small Cap Value A
    Intermediate-Term Bond PTTDX PIMCO Total Return D
    SMALL BLEND RYTFX Royce Total Return Svc
    Intermediate-Term Bond SAMIX RidgeWorth Intermediate Bond I
    Foreign Large Blend SICNX Schwab International Core Equity Inst
    Foreign Large Blend SIEIX RidgeWorth Intl Equity Index I
    ULTRASHORT BOND SIGVX RidgeWorth US Gov Sec Ultra-Short Bd I
    Target Date 2031-2035 SRJAX JPMorgan SmartRetirement 2035 A
    DIVERSIFIED EMERGING MKTS SSEMX SSgA Emerging Markets Instl
    High Yield Bond STHTX RidgeWorth High Income I
    Muni National Interm STTBX RidgeWorth Investment Grade T/E Bond I
    LARGE BLEND SWANX Schwab Core Equity Inv
    Global Real Estate SWASX Schwab Global Real Estate Select
    Target Date 2026-2030 SWDRX Schwab Target 2030
    LARGE VALUE SWDSX Schwab Dividend Equity
    Financial SWFFX Schwab Financial Services
    Target Date 2011-2015 SWGRX Schwab Target 2015
    Intermediate Government SWGSX Schwab GNMA
    Long-Short SWHEX Schwab Hedged Equity
    Health SWHFX Schwab Health Care
    Target Date 2021-2025 SWHRX Schwab Target 2025
    Intermediate-Term Bond SWIIX Schwab Premier Income Instl
    Foreign Large Blend SWISX Schwab International Index
    Retirement Income SWKRX Schwab Monthly Income Enh Payout
    Retirement Income SWLRX Schwab Monthly Income Max Payout
    LARGE GROWTH SWLSX Schwab Large-Cap Growth
    Foreign Large Growth SWMIX Laudus International MarketMasters Sel
    Small Growth SWMSX Laudus Small-Cap MarketMasters Select
    Muni National Interm SWNTX Schwab Tax-Free Bond
    Moderate Allocation SWOBX Schwab Balanced Inv
    LARGE BLEND SWPPX Schwab S&P 500 Index
    SMALL BLEND SWSSX Schwab Small Cap Index
    LARGE GROWTH TGCNX TCW Select Equities N
    Mid-Cap Growth TGDNX TCW Growth Equities N
    EQUITY PRECIOUS METALS TGLDX Tocqueville Gold
    LARGE BLEND TICRX TIAA-CREF Social Choice Eq Retail
    LARGE GROWTH TIRTX TIAA-CREF Large-Cap Growth Retail
    LARGE GROWTH TWCGX American Century Growth Inv
    Muni National Interm TWTIX American Century Interm-T Tx-Fr Bd Inv
    SHORT GOVERNMENT TWUSX American Century Short-Term Govt Inv
    LARGE VALUE TWVLX American Century Value Inv
    Foreign Large Value TWWDX Thomas White International
    Foreign Large Growth UMBWX Scout International
    SMALL VALUE VSFAX Federated Clover Small Value A
    Mid-Cap Growth WTMGX Westcore MIDCO Growth
    LARGE VALUE YAFFX Yacktman Focused

     

    Asset Class Number of funds
    Balanced Fund 21
    REITs 2
    Fixed Income 34
    Commodity 1
    Sector Fund 9
    Foreign Equity 18
    Emerging Market Equity 7
    US Equity 41
    Other 4
    Total 137


    As of Apr 5, 2011, 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 (98%)
    Fund Quality -- Rated as average (54%)
    Portfolio Building -- Rated as great (86%)
    Overall Rating: above average (80%)

    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 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
    Commodity: DBC
    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 Apr 5, 2011)

    Performance table (as of Apr 5, 2011)

    With six asset classes and a wide number of funds, the returns beat the six asset class benchmark. With high scores in all categories, this plan delivers portfolios that have produced strong historical returns.

    Symbols: SPY, VTI, EFA, VEU, EEM, VWO, IYR, VNQ, ICF, AGG, BND, DBC, HYG, JNK, PHB, AOM, AOK, CIU, BIV, ITM, MUB, TFI, PZA, MLN, IYH, IXJ, VHT, XBI, PBE, DBR, RYH, EFG, IXP, PTE, DGG, LTL, MTK, PTF, DBT, RYT, ROM, GWL, PFA, IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV, SCZ, EFV, PID, DWM, IYF, VFH, IPF, PFI, DRF, RYF, IFGL, RWX, TZE, TZG, TZI, TZO, TZL, IGOV, BWX, WIP, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IOO, VT, SHY, SHV, VGSH, PLK, USY, 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, IJS, IWN, JKL, VBR, DSV, PWY, RZV, UVT, IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA, GMM, PXH, DEM, SCHE, GBF, LAG, PCY, CSJ, BSV, VCSH, ITE, IXC, IPW, DBE, RYE, DKA, IEI, VGIT, IJK, IWP, VOT, EMG, PWJ, RFG, UKW, IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK, TIP, DBP, EPP, VPL, GMF, PAF, AAXJ, DND, EWJ, JPP, PJO, DXJ, GSG, BIL

    Disclosure:

    MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

    Originally from the UK, Jenny Hollingworth lives with her husband and two sons in Northern California. She is a wife, mother, writer, theatre director, coffee drinker, avid reader, keen walker, movie watcher, Jane Austen lover and observer of life, in no particular order. MyPlanIQ has no formal relationship with Jenny Hollingworth.

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  • Japan’s Disasters Slams the Market – What Happens to REIT Now?

    03/22/2011

    The recent slide in global stocks due to the triple disasters in Japan erased 2011 S&P gains. The MSCI world index has decline more than 6.77% this month all the tickers are flashing red.  The Fed pledges it will continue the second round of quantitative easing by buying back more treasuries and keeping the interest rates low. The recovery is on its way but still time is needed especially in light of recent events. In addition, escalating tension in the Middle East along with the recent downgrading of Spain and Portugal by Standard & Poor’s adding downward pressure to the market. Risk is very visible at the moment.

    This is an excellent time to discuss US REAL ESTATE INVESTMENT TRUST ETF’s (US REITS). With equities domestically and internationally under pressure, having an asset class that is uncorrelated with equities, can help lower risk and provide a hedge. US REITS have a total return around 17-20%. over the last 52 weeks. Please see the table of US REITS.

     

     

    Description

    Symbol

    1 Yr

    3 Yr

    5 Yr

    Avg. Volume(K)

    1 Yr Sharpe

    Vanguard REIT Index ETF

    VNQ

    17.38%

    1.23%

    0.37%

    1,735

    97.45%

    SPDR Dow Jones REIT

    RWR

    17.83%

    0.3%

    -1.17%

    260

    99.15%

    iShares Dow Jones US Real Estate

    IYR

    17.51%

    0.6%

    -1.7%

    7,165

    103.34%

    iShares Cohen & Steers Realty

    ICF

    20.25%

    -1.24%

    -1.8%

    610

    112.48%

     

    The two top performers are:

    Ø  iShares Cohen & Steers Realty (ICF) with  a return of around 20.25%

    Ø  SPDR Dow Jones REIT (RWR) with return of around 17.83%

     

    Although the 52 weeks returns are strong, the shorter term returns shows a slowing in the momentum of REITS. Reviewing returns over time show that the US REITS are competing the Internationals REITS making it more better place for investment internationally and the show the strong fundamentals of US REITS.

     

    LONG TERM US REITS POSITIONING:

    REIT’s have enjoyed two good years of 28% returns. The key question is, “Will the rally will continue in the US REIT’s?” As long as the FED keeps interest rate low US REITS will continue to enjoy good but lower returns.. The long term of US REIT is positive and we can see further rise in the upcoming days.

    Investors looking for high dividend yields also favored the REIT sector. Solid dividend payouts are arguably the biggest enticement for REIT investors as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends to shareholders.

     

    Conclusion

    Over the past week, the world index has dropped 6.7%. At the same time, US REITs have dropped around 2.3%. With a disaster on such an unprecedented scale as Japan, almost everything is going to be hit but having an asset class uncorrelated with equities gives us an alternative path to provide a hedge.

    The crisis, as disastrous as it is at a human and ecological level, will have reducing impact on financial markets over time and we will likely see REITS return back into positive territory.

    Disclosure:

    MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

    Symbols:VNQ,RWR,IYR,ICF,RWO,RWX,IFGL,DRW,WPS,


    Exchange Symbols: (NYSE: vnq), (NYSE: rwr), (NYSE: iyr), (NYSE: icf), (NYSE: rwo), (NYSE: rwx), (NYSE: IFGL), (NYSE: drw), (NYSE: wps)

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  • E-Trade ETF Plan Hits Most of the High Notes

    02/16/2011

    ETrade All-Star ETF plan has recently been announced as no/low cost ETF plans become increasingly widespread. The company has attempted to make their selection on criteria such as low expense ratio, tracking error, liquidity, style purity, underlying holdings, and how well the ETF represents the index it seeks to replicate. In addition, ETFs chosen are passively managed, have at least 6-months trading history and are sponsored by a well balanced investment firm.

    The growth in number of ETFs are such that many of them are still new. In our analysis, we ignore ETF's that have less than one year's history which may negatively impact returns in the short term but, over time, they will come on-line and provide greater diversification.

    The plan consists of 40 funds giving exposure to 5 major assets: US Equity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.

     

    Asset Class Ticker Name
    LARGE BLEND RSP Rydex S&P Equal Weight
    LARGE BLEND SPY SPDR S&P 500
    LARGE GROWTH IWF iShares Russell 1000 Growth Index
    LARGE GROWTH MGK Vanguard Mega Cap 300 Gr Index ETF
    LARGE VALUE IWD iShares Russell 1000 Value Index
    LARGE VALUE DIA SPDR Dow Jones Industrial Average
    LARGE VALUE VYM Vanguard High Dividend Yield Indx ETF
    LARGE VALUE MGV Vanguard Mega Cap 300 Value Index ETF
    MID-CAP BLEND VO Vanguard Mid-Cap ETF
    Mid-Cap Growth VOT Vanguard Mid-Cap Growth ETF
    MID-CAP VALUE VOE Vanguard Mid-Cap Value ETF
    SMALL BLEND IWM iShares Russell 2000 Index
    Small Growth IWO iShares Russell 2000 Growth Index
    SMALL VALUE IWN iShares Russell 2000 Value Index
    Emerging Markets Bond EMB iShares JPMorgan USD Emerg Markets Bond
    Emerging Markets Bond PCY PowerShares Emerging Mkts Sovereign Debt
    High Yield Bond HYG iShares iBoxx $ High Yield Corporate Bd
    High Yield Bond JNK SPDR Barclays Capital High Yield Bond
    Inflation-Protected Bond TIP iShares Barclays TIPS Bond
    Intermediate Government IEI iShares Barclays 3-7 Year Treasury Bond
    Intermediate Government AGZ iShares Barclays Agency Bond
    Intermediate Government ITE SPDR Barclays Capital Interm Term Trs
    Intermediate-Term Bond AGG iShares Barclays Aggregate Bond
    Intermediate-Term Bond CFT iShares Barclays Credit Bond
    Intermediate-Term Bond BIV Vanguard Intermediate-Term Bond ETF
    Intermediate-Term Bond BND Vanguard Total Bond Market ETF
    LONG GOVERNMENT TLH iShares Barclays 10-20 Year Treasury Bd
    Long-Term Bond BLV Vanguard Long-Term Bond Index ETF
    SHORT GOVERNMENT SHY iShares Barclays 1-3 Year Treasury Bond
    Short-Term Bond BSV Vanguard Short-Term Bond ETF
    WORLD BOND BWX SPDR Barclays Capital Intl Treasury Bond
    WORLD BOND BWZ SPDR Barclays Cap S/T Intl Treasury Bond
    WORLD BOND WIP SPDR DB Intl Govt Infl-Protected Bond
    DIVERSIFIED EMERGING MKTS BIK SPDR S&P BRIC 40
    DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
    Foreign Large Blend EFA iShares MSCI EAFE Index
    Foreign Large Value IDV iShares Dow Jones Intl Select Div Idx
    Foreign Small/Mid Value SCZ iShares MSCI EAFE Small Cap Index
    Global Real Estate RWO SPDR Dow Jones Global Real Estate
    REAL ESTATE RWR SPDR Dow Jones REIT

     

    This is a good selection of funds which hit the main notes -- good choices in fixed income and the US and choices for international and domestic real estate as well as multiple selections in Foreign and emerging market classes.

    The US selections have one in the top ten performance ranking and so US there is room for improvement there.

    TKR
    Name
    Rank
     5 Yr AR%
    3yr AR%
    1yr AR%
    MPIQ Score
    IWO
    iShares Russell 2000 Growth 
    5
    3.73%
    5.45%
    39.77%
    55.4%
    VO
    Vanguard Mid-Cap ETF
    12
    3.60%
    3.05%
    36.00%
    47.8%
    VOT
    Vanguard Mid-Cap Growth ETF
    13
    0.00%
    3.26%
    42.68%
    47.6%
    IWN
    iShares Russell 2000 Value Index
    18
    1.61%
    3.65%
    32.80%
    41.5%
    RSP
    Rydex S&P Equal Weight
    19
    3.45%
    3.58%
    27.38%
    39.7%
    IWM
    iShares Russell 2000 Index
    20
    2.26%
    3.50%
    29.63%
    39.4%
    VOE
    Vanguard Mid-Cap Value ETF
    22
    0.00%
    2.95%
    29.26%
    33.7%
    DIA
    SPDR DJ  Industrial Average
    27
    4.35%
    0.33%
    19.15%
    28.3%
    IWF
    iShares Russell 1000 Growth Index
    29
    3%
    2.21%
    17.76%
    26.4%
    SPY
    SPDR S&P 500
    30
    2.07%
    -0.11%
    21.68%
    25.7%
    IWD
    iShares Russell 1000 Value Index
    36
    1.14%
    -2.81%
    18.67%
    16.7%
    MGK
    Vanguard Mega Cap 300 Growth
    NRV
    MGV
    Vanguard Mega Cap 300 Value
    NRV
    VYM
    Vanguard High Dividend Yield Indx 
    NRV


    NRV means not ranked because the trading volume was below our cutoff

    There is no commodity alternative. This may have been less important in the past, but with inflation almost inevitable, a commodities option such as DBC would make sense.

     

    As of Feb 15, 2011, this plan investment choice is rated as average based on MyPlanIQ's 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 (89%)

    Fund Quality -- Rated as below average (17%)
    Portfolio Building -- Rated as average (42%)
    Overall Rating: average (49%)

    It is important to note that the fund quality rating is lower because of the lack of history -- as time marches on and the ETFs create more of a trail, we expect that rating to increase.

    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 Feb 15, 2011)

    Performance table (as of Feb 15, 2011)

    Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    Etrade All Star ETFs Tactical Asset Allocation Moderate 14% 117% 9% 69% 11% 71%
    Etrade All Star ETFs Strategic Asset Allocation Moderate 16% 146% 2% 12% 5% 19%
    Five Core Asset ETF Benchmark Tactical Asset Allocation Moderate 14% 124% 8% 65% 11% 72%
    Five Core Asset ETF Benchmark Strategic Asset Allocation Moderate 19% 157% 4% 18% 6% 24%

    Currently Real Estate, US Equity and Commodities are doing well. US Equity and Real Estate available to Etrade All Star ETFs participants.

    The plan runs neck and neck with the benchmark but we would expect it to pull away as more of the funds establish history and can be used in the portfolio.

    To summarize, Etrade All Star ETF plan ticks most of the boxes but would be strengthened by adding commodity choices.

    Disclosure:

    MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

     

    Symbols:SPY,VTI,EFA,VEU,EEM,VWO,IYR,VNQ,ICF,AGG,BND,HYG,JNK,PHB,CIU,BIV,GWL,PFA,IVE,IWW,JKF,VTV,ELV,PWV,RPV,SCHV,SCZ,EFV,PID,DWM,IFGL,RWX,IGOV,BWX,WIP,IVV,IYY,IWV,VV,DLN,RSP,SCHX,SHY,SHV,VGSH,PLK,USY,TLT,TLH,IEF,EDV,VGLT,TLO,PLW,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,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,PCY,CSJ,BSV,VCSH,IEI,VGIT,ITE,IJK,IWP,VOT,EMG,PWJ,RFG,UKW,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,TIP,DBC

    labels:IRA,Retirement,Investment,ETF,Portfolio,construction, 

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  • End of the Year Review of Luminary Portfolios -- II

    01/01/2011

    Earlier in the year, we presented a series of reports on lazy portfolios from investing luminaries. We went on to pit them together to come out with an overall winner.

    That was then, this is now. It's time to review their progress and look at how they have performed in 2010. This is the second article where we look at the bottom half of the alphabet and see how they have done this year.

    We created SIB (Simpler is Better) portfolios one index fund for each asset class (ETF's are ideal for this) as a basic benchmark for each asset class portfolio. A SIB gives you diversification and low cost with no thought to picking a stock or even sub-segment of an asset class.

    MyPlanIQ Benchmark

    TAA 5 Yr Return Annualized

    TAA 1 Year

    SAA 1 Year

    Asset Classes

    Six Asset SIB

    15%

    8%

    10%

    6

    Six Asset SIB (Popular ETFs)

    12%

    7%

    10%

    6

    Five Asset SIB

    11%

    6%

    11%

    5

    Four Asset SIB (REIT)

    9%

    8%

    11%

    4

    Four Asset SIB (EEM)

    11%

    1%

    10%

    4

    Three Asset SIB

    6%

    -1%

    10%

    3


    We present four return data points:
    1. The five year annualized return based on a Tactical Asset Allocation strategy (TAA) -- this gives a viewpoint on the longer term behavior
    2. The one year TAA return
    3. The one year Strategic Asset Allocation (SAA) return

    We note that for 2010, SAA portfolios have performed better than the SAA but TAA has a better performance metric in the longer run. This will calibrate what we see with the lazy portfolios.

    The portfolios are listed by decreasing number of asset classes and decreasing number of funds. We would expect that the portfolio with the greatest number of asset classes to have the highest returns and we will test that to see to what extent it is true.

    Table of Lazy Portfolios and their classes and funds

    Plan Name

    TAA 5 Yr Return Annualized

    TAA 1 Year

    SAA 1 Year

    Original

    Asset Classes

    Gibson

    11%

    6%

    11%

    7%

    5

    Green`s Gone Fishin

    10%

    9%

    11%

    13%

    6

    Lowell

    13%

    7%

    13%

    15%

    3

    Schultheis

    6%

    10%

    14%

    9%

    3

    Seven-12

    13%

    11%

    14%

    12%

    7

    Swensen Six

    11%

    10%

    10%

    13%

    5

    Wasik Nano Plan

    9%

    9%

    13%

    11%

    4

    • Gibson's 5 Equal Asset Allocation Strategy comes from his Asset Allocation: Balancing Financial Risks book. In it, he outlined a simple yet diversified asset allocation model: putting equal amount of investment into 5 asset classes: US Equity, International Equity, REIT, Commodity, Fixed Income. 
    • Alexander Green proposed this The Gone Fishin' Portfolio. Based on the book the allocation is achieved using Vanguard low cost index funds (in Bogleheads forum, there is a discussion thread devoted to this portfolio)
    • Jim Lowell edits MarketWatch's ETF Trader, an investment letter employing a momentum-based exchange-traded-fund strategy for long-term investors. Large and small stocks, proposed his Sower's Growth Portfolio. This is a diversified portfolio of exchange-traded funds
    • Bill Schulthe is is a former Smith Barney broker and author of "The Coffeehouse Investor"
    • Craig L. Israelsen is an Associate Professor at Brigham Young University where he teaches Personal and Family Finance to over 1,200 students each year. The Israelsen Seven Equally Weighted is aimed to protect the portfolio against losses
    • David Swensen, the Yale Endowment Manager, proposed a one size fit in all model portfolio for individual investors. The major difference of this portfolio is the emphasis on international equities (including emerging market equities) and real estate
    • John Wasik is a professional journalist and author specializing in personal finance, the environment, investing and social issues. John has proposed a Nano plan investment portfolio which employs a handful of index or ETFs to cover virtually the entire world of bond and stock markets

    The one year returns of the original portfolio are presented in order of highest to lowest.


    How do the returns compare to what we would have expected?

    Plan Name

    TAA 5 Yr Return Annualized

    TAA
    1 Year Return

    SAA
    1 Year Return

    Original 1Year

    Asset Classes

    Lowell

    13%

    7%

    13%

    15%

    3

    Green`s Gone Fishin

    10%

    9%

    11%

    13%

    6

    Swensen Six

    11%

    10%

    10%

    13%

    5

    Seven-12

    13%

    11%

    14%

    12%

    7

    Wasik Nano Plan

    9%

    9%

    13%

    11%

    4

    Schultheis

    6%

    10%

    14%

    9%

    3

    Gibson

    11%

    6%

    11%

    7%

    5

    • The second half of the group performed slightly better as a group than the first half. Lowell's return is the highest of the bunch -- as a three asset class portfolio, that will be an interesting study as to whether this will continue in 2011
    • All of the portfolios exhibited the same behavior of the buy and hold approaches beating TAA -- this is an important lesson that TAA, while having significant benefits in a choppy market, may not perform as well as SAA in a good market
    • As we end the year on a relatively strong note, there is still a note of caution and concern about the future and we will have to see how well these portfolios perform next year


    Takeaways

    • 2010 has been a good year for lazy portfolios as stocks have continued their recovery albeit with concern for the future
    • TAA has real benefits but so does SAA or buy and hold -- this year demonstrates this point
    • Index funds continue to show good results against managed funds
    • Larger asset class plans have the benefit of stability and good returns
    • ETF’s can be used to implement any of these strategies
    • We pick the top three -- Lowell, Green and Swensen Brown to move on to the finals
    • The Seven-12 portfolio can feel hard done by because if it were in the top half of the draw, it would have made it through to the finals

     

    labels:investment,

    Symbols:ACWI,ACWX,ADRE,AGG,BIV,BLV,BND,BSV,BWX,CFT,CIU,CSJ,DBC,DBV,DIA,DVY,EDV,EEM,EFA,EFG,EFV,EMB,ETF,GLD,GOOG,GSG,GXC,HPQ,HYG,ICF,IEF,IEI,IFGL,IGOV,IGR,IJH,IJJ,IJK,IJR,IJS,IJT,IVE,IVV,IVW,IWB,IWC,IWD,IWF,IWM,IWN,

     

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  • Samsung's Excellent 401K Plan, Pushes the ETF Benchmark Hard

    12/14/2010

  • Ford Motor Company 401K Plan: Diversified and High Quality

    10/24/2010

  • TD Ameritrade Commission Free ETF’s Empowers Both Strategic and Tactical Asset Allocation

    10/19/2010

  • Lazy Portfolios -- The Playoffs II

    10/19/2010

  • Lazy Portfolios -- The Playoffs

    10/19/2010

First   1   Last  

  • TD Ameritrade Commission Free ETFs Report On 12/07/2010

    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

  • Vanguard-VA-Clone Report On 12/07/2010

    12/07/2010

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