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Articles on SHY

  • Appetite for US High Yield Bonds Remains High as Yields Tighten

    05/11/2011

     


    High yield bond ETFs concentrate on lower quality corporate bonds, which are considered riskier than higher-quality or more established companies. Because of this higher level of risk, high-yield bonds, also known as junk bonds, offer higher yields to investors. US high yield bond ETFs invest at least 65% of capital in binds that are not rated or are rated by S&P or Moody's at or below BB (considered speculative). Because of high returns and the potential for diversification across many markets, regions, and industries, high yield bonds are a major part of many investment strategies.

    We track asset class movement and you can see here the fixed income table which is updated weekly.

    Assets Class Symbols 05/06
    Trend
    Score
    04/29
    Trend
    Score
    Direction
    International Inflation Protected WIP 6.74% 9.22% v
    High Yield JNK 5.54% 5.68% v
    International Treasury BWX 5.1% 6.82% v
    Long Term Credit LQD 3.48% 2.87% ^
    Emerging Mkt Bonds PCY 3.48% 2.21% ^
    20+ Year Treasury TLT 3.38% 1.63% ^
    Inflation Protected TIP 3.09% 3.27% v
    10-20Year Treasury TLH 2.88% 1.73% ^
    Intermediate Term Credit CIU 2.43% 2.06% ^
    Intermediate Treasury IEF 2.39% 1.65% ^
    US Total Bond BND 2.1% 1.77% ^
    MBS Bond MBB 1.92% 1.83% ^
    California Muni CMF 1.74% 1.99% v
    National Muni MUB 1.57% 1.24% ^
    Short Term Credit CSJ 1.0% 1.09% v
    New York Muni NYF 0.64% 0.51% ^
    Short Term Treasury SHY 0.55% 0.53% ^
    Treasury Bills SHV 0.08% 0.07% ^
      Trend score is the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).
    You can get a no cost widget for any of these tables which will automatically update weekly.


    At the end of last week (5/6/2011), high yield bond ETFs, represented by the SPDR Barclays Capital High Yield (JNK), stood among the top of the Fixed Income Return Table. Yields in the sector have declined as risk premiums have tightend on stronger performance by companies with lower credit ratings. While returns on corporate bonds have declined slightly in recent periods, ETFs that track the market have continually offered strong returns relative to other fixed income securities.

    U.S. High Yield Bonds

    05/06/2011
    Description Symbol 1 Yr 3 Yr 5 Yr Avg. Volume(K) 1 Yr Sharpe
    iShares iBoxx $ High Yield Corp HYG 17.67% 7.03% NA 1,247 270.24%
    SPDR Barclays Capital High Yield JNK 20.83% 8.41% NA 2,972 279.79%
    PowerShares Fundamental High Yield PHB 19.2% 0.79% NA 302 318.25%


    Among US High Yield Bond ETFs, the top performers include the SPDR Barclays Capital High Yield (JNK), the Powershares Fundamental High Yield ETF (PHB), and the iShares iBoxx $ High Yield Corporate ETF (HYG) returning 20.83%, 19.20%, 17.67% respectively in the past year.

    With the highest one-year return and the highest trading volume, the SPDR Barclays Capital High Yield ETF remains a srtong investment option. The ETF is well diversified, with no single bond comprising more than 4% of total assets and the top 10% of assets making up only 22.58% of the total.

    Going forward, yields on high yield corporate debt should continue to tighten as long as companies continue to generate strong performance. Still, high yield corporate bond ETFs should continue to offer attractive returns relative to other fixed income assets.

    Corporate bonds are an important component of diversified bond portfolios, as they offer greater returns and risks than government bonds. Due to their high level of interest paid, generally in the form of monthly distributions, corporate bond ETFs may be especially suitable for individuals approaching or already in retirement. As with any investment, it is important to make sure the risk and return levels match up with your personal investment goals.


    Symbols: AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB


    Tickers: (NYSE: AGG), (NYSE: BND), (NYSE: SHV), (NYSE: SHY), (NYSE: IEF), (NYSE: TLH), (NYSE: TLT), (NYSE: TIP), (NYSE: WIP), (NYSE: HYG), (NYSE: JNK), (NYSE: PHB), (NYSE: CSJ), (NYSE: CIU), (NYSE: LQD), (NYSE: BWX), (NYSE: CMF), (NYSE: NYF), (NYSE: MUB), (NYSE: MBB), (NYSE: PCY), (NYSE: EMB)

     

    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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  • JNK Beats WIP At the Top of The Fixed Income Table

    05/10/2011

     

    In order to reach your financial objectives, you must diversify. There are a range of investment alternatives that vary greatly in the degree and type of risk and potential return. The key to developing a sound portfolio is to strike the right balance between potential reward and risk, based on your financial objectives, financial situation and investment style. 


    Fixed Income refers to assets that provide their owners with a fixed stream of income. Fixed income assets can be broken down into five sub-classes:

    • Government-issued securities
    • Corporate-issued securities
    • Inflation-protected securities (IPS)
    • Mortgage-backed securities (MBS)
    • Asset-backed securities (ABS)

    An enormous amount of innovation continues within the world of fixed income. For the retail investor, IPS, MBS, and ABS are all relatively new additions. The U.S. leads the world in the range and depth of fixed-income offerings--particularly with MBS and ABS. Other countries are developing their MBS and ABS markets. 

    Although the fixed income stream ETFs provide the best hedge against equity volatility, the returns are not high as equity and other assets. WIP, JNK & BWX are the best performers in terms of returns but the last week showed a decline.

    There is a mixed trend within the fixed asset type ETFs but overall more sub-classes are up than down. We are expecting a shift in ETF’s towards international fixed income as the dollar weakens and interest rates are raised overseas

    WIP fund total Net assets value is 1.362 billion with a one year return of 16.95% and a three year return is of 4.01%. The gross expense ratio is 0.50%. The total sector allocation is broken down into the following composition: Treasury 99.83% & Cash 0.16%.

    JNK fund total Net assets value is 7.3 billion with a one year return of 12.82% and a three year return is of 8.21%. The gross expense ratio is 0.40% for the sector allocations please see the graph below:

     

     

     

    Although the one year returns of WIP i.e. 16.95% are greater than JNK i.e. 12.82%, we prefer the longevity from JNK i.e. 8.21% within the 3 years double the time of WIP return and it is performing well in the short term too.

    We track asset class movement and you can see here the fixed income table which is updated weekly.

    Assets Class

    Symbols

    05/06
    Trend
    Score

    04/29
    Trend
    Score

    Direction

    International Inflation Protected

    WIP

    6.74%

    9.22%

    v

    High Yield

    JNK

    5.54%

    5.68%

    v

    International Treasury

    BWX

    5.1%

    6.82%

    v

    Long Term Credit

    LQD

    3.48%

    2.87%

    ^

    Emerging Mkt Bonds

    PCY

    3.48%

    2.21%

    ^

    20+ Year Treasury

    TLT

    3.38%

    1.63%

    ^

    Inflation Protected

    TIP

    3.09%

    3.27%

    v

    10-20Year Treasury

    TLH

    2.88%

    1.73%

    ^

    Intermediate Term Credit

    CIU

    2.43%

    2.06%

    ^

    Intermediate Treasury

    IEF

    2.39%

    1.65%

    ^

    US Total Bond

    BND

    2.1%

    1.77%

    ^

    MBS Bond

    MBB

    1.92%

    1.83%

    ^

    California Muni

    CMF

    1.74%

    1.99%

    v

    National Muni

    MUB

    1.57%

    1.24%

    ^

    Short Term Credit

    CSJ

    1.0%

    1.09%

    v

    New York Muni

    NYF

    0.64%

    0.51%

    ^

    Short Term Treasury

    SHY

    0.55%

    0.53%

    ^

    Treasury Bills

    SHV

    0.08%

    0.07%

    ^

     Trend score is the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).
    You can get a no cost widget for any of these tables which will automatically update weekly.

     

    If you are planning to shift part of your portfolio into fixed-income investments to help manage risk, you may also want to consider "laddering" these securities. This means you spread the total dollar amount of your investment among fixed-income securities with different maturities.


    Symbols:  AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB 

     

     

    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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  • Emerging Market Bonds Become Important Parts of Many Portfolios

    05/04/2011

    Emerging market bonds have become a large part of many investors' portfolios in recent years. This can be attributed to an increase in the credit quality of the bonds of foreign countries and companies. These bonds generally offer higher yields than T reasury bonds and domestic corporate bonds. ETFs that track this market allow investors to diversify across many international regions and across countries of various size and economic strength.

    Recently, Emerging Market Bond ETFs have performed well when compared to other Fixed Income Assets. With a trend score of 2.21%, Emerging Market Bond ETFs, represented by PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) have shown improvement in recent periods. This can be attributed to the continued growth and economic strengthening of many developing nations along with the desire by many investors to move money away from developed nations that have encountered economic trouble.

     

    Fixed Income Return Table

    4/29/2011

    Assets Class Symbols 04/29
    Trend
    Score
    04/21
    Trend
    Score
    Direction
    International Inflation Protected WIP 9.22% 7.53% ^
    International Treasury BWX 6.82% 4.91% ^
    High Yield JNK 5.68% 5.88% v
    Inflation Protected TIP 3.27% 2.89% ^
    Long Term Credit LQD 2.87% 2.43% ^
    Emerging Mkt Bonds PCY 2.21% 1.52% ^
    Intermediate Term Credit CIU 2.06% 1.74% ^
    California Muni CMF 1.99% 0.42% ^
    MBS Bond MBB 1.83% 1.32% ^
    US Total Bond BND 1.77% 1.39% ^
    10-20Year Treasury TLH 1.73% 1.02% ^
    Intermediate Treasury IEF 1.65% 1.06% ^
    20+ Year Treasury TLT 1.63% 1.12% ^
    National Muni MUB 1.24% 0.84% ^
    Short Term Credit CSJ 1.09% 0.89% ^
    Short Term Treasury SHY 0.53% 0.46% ^
    New York Muni NYF 0.51% 0.06% ^
    Treasury Bills SHV 0.07% 0.09% v

    The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).

    In the past year, ETFs tracking Emerging Market Bonds have offered investors strong performance, slightly above historical levels. EMB iShares JPMorgan USD Emerging Markets ETF (EMB) lead within the sector, growing 9.3% in the past year. Over the past three years EMB has returned 7.44%. Another strong performer in Emerging Market Bond ETFs has been PCY PowerShares Emerging Markets (PCY), gaining 8.7% in the past year, slightly above its three year growth of 8.32%.

     

    Emerging Market Bonds

    4/29/2011

    Description Symbol 1 Year 3 Years
    EMB iShares JPMorgan USD Emerg Mkt EMB 9.3% 7.44%
    PCY PowerShares Emerging Mkts PCY 8.7% 8.32%

     

    As developing economies continue to improve, Emerging Market Bond ETFs will remain an important part of a well-diversified portfolio. With developed nations like the United States, Japan, and certain European countries experiencing economic instability, market participants will likely continue moving towards emerging market assets like Bond ETFs.

    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.

    Tickers: (NYSE: PCY), (NYSEArca: EMB), (NYSE: PCY), (NYSE: EMB), (NYSE: WIP), (NYSE: BWX), (NYSE: JNK), (NYSE: TIP), (NYSE:LQD), (NYSE:.PCY), (NYSE: CIU), (NYSE: CMF), (NYSE: MBB), (NYSE: BND), (NYSE: TLH), (NYSE: IEF), (NYSE: TLT), (NYSE: MUB), (NYSE: CSJ), (NYSE: SHY), (NYSE: NYF), (NYSE: SHV)

     

    Symbols: PCY, EMB, WIP, BWX, JNK, TIP, LQD, PCY, CIU, CMF, MBB, BND, TLH, IEF, TLT, MUB, CSJ, SHY, NYF, SHV 


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  • How Are Morningstar's Best Bond Fund Managers Faring in These Trying Times

    04/29/2011

    Many working people put off their retirement investing -- just one more year until it has becomes a "hair on fire" problem. The problem is that we can easily be overwhelmed and shut down. The way to solve this is to focus on what works in the long term -- that is what long term investing is all about -- and allow that to filter out what may work in the short term but won't stand the test of time.

    We continue to examine different portfolios to see what we can learn and use to further our investment portfolios.

    This article reviews the best of bond strategy that we first published in November of last year. This outlined a strategy based on bond funds only It was simple: out of the seven top bond managers (according to Morningstar) own the top performing bond fund which you review on a monthly basis (or quarterly if you prefer). Every year we 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).

    Currently, the top seven we use are:

    Bond Fund

    Ticker

    PIMCO Total Return

    PTTRX

    TCW Total Return Bond

    TGLMX

    Western Asset Core Bond

    WATFX

    Metropolitan West Total Return Bond

    MWTRX

    Loomis Sayles Bond

    LSBDX

    Dodge & Cox Income

    DODIX

    FPA New Income

    FPNIX

    In a previous set of articles we tried to compete using bind ETFs such as BND, BWX, CIU, CMF, CSJ, IEF, JNK, LQD, MBB, MUB, NYF, PCY, SHV, SHY, TIP, TLH, TLT, WIP but we were unable match the returns of these managed bond funds. With PIMCO recently announcing a managed ETF bond fund, it will be interesting to see whether this gap will be filled.

    Bonds have had a torrid time since the turn of the year with many tactical strategies moving to cash rather than staying in bond funds. With interest rates sticking to their lows and with QEII still in operation, there has been little joy for bond owners.

    We compare this against a portfolio of dividend bearing ETF's that we have reviewed and use as a recommended plan for those looking to invest for income.

    The comparison is

     

    Portfolio Performance Comparison

    Portfolio/Fund 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 Quarterly 5% 85% 11% 194% 10% 164%
    P Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year`s Funds Monthly 6% 110% 12% 219% 11% 172%
    Retirement Income ETFs Strategic Asset Allocation Moderate 13% 96% 4% 16% 5% 23%
    Retirement Income ETFs Tactical Asset Allocation Moderate 7% 52% 10% 76% 10% 66%


    Full details with drawdown and other parameters -- you can also add other portfolios for comparison

    Three Month Chart (Blue is Quarterly)

    One Year Chart  (Blue is Quarterly)

    Three Year Chart  (Blue is Quarterly)

    Five Year Chart  (Blue is Quarterly)


    Takeaways
    • Despite the challenging conditions, the Bond funds continue to deliver reasonable results in the short term and still look good over the longer time horizon
    • The retirement income ETF tactical asset allocation has a similar long term performance but with more trading activity
    • The strategic asset allocation has been doing well in the short term but suffered in the big downturn

    The best of bonds is still a solid approach and with the advent of managed bond ETFs, it may be possible to have an ETF equivalent plan.

    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: PTTRX, TGLMX, WATFX, MWTRX, LSBDX, DODIX, FPNIX, BND, BWX, CIU, CMF, CSJ, IEF, JNK, LQD, MBB, MUB, NYF, PCY, SHV, SHY, TIP, TLH, TLT, WIP

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  • Bernstein No Brainer and Smart Money Lazy Portfolios Under The Microscope

    04/15/2011

    Retirement investing is now a "hair on fire" problem for Boomers who have no time to waste in getting their portfolios in order. The challenge is how to avoid being overwhelmed with conflicting data and shutting down.

    We present simple approaches to understand the path to higher returns with lower risk.

    Dr. William Bernstein is the author of the "Intelligent Asset Allocator" and "The Four Pillars of Investing." He's also a physician, neurologist and financial adviser to high-net-worth individuals. He has proposed a number of lazy portfolios. There are two that we now examine in the light of a more active benchmark which has monthly instead of annual rebalancing.

    1. The smart money portfolio

    2. The no-brainer portfolio

    The no-brainer portfolio comprises the following fund allocation:

    • 25% in Vanguard 500 Index VFINX (IVW)

    • 25% in Vanguard Small Cap NAESX or VTMSX (VB)

    • 25% in Vanguard Total International VGTSX or VTMGX (EFA, VEA)

    • 25% in Vanguard Total Bond VBMFX or VBISX (BND)

    Things to note about the portfolio:

    • Heavily weighted towards domestic equities

    • Similar to a three asset SIB [simpler-is-better] with domestic, international and fixed income

    • It would be better to have some REIT or emerging markets exposure


    The smart money portfolio comprises the following fund allocation:

    • 40% Vanguard Short Term Investment Grade VFSTX (SCJ, SHY)

    • 15% Vanguard Total Stock Market VTSMX (VTI)

    • 10% Vanguard Small Cap Value VISVX (VBR)

    • 10% Vanguard Value Index VIVAX (VTV)

    • 5% Vanguard Emerging Markets Stock VEIEX (VWO)

    • 5% Vanguard European Stock VEURX (VEU)

    • 5% Vanguard Pacific Stock VPACX (VPL)

    • 5% Vanguard REIT Index VGSIX (RWX, VNQ)

    • 5% Vanguard Small Cap Value NAESX or VTMSX (VB)

    To summarize:

    • 40% in U.S. equities

    • 10% in international equities

    • 5% in emerging market equities

    • 5% in REITs

    • 40% in fixed income


    The smart money portfolio is more conservative and has two more asset classes but they only represent five percent of the portfolio each. With 80% of the portfolio in US and fixed income, it isn't very different from the no brainer portfolio.

    We are going to use the SIB (Simpler Is Better) Portfolio as a benchmark. The SIB comprise – market index funds (ETFs or Mutual Funds) from key asset classes that can be used to measure historical returns to show the impact of asset class selection rather than fund or stock selection. We are going to use a six asset ETF SIBs. This will enable us to see the type of returns we can expect and contrast Mutual Funds and ETFs

    The following funds are used:

    Asset Class Ticker Name
    LARGE BLEND VTI Vanguard Total Stock Market ETF
    Foreign Large Blend VEU Vanguard FTSE All-World ex-US ETF
    DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
    REAL ESTATE VNQ Vanguard REIT Index ETF
    COMMODITIES BROAD BASKET DBC PowerShares DB Commodity Idx Trking Fund
    Intermediate-Term Bond BND Vanguard Total Bond Market ETF

     

    The strategic asset allocation strategy has 40% in fixed income and 12% in the other five funds.


    The tactical asset allocation strategy has 40% in fixed income and 30% in the top two asset class funds determined by the price momentum -- unless that performance is below fixed income when the money will be diverted to fixed income. If fixed income is performing below cash, the fixed income portion will be cash.

    Portfolio Analysis

    full chart

    Portfolio Performance Comparison

    Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    P William Bernstein No Brainer Nine Fund Portfolio Annual Rebalance 8% 79% 4% 20% 4% 21%
    P William Bernstein No Brainer Four Fund Portfolio 11% 87% 4% 18% 5% 19%
    Six Core Asset ETF Benchmark Tactical Asset Allocation Moderate 10% 71% 9% 73% 13% 91%
    Six Core Asset ETF Benchmark Strategic Asset Allocation Moderate 13% 103% 4% 20% 7% 35%

    Takeaways

    • Both Bernstein portfolios perform satisfactorily for a lazy portfolio – it is surprising that the no-brainer performs so well against its more diversified smart-money cousin
    • The Six Asset SIB buy and hold outperforms both Bernstein portfolios based on broader diversification.
    • Tactical Asset Allocation reduces downside risk and that wins in the current uncertain environment

    Symbols: BND, DBC, EFA, IVW, NAESX, RWX, SCJ, SHY, VB, VBR, VEA, VEIEX, VEU, VEURX, VFINX, VFSTX, VGSIX, VISVX, VIVAX, VNQ, VPACX, VPL, VTI, VTMGX, VTMSX, VTSMX, VTV, VWO

    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

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  • GMO’s Lean Investment Outlook

    04/08/2011

  • Schwab Mutual Funds Beat out ETFs

    04/06/2011

  • Schwab Select ETF Plan Has Bright Prospects

    04/06/2011

  • Smart U.S. Money Managers Dumped Long Term Treasury Bonds, Who Are Holding The Bag?

    04/04/2011

  • MidAmerican Energy Company's 401K Plan: More Diversification Needed

    03/31/2011

  • Tactically Manage An Income Producing Portfolio With Commodity Exposure

    03/25/2011

  • Fund Advice Gives Sound Advice

    03/22/2011

  • Commodities Withstood the Recent Market Selloff

    03/21/2011

  • Morningstar's 401K Clone Begs the Question- What about Managed Funds?

    02/27/2011

  • Shell Versus Morningstar -- More is Better

    02/27/2011

  • Energy Commodities and Gold Strong: Gold's Role in Asset Allocation

    02/26/2011

  • Commodity ETF Trends: Silver Breaks Out, Gold Steady Amid Commodity Strength

    02/20/2011

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

    02/16/2011

  • Beware of Divergence Among Energy Commodity ETFs

    02/14/2011

  • Rising Energy Costs: Casting a Cloud over Energy-Dependent Sector ETFs

    01/15/2011

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  • ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Report On 12/03/2010

    12/03/2010

    This report reviews ALLERGAN, INC. SAVINGS AND INVESTMENT 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 ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN can achieve reasonable investment results using asset allocation strategies.

    Plan Review and Rating

    ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN's 401K plan consists of 13 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
    Moderate Allocation: AOM
    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
    World Stock: IOO, VT

    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 (21%)
    Fund Quality -- Rated as (16%)
    Portfolio Building -- Rated as (31%)
    Overall Rating: (24%)

    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 ALLERGAN, INC. SAVINGS AND INVESTMENT 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)

    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 ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN participants.

    To summarize, ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Symbols: AGN , 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 , IOO , VT , SHY , SHV , VGSH , PLK , USY , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJS , IWN , JKL , VBR , DSV , PWY , RZV , UVT , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK

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