April 9, 2012: My Investment Accounts & Allocation Templates

04/10/2012 Share 0 comments

Re-balance Cycle Reminder

Based on our new monthly re-balance calendar, the next re-balance time will be on Monday, April 23, 2012. You can also find the re-balance calendar of 2012 on 'My Portfolios' page.

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

New Features

We would like to introduce two new features to our users.

My Investment Accounts

As we stated in a previous newsletter, one of the major problems for users to follow a model portfolio is that their actual investment accounts are not necessarily in sync with the model portfolios they are following. This problem is mainly caused by the minimum holding period requirement imposed by mutual funds or brokerages. When you start to follow a model portfolio, the model portfolio has its own holding periods for existing holdings, so unless you wait to time for completely new purchases, you will not be able to make your actual investments exactly mirror the model portfolio. Furthermore, in reality, one can never be sure to make transactions on the exact same date with the exact allocation percentages as the model portfolio that, again, is the other main source to make your actual investment account different from the model portfolio.

The new feature 'My Investment Accounts' allows you to input your actual holdings in an investment account and their holding periods lot by lot (meaning if there are multiple transactions on a holding at different time, you can enter them individually so that the holding periods can be accounted for). You then can specify a model portfolio that is either followed or customized by you and get re-balance transaction suggestions based on the current holdings of the model portfolio.

You can create an Investment Account either on 'My Portfolios' page or on a model portfolio page. You can further save the information you enter to this Investment Account so that next time, you can simply update it instead of entering all the info again.

Please note that an investment account has to be associated with a model portfolio.

Allocation Template

We are pleased to announce this new beta feature: allocation template allows users to use existing templates or just simply enter their own weights when customizing a Strategic Asset Allocation (SAA) portfolio. At the beta stage, every registered user can use it. This feature allows users to create an SAA portfolio with non-equal weights among risk asset classes. You can even simply enter a portfolio of individual funds one by one and then specify target allocations for each fund (or asset). Our re-balance algorithm will then be used for the portfolio.

Here is a simple walk:

1. Invoke from 'Customize a New Portfolio' on an SAA portfolio page:

Click on 'Choose an allocation template' button (it is only shown when the strategy is Strategic Asset Allocation (SAA)).

2. Choose an allocation template or specify your own

3. Adjust weights

For those asset classes that have no corresponding candidate funds in the plan you are working (for example, in this example, the David Swensen's template has both Inflation-Protected Bonds and Long Term Treasury Bonds assets that are not present in the Six Core Asset ETFs plan), you can either 'delete' them and add a new asset class such as Fixed Income (Vanguard BND is the only fund in the Fixed Income asset class in this plan) or use 'scale' so that we can automatically apply those 'extra' weights to the existing asset classes. We do not recommend using 'scale' for a starter.

4. Simulate the new portfolio

Once you press 'Apply' button, the new template allocation will be applied back to the top of the page and then you can click on 'Build the Customized Portfolio' button to simulate this portfolio.

We believe this new feature is very useful for anyone who would like to follow an allocation template suggested by Gurus (i.e. lazy portfolios) or by allocation tools suggested by other web sites (such as the Vanguard one we mentioned in our previous newsletter March 26, 2012: A Few Good Sources To Help On Deciding Risk Profiles ).

We plan to make this feature available to our basic and expert subscribers in the future. For now, it is open to everyone.

Portfolio Reviews

We continue our regular reviews on various portfolios we provided. The following is the performance of the five tactical portfolios on our Brokerage Specific ETF Portfolios page:

More detailed comparison>>

As a reminder, the comparison link is also listed on our Brokerage Specific ETF Portfolios page.

Asset Class Trend Review

Is this a repeat of 2011? Many are asking this question these days. Given the latest (Monday's) market actions, there is a possibility that risk assets will start to deterioate in the coming weeks). The following table shows the latest (4/9/2012) trend scores:

Major Asset Classes Trend

04/09/2012

Because of the Year over Year comparison, we suspect that if equity markets continue to weaken, we will see their rankings drop sooner this year. For now, we just stay on the course.

See major asset trend table on 360° Market Overview for more details.

Again, we would like to emphasize the high risk in stock markets. For new investors, we repeat that it is important to adopt gradual exposure to risk assets using strategies suh as dollar cost averaging.

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