10/19/2010

TD Ameritrade (Ticker: AMTD) just announced that it offers 100+ commission free ETFs for its clients.The 100+ (a precise number is 101) ETFs were selected by Morningstar that include ETFs from iShares, Vanguard, State Street, PowerShares, and others. In comparison, Schwab's free ETFs include only 11 of its own funds. Similarly, Vanguard offers 47 Vanguard ETFs for free. Fidelity was the first one that offers 25 iShares ETFs for free. See the official TD Ameritrade offering for more details.

MyPlanIQ views this is a very significant step for small investors (well we are not sure whether TD Ameritrade would still offer such a deal to very large accounts). We have constructed an investment plan TD Ameritrade Commission Free ETFs to take advantage of these ETFs. Though for the trades of these ETFs to be eligible for commission free, TD Ameritrade's customers have to hold these ETFs for more than 30 days, such a restriction is not significant for our plan since the plan only rebalances at most once per month. In this plan, the minimum holding period for each fund is set to be 1 month, which is equivalent to 30 days.

TD Ameritrade Commission Free ETFs's 401K plan consists of 101 funds. These funds enable participants to gain exposure to 6 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , Commodity , REITs . We view this is the most comprehensive coverage of major asset classes. 

The list of minor asset classes covered are: 

COMMODITIES BROAD BASKET: GSG , DBC 
Conservative Allocation: AOK 
DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE 
Emerging Markets Bond: PCY 
EQUITY: VTI,VT 
EUROPE STOCK: IEV , VGK , PEF , DEB 
Foreign Large Blend: EFA , VEU , GWL , PFA 
Foreign Large Growth: EFG 
Foreign Large Value: EFV , PID , DWM 
FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC 
Foreign Small/Mid Value: SCZ 
Global Real Estate: IFGL , RWX 
High Yield Bond: HYG , JNK , PHB 
Inflation-Protected Bond: TIP 
Intermediate Government: IEI , VGIT , ITE 
Intermediate-Term Bond: AGG,CIU , BIV,BND 
JAPAN STOCK: EWJ , JPP , PJO , DXJ 
LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX 
LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG 
LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV 
Latin America Stock: ILF , GML 
LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW 
Long-Term Bond: CLY,LQD , BLV,VCLT 
MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV 
Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW 
MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU 
Moderate Allocation: AOM 
Multisector Bond: AGG,GBF , BND , LAG 
Muni National Interm: ITM 
Muni National Long: MUB , TFI , PZA , MLN 
Muni National Short: SUB , SHM , PVI , SMB 
PACIFIC/ASIA EX-JAPAN STK: EPP,AAXJ , GMF , PAF , DND 
REAL ESTATE: IYR,ICF , VNQ 
SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY 
Short-Term Bond: CSJ , BSV,VCSH 
SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA 
Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK 
SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT 
SPECIALTY-REAL ESTATE: RWR , PSR , URE 
World Allocation: AOR , AOA 
WORLD BOND: IGOV , BWX,WIP 
WORLD STOCK: IOO , VT

As of Oct 15, 2010, this plan investment choice is rated as above average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

Diversification -- Rated as great (97%) 
Fund Quality -- Rated as below average (29%) 
Portfolio Building -- Rated as great (90%) 
Overall Rating: above average (74%)

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

REITs:( IYR or VNQ or ICF ) 
Fixed Income:( AGG or BND ) 
Commodity:(DBC) 
Foreign Equity:( EFA or VEU ) 
Emerging Market Equity:( EEM or VWO ) 
US Equity:( SPY or VTI ) 
Performance chart (as of Oct 15, 2010)

Performance table (as of Oct 15, 2010)

To summarize, TD Ameritrade Commission Free ETFs plan is very comprehensive and allows investors to achieve significant performance with reasonable risk. With now all of the top discount brokers (Fidelity, Schwab and TD Ameritrade) offering such commission free ETFs, investors are now free from trading cost and focus on portfolio building in terms of better asset allocation strategies. 

labels:investment,

Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,

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10/19/2010

Vanguard ETFs's 401K plan consists of 43 funds. These funds enable participants to gain exposure to 5 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , REITs . The list of minor asset classes covered:

Communications: IXP , PTE , DGG , LTL 
Consumer Discretionary: RXI , VCR 
Consumer Staples: KXI , VDC , PSL , DPN , RHS 
DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE 
DIVERSIFIED PACIFIC/ASIA: EPP , VPL , GMF , PAF 
Equity Energy: ITE,IXC , IPW , DBE , RYE , DKA 
EUROPE STOCK: IEV , VGK , PEF , DEB 
Financial: IYF , VFH , IPF , PFI , DRF , RYF 
Foreign Large Blend: EFA , VEU , GWL , PFA 
FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC 
Health: IYH,IXJ , VHT , XBI , PBE , DBR , RYH 
Industrials: IYJ,EXI , VIS 
Intermediate-Term Bond: AGG,CIU , BIV,BND 
LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX 
LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG 
LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV 
LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW 
Long-Term Bond: CLY,LQD , BLV,VCLT 
MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV 
Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW 
MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU 
Natural Resources: IYM,IGE , VAW , XLB,XME , PYZ , DBN , RTM , UYM 
REAL ESTATE: IYR,ICF , VNQ 
SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY 
Short-Term Bond: CSJ , BSV,VCSH 
SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA 
Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK 
SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT 
Technology: MTK , PTF , DBT , RYT , ROM 
Utilities: GII , PUI , DBU , RYU , UPW 
WORLD STOCK: IOO , VT

As of Oct 15, 2010, this plan investment choice is rated as averagebased on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

Diversification -- Rated as above average (74%) 
Fund Quality -- Rated as below average (33%) 
Portfolio Building -- Rated as average (37%) 
Overall Rating: average (47%)

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

REITs:( IYR or VNQ or ICF ) 
Fixed Income:( AGG or BND ) 
Foreign Equity:( EFA or VEU ) 
Emerging Market Equity:( EEM or VWO ) 
US Equity:( SPY or VTI ) 
Performance chart (as of Oct 15, 2010)

Performance table (as of Oct 15, 2010)

Currently, asset classes in REITs( IYR , VNQ , ICF ) , Fixed Income( AGG , BND ) and Emerging Market Equity( EEM , VWO ) are doing relatively well. These asset classes are available to Vanguard ETFs participants.

To summarize, Vanguard ETFs plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. Currently, the tactical asset allocation strategy indicates overweighing on reits , emerging market equity and fixed income funds.

labels:investment,

Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,

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10/19/2010

• The expense ratios are low
• There are four asset classes with a good choice of funds
• We would have liked to have seen more choices with other providers
• We would have liked to have seen funds with a longer history
• We would expect real estate to be added before long
• We would expect more choices in the international and emerging market segments before long

Fixed Income:( AGG or BND ) 
Foreign Equity:( EFA or VEU ) 
Emerging Market Equity:( EEM or VWO ) 
US Equity:( SPY or VTI ) 

Performance chart (as of Oct 15, 2010)

 

Performance table (as of Oct 15, 2010)

• A large number of ETF’s in six asset classes to allow the construction of high performance portfolios
• Providing ETF’s with history from industry leading suppliers

labels:investment,

Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,

comments(0) 

10/19/2010

The recent news that TD Ameritrade are providing over 100 ETF’s commission free is a perfect fit for a retirement portfolio. Investors are able to trade once a month and pick from a wide range of ETF’s without incurring any trading fees. Combine this with an IRA where the tax consequences of trading are removed and you have an almost ideal scenario and back tested returns demonstrate the point.

We used the MyPlanIQ system to build and monitor a moderate risk (40% fixed income) strategic asset allocation portfolio. With five risk based asset classes, each of those classes would have 12% of the assets dedicated to them but the funds would be evaluated every month and the optimal fund selected based on the momentum within the class.

This can be compared with a Six asset SIB for which there is just one fund in each asset class.

From the performance chart, it is clear that there is increased upside potential from being able to switch funds within an asset class. Unfortunately, there is less ability to minimize downside risk when an asset class is under downward pressure.

Despite this, for those who want to stay with a buy and hold in terms of asset classes, using this approach can squeeze some extra returns from the strategy.

With the large number of funds in six asset classes, momentum based asset allocation can be seen in its best light.

 
Full Details

• ETF’s provide the basis for an outstanding portfolio with either strategic or tactical asset allocation. This is clearly demonstrated with TD’s wide range of commission free funds
• Using a web based application takes a lot of the effort from finding the best funds for either strategy
• Strategic asset allocation with styles rotation can deliver solid results using a well trusted strategy
• Tactical asset allocation greatly benefits from the large number of funds

labels:investment,

Symbols:GSG,DBC,AOK,EEM,GMM,PXH,DEM,SCHE,PCY,VTI,VT,IEV,VGK,PEF,DEB,EFA,VEU,GWL,PFA,EFG,EFV,PID,DWM,IFSM,VSS,SCHC,SCZ,IFGL,RWX,HYG,JNK,PHB,TIP,IEI,VGIT,ITE,AGG,CIU,BIV,BND,EWJ,JPP,PJO,DXJ,IVV,IYY,IWV,VV,SPY,DLN,RSP,SCHX,IVW,IWZ,JKE,VUG,ELG,QQQQ,RPG,SCHG,IVE,IWW,Commission,Free,ETFs,Strategic,Asset,Allocation,Tactical,Asset,Allocation,Asset,Allocation,styles,rotation,

comments(0) 

10/19/2010

The recent news that TD Ameritrade are providing over 100 ETF’s commission free is a perfect fit for a retirement portfolio. Investors are able to trade once a month and pick from a wide range of ETF’s without incurring any trading fees. Combine this with an IRA where the tax consequences of trading are removed and you have an almost ideal scenario and back tested returns demonstrate the point.

We used the MyPlanIQ system to build and monitor a moderate risk (40% fixed income) strategic asset allocation portfolio. With five risk based asset classes, each of those classes would have 12% of the assets dedicated to them but the funds would be evaluated every month and the optimal fund selected based on the momentum within the class.

This can be compared with a Six asset SIB for which there is just one fund in each asset class.

From the performance chart, it is clear that there is increased upside potential from being able to switch funds within an asset class. Unfortunately, there is less ability to minimize downside risk when an asset class is under downward pressure.

Despite this, for those who want to stay with a buy and hold in terms of asset classes, using this approach can squeeze some extra returns from the strategy.

With the large number of funds in six asset classes, momentum based asset allocation can be seen in its best light.

 
Full Details

• ETF’s provide the basis for an outstanding portfolio with either strategic or tactical asset allocation. This is clearly demonstrated with TD’s wide range of commission free funds
• Using a web based application takes a lot of the effort from finding the best funds for either strategy
• Strategic asset allocation with styles rotation can deliver solid results using a well trusted strategy
• Tactical asset allocation greatly benefits from the large number of funds

labels:investment,

Symbols:GSG,DBC,AOK,EEM,GMM,PXH,DEM,SCHE,PCY,VTI,VT,IEV,VGK,PEF,DEB,EFA,VEU,GWL,PFA,EFG,EFV,PID,DWM,IFSM,VSS,SCHC,SCZ,IFGL,RWX,HYG,JNK,PHB,TIP,IEI,VGIT,ITE,AGG,CIU,BIV,BND,EWJ,JPP,PJO,DXJ,IVV,IYY,IWV,VV,SPY,DLN,RSP,SCHX,IVW,IWZ,JKE,VUG,ELG,QQQQ,RPG,SCHG,IVE,IWW,Commission,Free,ETFs,Strategic,Asset,Allocation,Tactical,Asset,Allocation,Asset,Allocation,styles,rotation,

comments(0) 

10/19/2010

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