 |
Vanguard ETF: |  |
7.4%* |
|
Diversified Core: | |
8.1%* |
|
Six Core Asset ETFs: | |
7.3%* |
Articles on DBC
- Investment Management: Morgan Stanley Smith Barney Is Now on Risk Off Mode
11/15/2011
Morgan Stanley Smith Barney published its latest November viewpoints on portfolio strategies. It stated that the odds of a recession in the U.S. and beyond are “uncomfortably high.” Here are its tactical changes for portfolios:
The global cash represents dollars and other currencies. This itself should be treated as an asset class that needs careful management.
Compared with MyPlanIQ's Tactical Asset Allocation(TAA), we are cautious and about 1/3 to 1/2 of full risk asset exposure. Some of our plans reduced risk asset exposures in September, helping to even preserve some gains from risk assets.
See Six Core Asset ETFs that consists of six major asset classes US Stocks (SPY, VTI), International Stocks (EFA, VEU), Emerging Market Stocks (EEM, VWO), REITs (IYR, VNQ), Commodities (DBC, GSG) and Total US Bonds (AGG, BND).
Portfolio Performance Comparison (as of 11/14/2011)
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Six Core Asset ETFs Strategic Asset Allocation Moderate 3% 12% 13% 73% 5% 25% Six Core Asset ETFs Tactical Asset Allocation Moderate -0% -15% 8% 65% 9% 67% SPY 6% 4% 13% 23% -0% -9% VBINX 6% 14% 13% 46% 3% 10% More details here.
Symbols: SPX, COMP, SPY, VTI, EFA, EEM, VWO, VNQ, IYR, DBC, AGG, Investment Management, Asset Allocation
- Retirement Investments: Compared with Hedge Fund Performance
11/08/2011
The following is the newest October hot shot hedge fund performance data:
More specifically,
Strategies/Portfolios YTD (as of 10/31/2011) Fund of Funds - Diversifed -4.84% Diversified Macro -1.42% Global Macro -2.15% Six Core Asset ETF Strategic Asset Allocation Moderate 0.69% Six Core Asset ETF Tactical Asset Allocation Moderate -2.56% Permanent Portfolio Global trategic Asset Allocation Moderate 1% Permanent Portfolio Global Tactical Asset Allocation Moderate 2.13% Our Tactical Asset Allocation(TAA) is similar to Global macro hedge fund strategy. We can see that both Strategic Asset Allocation and Tactical Asset Allocation model portfolios are compared favorably with the hedge fund averages.
For more information, see Six Core Asset ETFs plan that has ONLY 6 broadbase ETFs (Vanguard low cost ETFs VTI, VEU, VNQ, VWO, BND and one Poweshares DB Commodities ETF DBC).
Permanent Global Portfolio ETF Plan uses Gold (GLD), silver (SLV) and other ETFs to form a diversified hedging portfolio.
Symbols: SPX, COMP, VTI, VEU, VNQ, VWO, BND, DBC, GLD, SLV, TLT, IYR, Retirement Investments, Hedge Funds, Asset Allocation
- Strategic and Tactical Allocation for Retirement Investments
10/17/2011
Strategic Asset Allocation(SAA) and Tactical Asset Allocation(TAA) can complement to each other. The following is a recent article Core Satellite Portfolios For Long-Term Investments published on SeekingAlpha.com that discussed this issue:
"Recent market swings and weakness have proven to be difficult for both strategic and tactical asset allocation strategies. For a long-term investor who is concerned about his/her retirement investments, such as 401(k)s, IRAs, 403(b)s and variable annuity accounts, it is thus important to understand the strength and weaknes of the two common strategies.
The concept of core satellite portfolio construction has been adopted for several years by many investment advisers, wealth managers and financial planners. The EDHEC has collected several papers detailing this concept."
......
Read more on Core Satellite Portfolios For Long-Term Investments.
See the Core Satellite Six Core Asset ETFs 25 Core 75 Satellite portfolio and the comparison with strategic asset allocation and tactical asset allocation.
Symbols: SPX, COMP, AGG, BND, DBC, EEM, EFA, GSG, IYR, SPY, VEU, VNQ, VTI, VWO, Retirement Investments, Portfolio Management, Asset Allocation
- Retirement Investments: Right Expectations at The Right Time
09/23/2011
Global stock market has entered a bear market, based on a Bloomberg report Global Stocks Drop 20% Into Bear Market as Debt Crisis Outweighs Profits. For many investors who are managing their retirement investments such as 401K, it is a high time to review and set a proper expectation.
Chuck Jaffe at MarketWatch.com reported that Rob Arnott of Research Affiliates told financial advisers to reshape their return expectations dramatically for the coming decade and beyond.
Arnott outlined the following:
Last 30 Years Average Annual Return Coming Decade Expected Return Stocks (S&P 500 Total Return) 11% 4-6% Bonds 9% 2-4% He further suggested "investors will need to be increasingly tactical, trading into markets that are unloved and undervalued and being prepared to leave markets that have gotten overheated, and considering alternative strategies that can supplement the baseline stock and bond market returns."
Given an extremely high possibility that we are entering the second recession, investors should have an investment plan in place for their retirement investments. In addition to Tactical Asset Allocation(TAA), one should stick to
- Diversification: not only this reduces risk, it also gives you more opportunities to extract returns elsewhere. In addition to stocks (SPX) and bonds (AGG), asset classes such as Real Estate Investment Trusts (REITs) and Commodities including precious metals (Gold GLD)
- Tactical or Alternative strategy driven ETFs or mutual funds. In this area, however, investors should again have a solid fund selection algorithm to weed out under performing funds or strategies.
However, a proper risk tolerated strategic asset allocation portfolio should always have a place in one's overall portfolios (only a portion instead of all in such a portfolio). Periodically rebalancing will allow investors to capture the bigger future return of undervalued stocks or other asset classes.
See Six Core Asset ETFs for an example of diversification and tactical asset allocation. It uses only 6 diversified major asset ETFs.
Symbols: SPX, COMP, GLD, VTI, EFA, EEM, IYR, DBC, SLV, AGG, BND, Retirement Investments, Portfolio Management, Risk Management, Tactical Asset Allocation
- 3 Portfolio Management Techniques for 3 Bears in The Double-dip Recession
09/15/2011
In his Double-dip recession porridge: 3 bears dish it out | Reuters Money, John Wasik at Reuters Money mentioned 3 prominent bears in the investment community:
The first: One of the most vocal ursines — Nouriel Roubini, professor of economics at New York University — starts out his jeremiad by asking the question “Is Capitalism Doomed?” - Portfolio Management: Black Swan Tail Insurance vs. Tactical Asset Allocation
09/13/2011
- Black Swan Tail Insurance and Tactical Asset Allocation
09/13/2011
- More Can Be Done by Financial Advisors
09/10/2011
- Advisors Turning to Alternative Investments: What ETFs Can You Use?
08/30/2011
- 3 Ways to Manage Your Portfolios to Cope with World Wide Food Inflation
08/26/2011
- Why 'Buy and Hold' Strategy No Longer Works?
08/19/2011
- 5 Assets for a Global Banking Crisis?
08/17/2011
- Does Timing Market Only Work for Pros?
08/12/2011
- 5 Steps to Take When Your Company's Pension Is Underfunded
08/09/2011
- Using Asset Classes in Amerivest Guided Portfolios to Construct ETF Portfolios
07/22/2011
- Two Factors That Make Picking Stocks So Hard
07/08/2011
- Beating The Market Is Easy: Just Make Lots of Noise To Confuse
06/27/2011
- Target Date Funds, Balanced Funds or Your Own ETF/Index Fund Portfolios
06/23/2011
- Two Ways to Counter The Government's Financial Repression
06/10/2011
- Goldman Sachs Brings Asset Allocation Savvy to Its 401K Plan
06/03/2011
- Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Report On 12/03/2010
12/03/2010
This report reviews Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account 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 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan can achieve reasonable investment results using asset allocation strategies.
Plan Review and Rating
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Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan's 401K plan consists of 55 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Commodity, Emerging Market Equity, 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
Diversified Pacific/asia: EPP, VPL, GMF, PAF
Equity Energy: ITE, IXC, IPW, DBE, RYE, DKA
Europe Stock: IEV, VGK, PEF, DEB
Foreign Large Blend: EFA, VEU, GWL, PFA
Foreign Small/mid Growth: IFSM, VSS, SCHC
Health: IYH, IXJ, VHT, XBI, PBE, DBR, RYH
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
Latin America Stock: ILF, GML
Long Government: TLT, TLH, IEF, EDV, VGLT, TLO, PLW
Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
Multisector Bond: AGG, GBF, BND, LAG
Natural Resources: IYM, IGE, VAW, XLB, XME, PYZ, DBN, RTM, UYM
Pacific/asia Ex-japan Stk: EPP, AAXJ, GMF, PAF, DND
Short Government: SHY, SHV, VGSH, PLK, USY
Short-term Bond: CSJ, BSV, VCSH
Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
Technology: MTK, PTF, DBT, RYT, ROM
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 (91%)
Fund Quality -- Rated as (48%)
Portfolio Building -- Rated as (84%)
Overall Rating: (75%)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 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account 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 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 Dec 2, 2010)Performance table (as of Dec 2, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Tactical Asset Allocation Moderate 6% 44% 7% 51% 16% 109% Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Strategic Asset Allocation Moderate 12% 119% 3% 21% 9% 61% Four Core Asset ETF Index Funds Emerging Markets Tactical Asset Allocation Moderate 1% 6% 6% 49% 12% 78% Four Core Asset ETF Index Funds Emerging Markets Strategic Asset Allocation Moderate 10% 75% 2% 6% 7% 31% Currently, asset classes in Foreign Equity (EFA,VEU), Emerging Market Equity (EEM,VWO) and Fixed Income (AGG,BND) are doing relatively well. These asset classes are available to Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan participants.
To summarize, Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: ATI , SPY , VTI , EFA , VEU , EEM , VWO , AGG , BND , DBC , AOK , CIU , BIV , IYH , IXJ , VHT , XBI , PBE , DBR , RYH , IYM , IGE , VAW , XLB , XME , PYZ , DBN , RTM , UYM , MTK , PTF , DBT , RYT , ROM , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , 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 , IFSM , VSS , SCHC , GMM , PXH , DEM , SCHE , GBF , LAG , CSJ , BSV , VCSH , ITE , IXC , IPW , DBE , RYE , DKA , ILF , GML , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , TIP , EPP , VPL , GMF , PAF , AAXJ , DND , GSG
- TD Ameritrade Commission Free ETFs Report On 12/07/2010
12/07/2010
- The Goldman Sachs 401(k) Plan Report On 06/03/2011
06/03/2011
“The massive volatility and sharp equity-price correction hitting global financial markets signal that the most advanced economies are on the brink of a double-dip recession,” Roubini writes.
The second: A no less enlightened bearish overview comes from money manager Jeremy Grantham, chairman of GMO LLC, who has been sour for years on global economic prospects.
Grantham’s recent missive “Danger Children at Play” rambles on about the end of the U.S. empire, yet cobbled together some cogent ideas on how to regard our fin de siecle.
Gundlach told Advisor One “the time is ripe” for another AIG or Lehman-level collapse “based upon the growing lack of confidence in the growing debt of Spain, Italy, Greece, Portugal, Ireland and ultimately of France.”
Like the other bears, Gundlach is not keen on the stock market or the ability of politicians or central banks to pull us out of this muck and mire.