 |
Vanguard ETF: |  |
7.4%* |
|
Diversified Core: | |
8.1%* |
|
Six Core Asset ETFs: | |
7.3%* |
Articles on TLT
- 3 Lessons from the Demise of Legg Mason's Bill Miller
11/17/2011
Bill Miller to Step Down From Legg Mason Value Trust, reported by AdvisorOne.com. Since the great financial crisis in 2008, there have been numerous high profile managers' failures including Fairholme's Bruce Berkowitz (FAIRX). While we can put blame on these individuals, what one should always remember is that all humans are subject to failures, regardless how great they are. By the way, this is also applicable to ourselves and various great committees (recently, Morningstar started to release its new 'forward looking' rating system that is decided by committees, we'll have more on this later). So what to do with our retirement investments such as 401K, IRA accounts? How do we escape from being trapped in such funds? 3 lessons can be drawn from this:
- Diversification: you need diversification at your overall account level, at your portfolio level and at your security level. Diversified funds are better than individual stocks, especially if you are only dealing with a handful of them. At the portfolio or account level, proper asset allocation determines majority of your returns and risk.
- Fundamentals: yes, we still believe fundamentals such as managers' track record, investment strategies, fund expenses, etc. These will serve you the first line of defense (and offense). So information provided by firms such as Morningstar.com is still useful.
- Technical or stop loss: on the other hand, we do believe that one need to have a ultimate line of defense: when a fund is not doing well for an extended period based on a systematic and well defined set of rules, you have to liquidate it. The permanent capital loss is just too great to hope for a recovery or rely on superhuman acts.
The last point is the most contentious and sometimes is against our super human or well educated committee members' consensus. Recognizing that adopting this will result in under performance in a super bull market or for an (extended) period of under performance of a good fund. But that is again an insurance one has to pay to avoid severe damages by such super humans.Just as a comparison, the David Swensen Six ETF Asset Individual Investor Plan consists of only six broad base ETFs and diversified asset allocation portfolios have outperformed both S&P index and other once great funds by big margins:Portfolio Performance Comparison (as of 11/16/2011)
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe David Swensen Six ETF Asset Individual Investor Plan Tactical Asset Allocation Moderate 12% 72% 11% 82% 10% 68% David Swensen Six ETF Asset Individual Investor Plan Strategic Asset Allocation Moderate 5% 26% 18% 90% 6% 27% FAIRX -22% -74% 10% 36% 0% -3% SPY 6% 4% 15% 23% -1% -9% LMVTX -1% -6% 15% 48% -10% -34% More detailed comparison.
Disclaimer: 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: SPX, COMP, ETFs, Headline, Mutual-Funds Tags: EEM, EFA, FAIRX, IYR, LMVTX, SPY, TIP, TLT, VWO
- 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
- 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?” - Retirement Income ETFs vs. Income Mutual Funds: An Update
09/11/2011
We first compared asset allocation portfolios using dividend ETFs (and bond ETFs) and those using income mutual funds on SeekingAlpha.com Retirement Income Investing: ETFs vs. Mutual Funds more than two months ago. Let's review these two plans: Retirement Income ETFs and Schwab Income Mutual Fund Select List.
Here are the asset classes covered by the two plans:
The list of minor asset classes covered by Retirement Income ETFs The list of minor asset classes covered by Schwab Income Mutual Fund Select List Diversified Emerging Mkts: EEM, VWO, DEM
Emerging Markets Bond: EMB, PCY
Equity Energy: AMJ
Foreign Large Value: PID, IDV
Global Real Estate: RWX
High Yield Bond: HYG
Inflation-protected Bond: TIP
Intermediate Government: IEI
Intermediate-term Bond: CIU, CORP, MBB
Large Blend: VIG
Large Value: DVY, SDY, VYM, FVD
Long Government: IEF, TLT
Long-term Bond: LQD, VCLT
Mid-cap Value: PEY
Miscellaneous Sector: PFF
Muni National Long: MUB
Muni Short: SHM
Real Estate: IYR, ICF, VNQ
Short Government: SHY
Short-term Bond: CSJ, VCSH
World Bond: BWX, WIPEmerging Markets Bond: TGINX
Foreign Large Blend: SICNX, LISOX
Foreign Large Value: AAIPX
High Yield Bond: STHTX, MWHYX
Inflation-protected Bond: ACITX
Intermediate Government: SWGSX, CPTNX
Intermediate-term Bond: SWIIX, SAMFX, PTTDX, PGBOX, MWTRX, FTRFX
Large Blend: SWANX, TICRX, PRBLX
Large Growth: SWLSX, JENSX
Large Value: TWEIX, PQIAX
Mid-cap Blend: NMMCX
Mid-cap Value: ARDEX
Multisector Bond: PONDX
Muni National Interm: SWNTX, TWTIX, STTBX
Muni National Long: NOTEX, ACLVX
Muni Short: FSHIX
Real Estate: CSRSX
Short Government: FIGTX
Short-term Bond: FSTIX, ACSNX
Ultrashort Bond: SIGVX
World Bond: PFODXAsset Class Retirement Income ETFs Schwab Income Mutual Fund Select List REITs 4 1 Fixed Income 19 24 Sector Fund 2 0 Foreign Equity 2 3 Emerging Market Equity 3 0 US Equity 6 9 Other 0 0 Total 36 37 Little in the two plans' investment choice ratings has changed since then. As of Sep 9, 2011, Retirement Income ETFs investment choice is rated as average and Schwab Income Mutual Fund Select List 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:
Attribute Retirement Income ETFs Schwab Income Mutual Fund Select List Diversification great (95%) great (85%) Fund Quality below average (29%) great (85%) Portfolio Building above average (67%) above average (71%) Overall Rating average (64%) above average (80%)
Performance chart (as of Sep 9, 2011)Performance table (as of Sep 9, 2011)
Portfolio Name 2011 YTD 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Retirement Income ETFs Tactical Asset Allocation Moderate 2.49% 8% 80% 11% 84% 10% 71% Retirement Income ETFs Strategic Asset Allocation Moderate -1.16% 5% 42% 5% 23% 3% 14% Schwab Income Mutual Fund Select List Tactical Asset Allocation Moderate 3% 9% 84% 11% 101% 10% 92% Schwab Income Mutual Fund Select List Strategic Asset Allocation Moderate -2.11% 4% 35% 4% 27% 3% 16% Refer to detailed portfolio comparison.
Again, we are seeing income ETFs can still rival the well selected income mutual funds. This is a good news for income investors in their IRA investments or taxable account investments. ETFs have more flexibility and have a well defined and simple indexing strategy (isn't this what MyPlanIQ is also doing?).
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: SPX, VIG, DVY, SDY, ICF, RWX, HYG, LQD, IEF, TLT, TIP, AMJ, TWEIX, LISOX, CSRSX, PTTDX, Retirement Investments, IRAs, ETF Portfolios, Portfolio Management, Risk Management, Dividend ETFs
- 5 Assets for a Global Banking Crisis?
08/17/2011
"Don’t interpret last week’s volatility as merely a reaction to S&P’s downgrade of US Treasury debt, according to Doubleline founder and chief investment officer Jeffrey Gundlach. Investors are actually fearful of a global banking crisis, he said, because many countries face a perilous choice – defaulting on their sovereign debt or inflating their way out of trouble." Reported in the following article
Gundlach - 'The Cusp of a Global Banking Panic' advisorperspectives.com
So if there is another Lehman like default from Euro zone, what are the similar and different positions one can take in a retirement investing portfolio such as in their 401k or IRA accounts?Similar to 2008 Lehman crisis, the following asset will do well:- Treasury bonds (TLT) (IEF): it is no different this time, even after S&P's downgrade of the U.S. debt rating, the U.S. treasuries remain the world's most liquid safe haven.
Unlike 2008, the following assets will be resilient- Gold (GLD): with the U.S. dollar's rapid devaluation as well as stimulus policies adopted by governments around the world, gold remains the only one asset that people can trust as a hard currency.
- Other commodities (DBC): though its underlying fundamental is not as strong as gold, commodities will be a good hedge for both sides: if the crisis does not happen, the demand of commodities from emerging markets and other economies will be strong. If the crisis does happen, the U.S. policy to devalue the dollar through more stimulus or other tools will still make commodities relatively strong relative to U.S. dollars.
- U.S. total bonds (AGG) (BND): in general, US coporate balance sheets are exceptionally strong and coupled with government treasury bonds' strength, this asset class will withstand the crisis better this time.
Check out MyPlanIQ Diversified Core Allocation ETF Plan and Six Core Asset ETFs. See how the portoflios are compared with other tactical asset allocation ETFs or mutual funds in our latest newsletter or through this comparison link. - The Implication of The Unthinkable U.S. Default: How Will It Affect Safe Haven Treasury Status
07/26/2011
- Two Ways to Counter The Government's Financial Repression
06/10/2011
- First Pacific Advisors (FPA) Bob Rodriguez: Another Crash Coming
06/08/2011
- Long Term Treasury Bonds ETF in David Swensen's Six ETF Plan
06/02/2011
- How To Guard Against Another Financial Crisis Around The Corner?
05/31/2011
- Appetite for US High Yield Bonds Remains High as Yields Tighten
05/11/2011
- JNK Beats WIP At the Top of The Fixed Income Table
05/10/2011
- Emerging Market Bonds Become Important Parts of Many Portfolios
05/04/2011
- How Are Morningstar's Best Bond Fund Managers Faring in These Trying Times
04/29/2011
- Improving on the No-Brainer Portfolio: Add More Asset Classes
04/24/2011
- Keep It Simple Stupid -- A Simple Benchmark to Measure Your Investment Returns
04/19/2011
- GMO’s Lean Investment Outlook
04/08/2011
- 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
- Tactically Manage An Income Producing Portfolio With Commodity Exposure
03/25/2011
- 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
- Peabody Investments Corp.Employee Retirement Account Report On 12/03/2010
12/03/2010
- TD Ameritrade Commission Free ETFs Report On 12/07/2010
12/07/2010
- David Swensen Six ETF Asset Individual Investor Plan Report On 06/02/2011
06/02/2011
“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.