Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

Advanced portfolios and static portfolios just had their month end rebalance. For regular SAA and TAA portfolios, the next re-balance will be on Monday, June 17, 2013. You can also find the re-balance calendar for 2013 on ‘Dashboard‘ page once you log in.

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.

Please note that we now list the next re-balance date on every portfolio page.

Total Return Bond Fund Portfolios For Major Brokerages

After many years super performance, fixed income or conservative investors are facing a daunting challenge today: the loose monetary policies adopted by central banks in the world (US, Europe, Japan and even emerging market country like China) have pushed bond yields to a level unseen since the Great Depression. Afraid of the upcoming eventual inflation and rising interest rate environment, these investors are cornered and pushed to try hard on risk assets such as stocks or high yield securities. 

As mentioned many times previously, we believe there still exist many opportunities in fixed income investments so long you are tactical and nimble. We also believe that great bond managers are able to capture these opportunities, even in the more difficult situations in the future. For more detailed reasons, please see 

We do believe that total return bond mutual funds can still be good vehicles to navigate through the upcoming murky water. However, we do recognize that it is now more important than ever to be able to select managers and/or bond funds dynamically. This is similar to the argument we made on using the upgrading approach to select top conservative allocation funds in May 27, 2013: Conservative Allocation Mutual Fund Portfolios:

Though we have high faith in many great investors, time and time again, many of them stumbled for a few bad years. Some of them never recovered. If you are a very conservative investor, you might not be able to afford such mistakes, however how high respect you have for the managers or funds. 

We have tracked  P Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year`s Funds Monthly listed on Advanced->Advanced Strategies page for more than four years (since 2010). The portfolio selects one total return bond fund every month from a list of total return bond funds whose managers have won Morningstar’s Manager of the Year award in fixed income category. 

The problem for this portfolio is that it is hard for many users to implement it in a particular brokerage. The usual issues:

  • No load, no transaction fee share class
  • Low minimum requirement
  • Should not violate minimum holding periods imposed by funds and the brokerage.  Brokerages have different minimum holding period requirements. For example, TDAmeritrade has the most stringent requirement: to avoid their extra short term redemption fee charge, one needs to hold a fund for at least 180 days. 

We are happy to report here that we have worked out five different portfolios for five major brokerages: Schwab, Fidelity, TDAmeritrade, ETrade and These portfolios re-balance monthly but similar to all of other SAA/TAA portfolios on, they are fully compliant with the minimum holding period requirement. They all use no load and no transaction fee mutual funds with very low minimum (usually $2500).

Furthermore, we take the discretion to add some good total return bond funds to the candidate list. For example, both and TD Ameritrade portfolios have DoubleLine Total Return Bond N (DLTNX) as one of its candidates. The candidate fund lists will be changed from time to time depending on our evaluation on these funds. The intention here is still to maintain a short list of funds that are managed by those who won Morningstar Manager of The Year award or we deem to be as good as these award winning managers (such as Doubleline’s Jeffrey Gundlach). 

The following shows how these portfolios are compared: 

Portfolio Performance Comparison (as of 5/31/2013)

Ticker/Portfolio Name YTD
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe 10Yr AR 10Yr Sharpe
Etrade Total Return Bond 1.2% 8.5% 3.4 7.4% 2.19 7.7% 1.78 6.4% 1.36
Fidelity Extended Fund Picks Bond Trend Following 0.9% 8.2% 3.56 9.1% 2.35 9.2% 1.85 6.5% 1.17
FolioInvesting Total Return Bond 1.2% 8.5% 3.38 7.5% 2.32 7.9% 1.86 6.5% 1.42
PTTRX -0.6% 4.2% 1.64 6.1% 1.82 7.6% 1.69 6.2% 1.2
Schwab Total Return Bond 1.2% 8.5% 3.38 7.5% 2.32 8.0% 1.89 6.7% 1.45
TDAmeritrade Total Return Bond 1.3% 9.3% 4.04 8.3% 3.02 8.6% 2.15 7.2% 1.63
VBMFX -1.1% 0.6% 0.19 4.4% 1.17 5.3% 1.22 4.5% 0.82

*: NOT annualized

**YTD: Year to Date


Click for latest and detailed year and year performance comparison >>

Some observations:

  • All portfolios out performed PIMCO Total Return Bond Fund Institutional (PTTRX) managed by Bill Gross in the 10 year period. 
  • They are out done total bond market index fund (VBMFX) by a big margin. 
  • Surprise! TD Ameritrade portfolio did much better than other 4 portfolios even this portfolio has to stick to the stringent 6 month minimum holding period requirement. This might indicate that for total return bond funds, the minimum holding period requirement might not be as sensitive as for fast changing stock funds.

 To summarize, even though we are facing unprecedented challenge in fixed income investing, we don’t believe we should be swayed to become risk asset chaser. We should try to look at hard on total return bond fund managers and invest in their funds accordingly (though selectively from time to time). 

Portfolio Performance Review

What a difference a week can make: with all high yield REITs and long term bonds crashing down, suddenly, the simple broad base portfolios are doing better: 

Portfolio Performance Comparison (as of 5/31/2013)

Ticker/Portfolio Name 1 Week
1Yr AR 3Yr AR 5Yr AR 10Yr AR
High Dividend ETFs Liquid TAA Risk Profile 0 -4.2% 1.3% 13.0% 9.3% 10.9%  
MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate -2.4% 2.6% 11.8% 7.7% 6.7% 10.6%
Retirement Income ETFs Tactical Asset Allocation Moderate -2.6% 2.7% 8.6% 10.0% 8.0% 11.0%
Six Core Asset ETFs Tactical Asset Allocation Moderate -1.9% 3.6% 8.9% 6.4% 6.2% 10.3%
VBINX -0.8% 8.8% 16.3% 11.9% 6.1% 7.1%
VFINX -1.1% 15.3% 27.1% 16.7% 5.3% 7.5%

*: NOT annualized

**YTD: Year to Date

More detailed and up to date comparison >>

What we can learn from this: 

  • There are many paths that can cross each other: a simple straightforward 60% US stocks/40% bonds VBINX has been better than the TAA portfolios for the past 1 and 3 years. Its 5 year performance is also very close now. 
  • Simple portfolios such as Six Core are as good as those complicated ones, especially if you take those trading complication into account. 
  • However, even though VBINX has now caught up with TAA portfolios, that does not mean it is good for every one: many people can not withstand its volatility. 

Market Overview

Last week’s correction happened to almost all asset classes (other than Gold and precious metals). The main concern is that Federal Reserve’s Quantitative Easing (QEs) might taper off and interest rates might rise. Even though we don’t know whether such a concern is justified or not, the market actions are very indicative and should offer insights when such situation (i.e. stopping loose monetary measures or even reverse them) indeed materialize: virtually, all assets (stocks, REITs, bonds) have been inflated and they will be deflated all together. Even for a global diversified portfolio, this scenario is very challenging and at that time, there might be only one stable asset: cash. 

Asset Class Trends (As of 05/31/2013)
Asset Class 1 Weeks 4 Weeks 13 Weeks 26 Weeks 52 Weeks Trend Score
US Stocks -1.0% 1.3% 7.9% 16.9% 31.2% 11.3%
Global Real Estate -2.6% -7.9% -0.4% 7.7% 36.9% 6.7%
Intl Stocks -1.9% -3.5% 1.3% 7.8% 27.9% 6.3%
US REITs -5.2% -6.2% 2.8% 12.5% 20.4% 4.9%
High Yield Bonds -0.8% -1.8% 1.1% 3.5% 12.4% 2.9%
Emerging Mkt Stocks -2.6% -4.3% -4.0% 0.7% 15.9% 1.1%
Cash 0.0% 0.0% 0.0% 0.0% 0.1% 0.0%
US Bonds -0.6% -1.6% -1.0% -1.2% 0.3% -0.8%
Commodities -0.9% -2.1% -4.0% -8.0% 4.6% -2.1%
Intl Bonds -0.1% -3.3% -2.2% -6.5% -3.7% -3.2%
Long Term Treasuries -2.0% -5.2% -3.3% -6.7% -9.0% -5.2%
Gold 0.1% -5.7% -12.1% -19.3% -15.0% -10.4%

For other detailed ranking, see 360° Market Overview.

We again copy our position statements (from previous newsletters): 

Our position has not changed: We still maintain our cautious attitude to the recent stock market strength. Again, we have not seen any meaningful or substantial structural change in the U.S., European and emerging market economies. However, we will let markets sort this out and will try to take advantage over its irrational behavior if it is possible. 

We again would like to stress for any new investor and new money, the best way to step into this kind of markets is through dollar cost average (DCA), i.e. invest and/or follow a model portfolio in several phases (such as 2 or 3 months) instead of the whole sum at one shot. 

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