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

For regular SAA and TAA portfolios, the next re-balance will be on Monday, August 11, 2014. 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.

Composite Portfolios Review

As we pointed out several times, we believe investors can construct better portfolios by using the model portfolio MyPlanIQ provides. Instead of simply following a single strategic or tactical model portfolio for your account, you can choose best portfolios and construct a composite portfolio to follow. 


As mentioned in the above newsletter, our favorite approach is a two step process:

  • Core satellite: decide to put some portion to a strategic  portfolio and the rest to a tactical portfolio. 
  • For each strategic or tactical portfolio:
    • strategic: we favor a low cost and broad base index fund based portfolio. An ideal portfolio is something like  Six Core Asset ETFs Strategic Asset Allocation – Optimal Moderate (you should use your own risk profile instead). Or you can use a lazy portfolio such as those listed on Lazy Portfolios  page. 
    • tactical: we favor using a tactical portfolio that is of risk profile 0 (i.e. can be 100% in risk assets or stocks, REITs and commodities) and a fixed income portfolio that is constructed using some of the best total return bond mutual funds. See the previous letter for more details. 

In the following, we review several portfolios mentioned in the December 2, 2013: Versatile Multiple Portfolio Construction.  We strongly recommend you to read the article if you have not done so. 

100% Stock (or Most Aggressive Tactical) Portfolios

Our favorite portfolios are those ETF portfolios. The following shows the 3 featured most aggressive tactical portfolios: 

Most aggressive tactical portfolio performance (as of 7/14/2014)

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 10Yr Sharpe
Six Core Asset ETFs Tactical Asset Allocation Most Aggressive 7.2% 20.6% 9.6% 14.1% 15.1% 0.82
MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Most Aggressive 7.6% 22.4% 11.3% 16.4% 15.9% 0.92
Retirement Income ETFs Tactical Asset Allocation Most Aggressive 5.2% 16.7% 8.3% 13.7% 15.0% 0.84
SPY (SPDR S&P 500) 7.4% 19.7% 16.6% 19.9% 8.0% 0.34
EFA (iShares MSCI EAFE Index) 3.8% 16.6% 7.8% 12.3% 6.5% 0.22
EEM (iShares MSCI Emerging Markets Index) 5.8% 13.4% -0.1% 9.2% 11.0% 0.3

**YTD: Year to Date

See detailed year by year comparison >>

All of these portfolios have done reasonably well. For average investors or those who prefer simplicity, Six Core Asset ETFs Tactical Asset Allocation Most Aggressive is highly recommended. See May 26, 2014: In Praise Of Low Cost Core Asset Class Based Portfolios

Our favorite 100% bond or fixed income portfolio

As we stated before, we believe the best fixed income portfolio is those that select a total return bond mutual fund monthly. The candidate bond mutual funds have to be those that are managed by excellent bond managers who have received at least once Fixed Income Manager of The Year award from Morningstar. These managers include Bill Gross, Dan Fuss, Jeffrey Gundlach and others. 

See June 3, 2013: Total Return Bond Fund Portfolios For Major Brokerages for more details. 

We believe that these excellent bond managers can still deliver index beating performance, unlike in equity (stock) investing. Coupled with our tactical upgrade approach, these portfolios are still better than those constructed out of bond ETFs.  If your brokerage is one of those we support, you should seriously take a look at these portfolios for your bond/fixed income side investment. 

Portfolio Performance Comparison (as of 7/14/2014): 

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR 10Yr Sharpe
Schwab Total Return Bond 6.6% 10.9% 6.1% 8.9% 2.18 7.8% 1.43
Fidelity Total Return Bond 5.7% 5.7% 6.0% 8.6% 2.65 7.0% 1.64
TDAmeritrade Total Return Bond 6.6% 8.5% 7.1% 8.8% 2.09 7.3% 1.36
FolioInvesting Total Return Bond 6.6% 10.9% 6.1% 8.9% 2.18 7.8% 1.43
Etrade Total Return Bond 6.6% 10.9% 6.1% 8.8% 2.17 8.0% 1.47
PTTRX (PIMCO Total Return Instl) 3.4% 4.7% 4.1% 6.0% 1.71 6.2% 1.24
VBMFX (Vanguard Total Bond Market Index Inv) 3.4% 4.0% 3.1% 4.4% 1.19 4.7% 0.91

**YTD: Year to Date

See year to year detailed comparison >>

Composite portfolio betters a tactical portfolio

Combining 100% stock portfolio and 100% bond portfolio, one can construct a balanced portfolio with various risk profile. The following table shows that the portfolio mentioned previously continues to deliver better performance than a straightforward tactical portfolio: 

Portfolio Performance Comparison

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR 10Yr Sharpe
60 Percent MyPlanIQ Diversified Core 40 Percent Fidelity Total Bonds 7.1% 17.9% 9.3% 13.4% 1.33 12.7% 1.14
MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate 6.2% 15.0% 8.3% 11.9% 1.17 10.9% 0.98
VBINX (Vanguard Balanced Index Inv) 5.5% 13.0% 10.7% 14.0% 1.44 7.4% 0.52

See detailed comparison >>

One can see that the composite portfolio outperformed the pure tactical one (MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate) in all of the periods (Year to date, 1, 3, 5, 10 years) by some significant margin!

My hedge fund portfolio or a hybrid portfolio

We introduced My Alternative Hedge Fund portfolio that uses MyPlanIQ portfolios and some of our favorite balanced funds, permanent portfolio fund, risk parity and conservative funds. See  December 2, 2013: Versatile Multiple Portfolio Construction for more details:

Asset Fund in this portfolio Percentage
stocks P_51098 (MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Most Aggressive) 42%
bonds P_46880 (Schwab Total Return Bond) 28%
balanced PRWCX (T. Rowe Price Capital Appreciation) 10%
permanent PRPFX (Permanent Portfolio) 10%
risk_parity ABRRX (Invesco Balanced-Risk Allc R) 5%
conservative BERIX (Berwyn Income) 5%

This portfolio continues to deliver (as of 7/11/2014): 

Name 1Wk
My Alternative Hedge Fund -0.2% 6.6% 15.8% 8.8% 13.1% N/A
VFINX (Vanguard (S&P 500) Index) 0.0% 7.6% 19.8% 15.9% 19.7% 8.0%
VBINX (Vanguard Balance (60% stocks/40% bonds) 0.0% 5.5% 13.0% 10.7% 14.0% 7.4%

To summarize, we devote this newsletter to review some of our favorite portfolios. We would like to bring  our users’ attention to these portfolios as they either add additional values or offer more diversification. 

Portfolio Review

Managed futures strategies usually use trend following or other quantitative strategies to trade commodity and financial futures. Unfortunately, these portfolios have done badly for the past 3 years or even 5 years. MyPlanIQ features a couple of these portfolios on our Advanced Strategies. The following table compares these portfolios with top 10 managed futures mutual funds: 

Portfolio Performance Comparison (as of 7/14/2014): 

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
P S and P Diversified Trend Indicators -4.1% -3.2% -1.8% -0.44 0.1% 0.02
P S and P Currency Trend Indicators -2.8% 1.2% 0.9% 0.2 0.7% 0.13
P S and P Commodity Trend Indicators Strategy -5.5% -6.7% -5.5% -0.77 -1.2% -0.12
ASFYX (Natixis ASG Managed Futures Strategy Y) 5.3% 12.3% 1.5% 0.15    
AQMIX (AQR Managed Futures Strategy I) -4.6% 0.5% 1.1% 0.16    
LFMIX (LoCorr Managed Futures Strategy I) 11.3% 12.8% -1.5% -0.14    
MHFIX (MutualHedge Frontier Legends I) -0.2% 1.8% -1.6% -0.21    
MFTIX (Altegris Managed Futures Strategy I) -2.0% -1.1% -3.0% -0.38    
RYMFX (Guggenheim Managed Futures Strategy H) -1.0% 2.1% -4.6% -0.59 -3.3% -0.42
FTEZX (Forward Commodity L/S Strategy Z) -2.4% -0.5% -7.2% -0.57    
MFTFX (Arrow Managed Futures Strategy A) -2.7% -3.3% -6.9% -1.26    
GPFIX (Grant Park Managed Futures Strategy I) -4.7% -5.4% -4.2% -0.69    
MMFAX (Makefield Managed Futures Strategy A) -4.5% -4.4% -5.8% -1.27    

detailed comparison >>

It should be noted that RYMFX (Guggenheim Managed Futures Strategy H) implements S&P diversified trend indicators, similar to that used in P S and P Diversified Trend Indicators except our portfolio invests in ETFs instead of futures.  A majority of these portfolios/funds have had negative 3 year returns. It is a cautionary tale for investors who use momentum based investments in a narrow sector or even an asset class (including stocks). 

Market Overview

Even though stock markets had a minuscule correction last week, they recovered somewhat today. However, international stocks, especially European stocks had taken a bit more severe beating recently. For us, we believe stocks have entered a very over valued zone. Simply put, there will be a time in the future that stocks will correct down way below the current levels. However, as we recognize our limitation to make market timing calls precisely, we will follow our preset investment strategies. 

For more detailed asset trend scores, please refer to 360° Market Overview.

We would like to remind our readers that markets are more precarious now than other times in the last 5 years. It is a good time and imperative to adjust to a risk level you are comfortable with right now.  However, recognizing our deficiency to predict the markets, we will stay on course. 

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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