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 31, 2015. You can also find the re-balance calendar for 2014 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.

Slippery Asset Trends

Now that we are officially in August, the last month of summer, it is a good time to look at asset trends. First, here is the major asset class rankings using index ETFs: 

Major Asset Classes Trend


Description Symbol 1 Week 4 Weeks 13 Weeks 26 Weeks 52 Weeks Trend Score
US Stocks VTI 1.19% 1.17% 0.37% 6.52% 11.47% 4.15%
US Equity REITs VNQ 1.19% 3.8% -0.23% -7.25% 9.89% 1.48%
International Developed Stks VEA 1.39% 0.55% -2.36% 7.25% 0.09% 1.38%
Intermediate Treasuries IEF 0.6% 1.69% 0.0% -2.8% 4.63% 0.83%
Total US Bonds BND 0.32% 0.88% -0.44% -1.85% 2.11% 0.2%
Treasury Bills SHV -0.02% -0.02% 0.0% 0.01% 0.0% -0.01%
Emerging Market Stks VWO -0.18% -6.7% -12.41% -2.99% -10.59% -6.57%
Commodities DBC -2.54% -11.38% -13.9% -9.6% -37.38% -14.96%

However, looking at the return charts of these major assets, one can see different pictures:

 US Stocks (SPY)

US stocks have performed best. However, S&P 500 has been range bound since February with its 200 day moving average closing in within this range. Even without technical analysis jargon, one can easily see that such a situation will soon to be resolved, either up or down out of the range. 

International Stocks (EFA)

European stocks have performed well in Euro currency. However, as US dollar has strengthened considerably so far this year, dollar denominated funds have fared worse. Greek debt resolution also played a large role in the big fluctuation of these stocks. 

Emerging Market Stocks (EEM)

Emerging market stocks continue their slippery descent: these economies have been largely affected by the considerable weakness of Chinese and Russian economies. The hope of recovery before May this year has been dashed and now they are at the lowest level in the last 52 weeks. 


REITs are highly sensitive to interest rates and investors have dumped the stocks since their high in March. It recently recovered from its low, again because now interest rate scare has subsided. 

Long Term Bonds (TLH)

Recent ascent of long term bonds has been based on weak economic growth (GDP) and a not robust enough job market (too many temporary workers, stalled wage growth and record low participation rate). Apparently markets are adjusting to the effect of upcoming interest rise. 

To summarize, other than US stocks, other risk assets are under their 200 days moving averages. It is frustrating to see that these assets whipsawed in some big ranges, creating enough false trends that have driven our Tactical Asset Allocation(TAA) based portfolios crazy. 

We have encountered such slippery trends many times for the past  five years. They represent a fear based rally: investors are more bearish and are always close to an exit door. However, the economies and financial markets have been constantly propped up by central banks, resulting more frequent fluctuation. 

In a word, the asset trends are slippery. Ride on them cautiously. 

Portfolio Review

Our balanced composite portfolio My Alternative Hedge Fund  uses MyPlanIQ portfolios and some of our favorite balanced funds, permanent portfolio fund, risk parity and conservative funds. Its target allocation is as follows. The allocation and funds are not strict: one can substitute these portfolios and funds with their favorite ones and tweak the allocation based on personal risk preference. For example, the TAA portfolio can be substituted with other TAA portfolios using brokerage specific core funds mentioned in June 29, 2015: Core ETF Commission Free Portfolios or March 30, 2015: Brokerage Specific Core Mutual Fund Portfolios 2

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%

Compared with some of our favorite global allocation funds (see SmartMoneyIQ Managers), this portfolio continues to perform in a steady fashion: 

Portfolio Performance Comparison (as of 7/31/2015):

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR
My Alternative Hedge Fund 0.1% -1.8% 7.1% 7.9% 1.06  
MALOX (BlackRock Global Allocation Instl) 2.4% 1.8% 8.1% 7.1% 0.74 7.4%
GBMFX (GMO Benchmark-Free Allocation III) -1.7% -3.6% 4.9% 6.1% 0.9 6.8%
PASDX (PIMCO All Asset D) -1.8% -6.9% 1.9% 3.9% 0.74 4.5%
EAXFX (Wells Fargo Advantage Asset Alloc R) 0.1% -3.7% 5.4% 6.0% 0.68 4.6%
WASYX (Ivy Asset Strategy Y) -0.5% -3.9% 9.3% 7.8% 0.5 9.5%

See detailed year by year comparison >>

Because the risk managed tactical portfolios and uncorrelated strategies performed by several funds and portfolios, we believe this ‘hedge’ style portfolio will withstand market stresses better than many conventional funds. For a balanced or conservative investor, it is a good way to construct similar portfolios. 

Market Overview

It looks like investors are more convinced that interest rates will rise more gradually than previously thought. Yield sensitive assets such as long term Treasury bonds (such as TLH or TLT) and REITs (such as VNQ or IYR) have crept back up. Mr. Market continues to play with a guessing game. As stated in the above, we advise a cautious allocation. 

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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