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, December 14, 2015. You can also find the re-balance calendar for 2015 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.

Better Email Communication

It has come to our attention that several users have communicated with us by simply replying to our newsletter emails, performance report emails or signup emails. In general, all of these emails are sent from either support at or newsletter at These emails can be easily overlooked as they are usually buried in our backup system. To better serve you, we would like to ask you to email us with a new subject line instead of a reply. Thank you for understanding. 

Diversification And Global Allocation

Diversification has clearly encountered some problems for the past several years. First in 2013, gold and commodities started to weaken. Emerging market stocks followed the lead. Since 2014, everything other than US stocks and REITs have lost money: 

Index Performance Comparison (as of 12/7/2015):
Index Fund YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR
SPY (SPDR S&P 500 ETF) 3.5% 3.0% 16.4% 13.6% 7.3%
EFA (iShares MSCI EAFE) 1.7% -2.1% 6.4% 4.3% 3.4%
EEM (iShares MSCI Emerging Markets) -13.1% -15.5% -5.0% -4.5% 3.6%
IYR (iShares US Real Estate) -0.0% 0.8% 9.6% 10.3% 5.6%
GLD (SPDR Gold Shares) -8.4% -10.2% -14.2% -5.5% 7.5%
AGG (iShares Core US Aggregate Bond) 0.5% 0.9% 1.3% 3.1% 4.4%

Looking at all country stock performance (see 360° Market Overview), one can see this pattern has continued: 

Global Stocks Trend


Description Symbol 1 Week 4 Weeks 13 Weeks 26 Weeks 52 Weeks Trend Score
Belgium EWK 1.29% 2.97% 8.5% 2.29% 10.15% 5.04%
Japan EWJ 0.08% 0.32% 7.83% -3.39% 8.35% 2.64%
Austria EWO 1.3% -0.41% 6.16% -3.71% 0.55% 0.78%
Germany EWG -0.95% 1.93% 5.51% -4.63% -3.82% -0.39%
France EWQ -0.48% -1.53% 3.64% -4.41% -0.92% -0.74%
Hong Kong EWH 0.9% -0.54% 8.98% -12.65% -1.59% -0.98%
The Netherlands EWN -1.13% -1.58% 2.95% -5.4% 0.05% -1.02%
Italy EWI -0.49% -0.35% 0.0% -4.63% -0.11% -1.11%
Switzerland EWL 1.49% 0.16% 1.03% -7.97% -2.32% -1.52%
Australia EWA -0.42% 4.68% 8.38% -9.77% -13.27% -2.08%
South Korea EWY -3.26% -3.73% 10.65% -8.55% -8.67% -2.71%
United Kingdom EWU -2.1% -1.29% 2.87% -9.04% -7.69% -3.45%
Taiwan EWT 0.52% -2.02% 4.94% -12.54% -10.92% -4.01%
Malaysia EWM -0.66% 3.74% 9.23% -14.18% -19.9% -4.35%
Singapore EWS 1.33% -1.66% 3.8% -14.15% -15.56% -5.25%
Spain EWP -0.16% -1.65% 0.3% -10.95% -16.83% -5.86%
Mexico EWW -3.56% -3.53% 0.84% -9.23% -13.86% -5.87%
India INP -2.56% -2.88% -1.25% -8.19% -15.34% -6.04%
China FXI -1.74% -3.59% 9.59% -25.14% -10.14% -6.2%
Russia RSX -7.19% -7.08% 0.65% -13.56% -8.18% -7.07%
Canada EWC -4.13% -4.7% -4.54% -17.8% -20.03% -10.24%
South Africa EZA -6.39% -8.66% -5.86% -18.88% -20.73% -12.1%
Brazil EWZ 3.42% -0.3% 0.82% -28.21% -36.68% -12.19%    

Other than the U.S., only 4 countries’ stocks haven’t lost money for the past 52 weeks. 

Lazy Portfolios

As always, we are a fan of lazy portfolios: those that have target allocations among a set of diversified index funds. See July 30, 2012: Strategic Asset Allocation & Lazy Portfolios Review, for example. 

The strength in the U.S. only certainly affects these diversified portfolios too:

Portfolio Performance Comparison (as of 12/7/2015):

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 10Yr Sharpe
7Twelve Original Portfolio -5.9% -6.2% 3.1% 3.7% 4.8% 0.27
P David Swensen Yale Individual Investor Portfolio Annual Rebalancing 0.9% 2.4% 8.5% 9.0% 7.4% 0.44
P Ted Aronson Lazy Portfolio Annual Rebalancing -2.5% -3.2% 6.5% 6.1% 6.3% 0.33
Fund Advice Ultimate Buy and Hold Lazy Portfolio -1.9% -3.0% 3.3% 4.2% 4.9% 0.33
The Coffee House Lazy Portfolio ETFs -0.1% 0.2% 7.8% 7.5%    
Harry Browne Permanent Portfolio -3.1% -3.0% -0.3% 3.4% 5.9% 0.7
Wasik Nano 1.3% 1.5% 7.4% 7.9% 6.0% 0.39
VBINX (Vanguard Balanced Index Inv) 1.9% 1.9% 10.0% 9.2% 6.6% 0.48

See detailed year by year performance >>

In fact, the more diversified, the more underperformance: 7Twelve Original Portfolio and Harry Browne Permanent Portfolio are the two good examples. 

Notice also, other than David Swensen’s lazy portfolio, no portfolio has out performed the simple 60% US stocks and 40% US bonds Vanguard Balanced Index Fund VBINX for the past 3, 5 and 10 years. The past 2-3 years are definitely a period that show the diversification principle, advocated by many (including MyPlanIQ), has distracted the performance, instead of enhancing it. 

The problem is also evident among many solid global allocation funds. 

Lackluster Global Allocation Funds

On SmartMoneyIQ Managers page, we maintain some of solid and representative asset allocation funds. 

Global Allocation Fund Performance Comparison (as of 12/7/2015):

Fund YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 10Yr Sharpe
GBMFX (GMO Benchmark-Free Allocation III) -3.5% -4.8% 3.3% 4.6% 6.0% 0.66
PASDX (PIMCO All Asset D) -8.2% -9.9% -2.2% 1.7% 3.8% 0.37
WASYX (Ivy Asset Strategy Y) -6.5% -9.3% 4.7% 3.9% 7.7% 0.45
GDAFX (Goldman Sachs Dynamic Allocation A) -6.0% -7.4% 0.3% 1.6%    
SGIIX (First Eagle Global I) 0.7% -0.5% 7.1% 6.7% 7.8% 0.53
MALOX (BlackRock Global Allocation Instl) -0.1% -1.6% 6.0% 4.9% 6.5% 0.51
DMLIX (DoubleLine Multi-Asset Growth I) -3.0% -2.0% 0.5%      
VBINX (Vanguard Balanced Index Inv) 1.9% 1.9% 10.0% 9.2% 6.6% 0.48

Year to date, only SGIIX (First Eagle Global I) managed to stay positive. The stellar long term performer GBMFX (GMO Benchmark-Free Allocation III) has under performed VBINX for all 1, 3, 5, and 10 years period. PASDX (PIMCO All Asset D), another solid global allocation fund, has faltered for the past 3 years and going. This group is believed to be the best among hundreds of global allocation mutual funds. If their performance is such, one can imagine how bad the rest are. 

Diversification is still the key

It is tempting to throw away the well established diversification methodology and go all in to the US assets. However, there are many reasons to argue against it: 

  • On the contrary, diversification actually works: precisely because of investments in the U.S. assets, these portfolios have weathered weakness in other assets. Even though from an US investor point of view, it would be better to just invest in the U.S., however, investors shouldn’t forget that before 2008, it was the emerging market and foreign stocks that carried global asset allocation portfolios to out perform the U.S. assets.
  • Just as in 2013, no one can foresee the prolonged weakness and bear market in commodities and emerging market stocks, it is also very likely that in anytime the U.S. assets can suffer from a long period of under performance in the near future. No one can predict the future precisely, that is the very reason why we need diversification. 
  • Even though we believe the U.S. will still be one of the better places to invest in the coming several years, globalization is still here to stay. With the advent of easy communication, manufacturing goods infrastructure, efficient supply chains and transportation, globalization is the long term trend that will not change easily. 
  • If you want to stay on strong performing assets, you need to do so in a systemic way, instead of acting on a hunch. Using a trend following strategy such as Tactical Asset Allocation(TAA) can be a way to invest in high performing assets. However, the TAA does not come without an expense: in fact, recently, TAA has also under performed, mostly due to the distraction of other assets and the volatile market trends. 
  • Finally, no single strategy works all the time. Global allocation portfolios were in favor several years ago and now, they are weak. But do you want to abandon them? As a long term investor, one has to stick to selected investment plans for a long period of time. 

Market Overview

We concur with Hussman that recent stock market fluctuation is a possible sign of top formation. Manufacturing weakness, stock sector divergence, fewer and fewer stocks rising, widening spread between high yield and credit or Treasury bonds and the overvalued markets are all setting up a fragile market that can behave violently, as evidenced by its recent gyration. Although markets seem to wait for the Fed’s interest rate decision next week, long term returns of major assets have been set regardless of the decision. We believe it is important to review one’s allocation and risk tolerance level at this time. It is also important to stick to a plan to navigate through such a period systematically. 

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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