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, June 6, 2016. 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.

AAII Article And Some Web Changes

This weekend, AAII (American Association of Individual Investors) Computerized Investing magazine featured an article that discusses MyPlanIQ and its services:

Build and Manage Your Retirement Plan With MyPlanIQ

The article introduces MyPlanIQ’s four step Get Started process for new users. It then describes main features including asset allocation strategies, portfolio and back testing tools, market trends etc. We recommend users (especially new users) to read the article to get an overview of our services. Because of many features provided by our system, users might want to keep it as a reference for future use. 

We continue to improve our services and products. If you have any suggestion, please send us email (support at or fill up the survey at the end of this newsletter. Thank you. 

Web Changes

Over the years, we have discussed various portfolio ideas in our newsletters. Some are merely research ideas or just for illustration purposes. Others eventually turned out to be something we think useful enough for our users. As a result, we have modified our web pages accordingly. 

Tax Free Portfolios

We introduced these portfolios in recent newsletter April 25, 2016: Tax Free Municipal Bond Funds & Portfolios. Currently these portfolios are accessible only for expert users. If there is enough demand, we can change them to be basic user accessible. One of the reasons to keep them as expert portfolios is that many users might want to customize these portfolios using their own state tax exempt funds. These portfolios are now listed on Brokerage Investors page. 

Conservative Allocation Portfolios

Our newsletter  April 11, 2016: Construction of Sound And Conservative Portfolios drew some good response from users. If there is enough interest, we are considering to replace current conservative upgrade portfolios on Brokerage Investors with these portfolios. When constructing current conservative upgrade portfolios for specific brokerages, we have encountered a great difficulty to find good no load  and especially no transaction fee funds available in a brokerage. Currently, brokerages are too divided and biased to offering a full suite of good funds because of their own business interests. For example, Schwab and Fidelity do not offer no transaction fee Vanguard fund such as VWINX (Vanguard Wellesley Income Inv). This is because they would rather promote their own funds to their clients. However, the proposed conservative portfolios can be easily constructed in various brokerages. 

Let us know whether you would like to see these portfolios supported. 

Smart ‘Cash’ Portfolios

We have introduced several smart ‘cash’ portfolios: the idea of using a total return bond fund portfolio or just a total bond market index fund as the cash component in various timing portfolios. In the previous newsletter May 9, 2016: Boost Your Dull Summer Investments, we again discussed portfolios for STS Seasonal Timing Using VFINX on Advanced Strategies. We now replace this portfolio with STS Seasonal Timing Using VFINX Total Return Bond Fund As Cash

Similarly, P SMA 200d VFINX Total Return Bond As Cash Monthly is now featured on Advanced Strategies page. This portfolio keeps track of the performance of a portfolio that uses 200 days simple moving average as its buy or sell signal monthly. The portfolio P SMA 200d VFINX Monthly that uses standard cash has shown to outperform VFINX (S&P 500) total return since 1988! We believe it’s a good reference benchmark (and even an effective investment strategy) to keep track of. 

Alternative Portfolios

Over the years, we have proposed several portfolios (most of them are lazy or static portfolios or portfolios of portfolios) that have unconventional allocations. See January 25, 2016: Alternative Portfolios Review for more discussion. We now list the following three portfolios on Brokerage Investors page:

Portfolio Performance Comparison (as of 5/20/2016):

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 10Yr Sharpe
Harry Browne Permanent Portfolio 6.8% 3.2% 3.8% 4.6% 6.3% 0.79
Permanent Income Portfolio 4.4% 4.5% 4.2% 6.2% 6.5% 0.97
My Simple Alternative Hedge Fund 3.3% -0.7% 3.0% 5.4% 9.3% 1.06
My Alternative Hedge Fund 3.3% -1.0% 3.3% 5.7%    
VWINX (Vanguard Wellesley Income Inv) 4.3% 4.0% 5.4% 7.3% 7.2% 0.97

 The reason we introduced My Simple Alternative Hedge Fund in place of My Alternative Hedge Fund is that several users have informed us of their difficulties to purchase PRWCX (T. Rowe Price Capital Appreciation) and ABRRX (Invesco Balanced-Risk Allc R) in their brokerages. Instead, we now use VWINX (Vanguard Wellesley Income Inv). As stated before, there are many ways to customize this portfolio using other solid balanced or conservative funds/portfolios. 

Permanent Income Portfolio is a good conservative portfolio that utilizes Permanent Portfolio’s four pillar concept (Growth, Inflation, Deflation and Safe harbor, see August 6, 2012: Four Pillar Foundation Based Portfolio Review). It uses inflation protected bonds instead of gold for Anti-Inflation investments. We will have a more detailed discussion in a future newsletter on such a portfolio. 

Market Overview

Factset reported that as of last Friday, 95% of S&P 500 companies had reported Q1 2016 earnings which declined -6.8% from the same period last year. Earnings were not as bad as what were predicted in the earlier of last month. The big news, however, is that the Federal Reserve has repeatedly hinted that it will hike interest rate more aggressively than many investors have predicted. Regardless of the Federal Reserve’s stance, what’s worrisome is that if inflation does indeed pick up at a faster pace and interest rate is forced to be raised, it can exert forces on corporate debt repayments or roll over (to new debt) dramatically. The reason is that companies have aggressively borrowed in the current low rate environment to buy back their stocks or expand their operations (thus money has been spent). If interest rates rises dramatically, some of these companies (we are sure there will be some, maybe many) may suddenly find out that it is difficult for them to roll over the old debts to the new debts (that charge higher interests and thus incur much more interest payment) or just simply to service their current debt payments. Inflation might be a potential black swan event that can derail economy and the financial markets. Though it’s still too early to tell, a prudent investor should keep an eye on such possible outcomes. 

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

We would like to remind our readers that since the financial crisis in 2008-2009, we have not seen substantial structural change in the U.S., European and emerging market economies. Economies have heavily relied on low interest debts. Capital might be misallocated to unproductive investments and consumption. U.S. stock valuation is at a historically high level. It is thus not a good time to take excessive risk. However, we remain optimistic on the long term perspective of U.S. economy and believe much better investment opportunities will arise in the future. 

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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