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, November 13, 2017. You can also find the re-balance calendar for 2017 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.

A Primer For Portfolios

Recently, we have received many requests/questions regarding our portfolios. We do recognize that MyPlanIQ provides various portfolios at different levels that can often confuse our users. In this newsletter, we want to explain our portfolio usage. 

Plans and portfolios

First, a word on the often confusing concepts: plans and portfolios on A plan is just a list of candidate funds or investment options. It’s similar to a 401k plan that only allows to choose investment funds from a selected list. A portfolio is a collection of funds that are selected dynamically from the list of candidate funds in a plan, if the portfolio belongs to a plan. A portfolio does not necessarily belong to a plan. Those portfolios listed on Advanced Strategies and static portfolios usually are not associated with a plan. 

Types of portfolios

There are four types of portfolios. 

Strategic Asset Allocation (SAA) and Tactical Asset Allocation(TAA) based portfolios are constructed from an investment plan such as a 401k plan, a brokerage specific plan or a personal private plan whose funds are entered by expert users. These portfolios can be accessed by basic level subscribers. Users can follow these portfolios and receive regular (monthly) rebalance emails. Examples of these portfolios are some of those listed on our What We Do -> Brokerage InvestorsVanguard Liquid ETFs Tactical Asset Allocation ModerateSchwab Core Mutual Funds Strategic Asset Allocation – Optimal ModerateFidelity Total Return Bond

These basic subscribers’ level portfolios can be customized or followed. Customizing such a portfolio means you can enter a risk profile of your choice to generate a private portfolio. The risk portfolio is the minimum percentage of safe or bond allocation. For example, a risk profile 45 portfolio has at least 45% allocated to bonds. 

Static portfolios have a fixed target allocation to each specific fund. They are free. Users can construct them or put an existing one to their favorite or watchlist as follows. You can’t follow an existing static portfolio created by others (such as admin). To follow or to receive regular rebalance emails, you have to customize a new static portfolio (see below):

Sometimes, a portfolio can consist of other portfolios as its holdings. For example, in the above figure, the static portfolio consists of two other portfolios. These subportfolios have permission also. In the portfolio in the above figure, you would need to be a basic subscriber to access to the real time info of one of its holdings P_46880 (Schwab Total Return Bond) portfolio. You would also need to be an expert subscriber to access to the real time holding and rebalance info of the other portfolio P_61056 (P_SMA 200d VFINX Total Return Bond As Cash Monthly). Note P_xxxxx is our internal ‘ticker symbol’ for a portfolio. 

Advanced portfolios are some special portfolios we developed for expert level subscribers. Many of them are listed on Advanced Strategies. They don’t necessarily have a regular rebalance emails. We will only send rebalance/transaction email notification when there is a transaction. So it’s likely you might not receive a transaction email for months or even for years for these portfolios. That would mean there is no change of the holdings.  

Portfolio information

You can view detailed information on a portfolio by visiting a portfolio page such as Tactical Conservative Portfolio 40 Percent Stocks. On that page, there are many tabs under each section that can help to reveal more information on a portfolio. 

For example, under Performance section, there is a tab ‘More Analytics‘ that lists detailed returns for each year, annualized returns for the last 1, 3, 5, 10 years and since the start date.  It also lists other metrics such as Standard Deviation (annualized), Sharpe ratio, Maximum Drawdown etc.. The following is the ‘More Analytics’ for Tactical Conservative Portfolio 40 Percent Stocks:

AR: Annualized Return (dividend reinvested)

SR: Sharpe Ratio

DD: Maximum Drawdown

SD: Standard Deviation

TR: Treynor Ratio

RS: R-Squared

SR: Sortino Ratio

We want to emphasize the metric DD or Maximum Drawdown. It’s also known as Ulcer Index. It measures the maximum loss from a peak to its subsequent troughs in a period. This metric measures wealth effect (loss). For example, in a given year, your portfolio starts at $10,000 and then it rises to $30,000 in March, only to see it falls and rises (never exceeds $30,000) a few times and then falls to the lowest level $15,000 in October. This would indicate its Maximum Drawdown in this year is 50% ((30,000-15,000)/30,000). Intuitively, most people would ignore the starting $10,000 value and feel their ‘wealth’ $30,000 in March as a yardstick. In October, they would feel their wealth has been cut in half, measuring from the peak in March, not from the beginning of the year. In general, this metric more accurately reflects the psychological effect from the portfolio’s behavior (loss). We take this metric seriously. 

There are other tabs in this section. The chart shown below the table is a default chart that shows the portfolio value growth from its start date. To see more detailed portfolio amount change in chart, you can click on ‘Chart’ tab and then ‘Flash Chart’. 

Another useful tab is ‘+Calculate Performance For A Period’. It allows you to enter dates of a period and calculates portfolio returns and Sharpe ratio for that period. 

There are many other tabs on this page and we encourage users to try them out. 

Market Overview

Bonds fell last week. It seems that investors are now concerned about the upcoming interest rate hike in December. This also caused dollar to rise and that in turns depressed foreign stocks and foreign bonds. On the other hand, US stocks continued to rise, regardless of the lower than expected earnings growth for the last quarter (granted, so far, only 17% of S&P 500 companies have reported earnings). It might turn out this fluctuation is a blip or might be a harbinger for a more volatile period. For now, stay the course. 

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

Now that the Trump administration has been in the office for more than half a year, it has stumbled and encountered many difficulties to implement its promised changes in terms of tax cuts, job stimulation and infrastructure spending. On the other hand, stocks continued to ascend, regardless of the progress. Looking ahead, however, we remain convinced that markets will experience more volatilities at some point when reality finally sets in. 

In terms of investments, 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 U.S. economy in the long term 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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