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 11, 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.

Rising Rates, Consumer Staples And Stock Index

Last week, long term interest rates continued to rise. 10 year Treasury bond’s yield is now above 3%, a much touted psychological level: 

Short term interest rates also rose. The following table shows how T-Bill, money market fund and brokered CDs rates for 3 month and 1 year: 

SecurityAnnualized Yield
Prime Money Market (Vanguard Prime MM)1.88%
3 Month Treasury Bill1.9%
3 Month CD1.8%
1 Year Treasury Bill2.36%
1 Year CD2.25%

We again observe that Treasury Bills’ yields are higher than their CD equivalent, somewhat unusual as T-Bills are considered to be the safest and thus should yield less. 

All of these are thought to spell trouble for rate sensitive stocks. 

Rate sensitive stocks in trouble

The following table compares S&P Consumer Staples sector ETF (XLP), Utility sector ETF (XLU), REITs (Vanguard REITs ETF VNQ) and S&P 500 (SPY). These sectors are the most sensitive to interest rates:

As of 5/18/2018
Ticker/Portfolio NameYTD
1Yr AR3Yr AR5Yr AR10Yr AR10Yr Sharpe
XLP (Consumer Staples Select Sector SPDR ETF)-11.9%-7.0%2.8%6.2%8.6%0.6
XLU (Utilities Select Sector SPDR ETF)-5.6%-1.7%7.1%7.8%5.9%0.31
VNQ (Vanguard REIT ETF)-7.7%-1.0%3.0%3.9%5.6%0.16
SPY (SPDR S&P 500 ETF)2.5%17.2%10.7%12.5%8.9%0.43

XLP has the worst year to date return while all of the 3 rate sensitive sectors have negative YTD returns, compared with SPY’s 2.5%.

US Sectors Trend 05/17/2018

DescriptionSymbol13 Weeks26 Weeks52 WeeksTrend Score
Consumer StaplesXLP-8.97%-7.59%-6.45%-5.06%
Consumer DiscretionaryXLY0.3%13.8%20.34%7.13%

The cyclical sectors like energy, technology and consumer discretionary are the top 3 performing sectors. 

Please login or register an account to view the newsletter