Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

Regular AAC (Asset Allocation Composite), SAA and TAA portfolios are always rebalanced on the first trading day of a month. the next re-balance will be on Monday August 1, 2023. 

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.

ETFs In Asset Classes For Portfolio Construction

ETFs have gained widespread usage. Except for a few asset classes, we hold the belief that ETFs have the potential to supplant mutual funds as the primary investment instruments to construct asset allocation portfolios.

The recently launched web page ETFs in Asset Classes has been created with the intention of enabling investors to utilize the carefully select suitable and sufficiently liquid ETFs for their investment portfolios. The ETFs are categorized into various asset classes, facilitating investors in their choices for asset allocation within their portfolios. In this newsletter, we delve into some specific details on how to effectively utilize the tables on the page for portfolio construction.


In general, when constructing a long-term investment portfolio, one can follow a two-step approach:

Step 1: Asset Allocation. This step can be further divided into two sub-steps:

  1. Identify your growth expectations and your preferred level of risk. Once this is established, determine your target allocation for risk assets (which encompass stocks, REITs, and other alternative assets like commodities) as well as your fixed income (bond) target allocation.

  2. Decide whether to employ a strategic asset allocation (SAA) or a tactical asset allocation (TAA) strategy. SAA maintains a consistent risk asset allocation regardless of market conditions, while TAA allows for tactical adjustments to the risk asset allocation based on prevailing economic and market circumstances. It’s worth noting that you aren’t restricted to just one strategy; you can opt for both strategies, each for different investment accounts. MyPlanIQ offers both types of strategies. See MyPlanIQ Strategic Asset Allocation (SAA) and(Asset Allocation Composite (AAC).

We have written several articles on this subject. Specifically, we recommend the article we published in AAII (American Association for Individual Investors) Asset Classes for Retirement Investments and the following:

Step 2:Fund Selection:

  • Index Funds for Stock Assets

In the Asset Classes for Retirement Investments we compared some of the best actively managed mutual funds with index funds for stock asset classes. Here is the latest return comparison for one of the tables: 

Active Mutual Funds Performance (as of 8/14/2023)
Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR
SEQUX (Sequoia) 18.6% 5.8% 4.1% 7.7% 7.0% 8.5%
LMVTX (Legg Mason Cap Mgmt Value C) 12.4% 11.7% 17.4% 9.6% 9.2% 7.8%
FAIRX (Fairholme) 51.8% 40.6% 23.7% 15.8% 8.1% 7.4%
LLPFX (Longleaf Partners) 22.8% 9.4% 14.4% 4.6% 5.6% 5.7%
TAVFX (Third Avenue Value Instl) 14.2% 34.0% 31.9% 11.2% 8.1% 6.9%
DODGX (Dodge & Cox Stock) 13.2% 10.4% 17.6% 10.3% 11.3% 10.0%
OAKMX (Oakmark I) 22.3% 15.9% 20.0% 11.6% 11.9% 11.8%
VFINX (Vanguard 500 Index Investor) 18.2% 9.5% 12.6% 11.7% 12.4% 10.9%

Only Oakmark fund was able to outperform VFINX (S&P 500) for the past 15 years. If we extend to 1992 (more than 30 years), we look at the best funds and compare with VFINX:

In this case, the three active funds have been able to outperformed VFINX. But the outperformance is due to their outperformance before 2007. Granted, since 2009, US stocks, especially S&P 500, have been exceptionally strong because of US central bank’s aggressive monetary policies. 

  • Actively Managed Total Return Bond Funds for Fixed Income

We have again and again proved that index bond funds have underperformed excellent actively managed bond funds. Please refer to our Income Investors page for more details. 

ETFs in Asset Classes

We go through a few tables on the page ETFs in Asset Classes for major asset classes. 

US stocks

There are many excellent choices in this asset class. There are several ultra low cost index funds such as IVV, VOO, VTI. Furthermore, we have ETFs from two famed investment houses: DFAC and DFAU from Dimensional funds and CGUS from Capital Group. See:

for more discussions. In general, we feel comfortable with going to ultra low S&P 500 index ETFs or Vanguard VTI in US stocks. We also want to comment that for US small cap stocks ETFs, Dimensional Funds DFAS, DFSV could be good choices. 

Foreign stocks

For foreign stocks, based on the above newsletters, DFA (Dimensional Funds Advisor) funds have track record to outperform Vanguard index funds. ETF DFAI, DFIC are good choices, in addition to the usual index funds like VEA and SCHF. 

Similarly, for emerging market stocks, DFA ETFs can be strong challengers to Vanguard ETF VWO. 


Vanguard VNQ seems to be a clear leader. However, when comparing with Cohen & Steers actively managed REIT mutual fund like CSRIX (Cohen & Steers Instl Realty Shares) , past returns indicate that C&S does have some slight edge over index funds in REITs: 

Vanguard REIT vs. Cohen & Steer REITs mutual fund 
Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR
VNQ (Vanguard REIT ETF) 4.7% -9.2% 6.4% 5.3% 6.6% 6.6%
CSRIX (Cohen & Steers Instl Realty Shares) 4.9% -11.3% 6.5% 6.4% 7.7% 7.4%

Notice also the CSRIX is an institutional share class.

US bonds (Fixed Income)

The total return bond ETFs table is relevant to our MPIQ ETF Fixed Income which is on Income Investors page:

US Total Return Bonds ETFs (as of 8/14/2023)

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR
BOND (PIMCO Total Return Active ETF) 4.3% 1.3% -2.9% 1.4% 2.2%  
TOTL (SPDR® DoubleLine Total Return Tact ETF) 4.3% 2.3% -2.0% 1.0%    
FBND (Fidelity Total Bond ETF) 4.2% 1.6% -1.8% 2.4%    
HTRB (Hartford Total Return Bond ETF) 3.9% 0.5% -2.4% 1.9%    
GTO (Invesco Total Return Bond ETF) 2.8% 0.3% -3.5% 1.8%    
CGCP (Capital Group Core Plus Income ETF) 2.3% -2.5%        
CGMS (Capital Group US Multi-Sector Income ETF) 8.1%          
BKAG (BNY Mellon Core Bond ETF) 2.7% -1.0% -3.6%      
STOT (SPDR DoubleLine® Short Duration Total Return Tactical ETF) 6.0% 7.9% 1.9% 2.5%    
PTRB (PGIM Total Return Bond) 5.0% 3.2%        
BND (Vanguard Total Bond Market ETF) 2.7% -0.7% -3.4% 1.3% 1.8% 2.8%

For 5 years, we can see that other than TOTL, all other ETFs have outperformed BND. We are also impressed by STOT (SPDR DoubleLine® Short Duration Total Return Tactical ETF), which has the best returns for the past 1,3,5 years. Though one might attribute the outperformance to its short term bond nature, we believe it can be a very good candidate fund for our tactical total return bond ETF portfolio MPIQ ETF Fixed Income  as it can become a good fund to go to in a rising rate environment. 

Regardless, we are still seeing that total return bond mutual fund based tactical portfolio (such as Schwab Total Return Bond) is still outperforming ETF based portfolio MPIQ ETF Fixed Income. This indicates that excellent total return bond mutual funds are still not replaceable, for now. Refer to Income Investors page for more details. 

Ultra short term bond ETFs

This table is again of interest to many investors as it includes several outstanding ‘money market ETFs’ like BIL, USFR, TFLO, SGOV. Furthermore, adding ICSH, NEAR, MINT, JPST as candidate funds, we can effectively construct a tactical ETF portfolio MPIQ Ultra ST Bond ETFs that can outperform many prime money market mutual funds. 

Other ETF tables

Other tables such as High yield bond ETFs and Active ETFs could be of interest to experienced investors. Specifically, we highlight ANGL (Market Vectors® FallenAngel HiYld Bd ETF) in high yield bonds. This fund has outperformed many high yield index funds such as HYG, JNK. In active ETFs, PDBC (Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF) is an interesting actively managed (tactical) commodity ETF and RPAR (RPAR Risk Parity ETF) is a reasonable risk parity ETF. These funds, along with others, deserve another article for further discussion. 

In conclusion, investors could find many excellent ETFs on ETFs in Asset Classes page. These can help them to construct a good asset allocation portfolio. We will continue to keep the page up to date. 

Market overview

As of 8/4/2023 (Factset didn’t publish the update on 8/11/2023), for Q2 2023 (with 84% of S&P 500 companies reporting actual results), the blended earnings growth was -5.2%, better than -7% expected on 6/30/2023. Though stocks have been jittery since last week, in general, investors are still very optimistic about the ‘good’ inflation outcome (i.e. inflation has slowed and the Federal Reserve might stop rate hike soon). On the other hand, the rising oil price and the still strong job market are presenting conflicting signals. Markets are again making short term moves based on investors collective guesses. 

As always, we call for staying the course which is guided by the well defined and sound strategic and tactical strategies:

  • For strategic allocation (buy and hold) investors, ignore the current market behavior. Remember, as what we have emphasized numerous times, when you choose and commit to a strategic portfolio, you essentially know and commit that your investment horizon (or the time you need to utilize this capital) is 20 years or preferably much longer given the current high valuation. As we pointed out, if your investments are those diversified (index) funds such as an S&P 500 index fund (VFINX, for example), you know your money is in some solid ‘business’ that eventually (20 years later and preferably many more years later) will deliver some reasonable returns. As long as you are comfortable with this thesis, you should sit tight and forget about the current gyration.
  • For tactical investors, again, you have to ignore the current market noise. Furthermore, you should follow your strategy rigorously, especially in a time like this. Human emotion, both optimistic and pessimistic, and human desire, both greedy and fearful, are your worst enemies. This has been shown to be true time and time again.

Stock valuation has dropped and now valuation is becoming less hostile. However, it is still not cheap by historical standard. For the moment, we believe it’s prudent to be extra cautious. However how serious a correction might be, we have confidence in the US economy in the long term and thus in the stocks in aggregate. We just need to manage through interim losses carefully.

We again would like to emphasize that 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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