Re-balance Cycle Reminder
Based on our new monthly re-balance calendar, the next re-balance time will be on next Monday, February 13, 2012. You can also find the re-balance calendar of 2012 on ‘My Portfolios’ page.
Current State Review
Economies & Markets
As we entered the New Year, U.S. economy has shown some sign of stronger recovery. However, we are also seeing many under currents. The following are some key observation:
- Unemployment rate: last Friday’s BLS (Bureau of Labor Statistics) reported on this important economic indicator generated quite some controversies. In general, we see a reasonable but not fantastic number from this report. See Unemployment Rate: Commonsense Interpretation for more details.
- S&P 500 companies earnings: based on a Reuters’ report, this is the weakest showing since Q4 2001: of the 184 companies in the S&P 500 that have reported earnings for Q4 2011, only 59% beat expectations. See S&P 500 Earnings Continue To Be Uninspiring
Risk assets have risen steadily. S&P 500 SPDR SPY had a year to date return 7.17% as of 2/3/2012. Signs of strong risk appetite include:
- Small cap out performs large cap so far: Asset Class Trends: U.S. Small Cap Stocks Outperform
- Cyclical sectors did better than defensive sectors: see US Sectors Trend table on 360° Market Overview
- Carry trade is back in vogue: Asset Class Trend: Carry Trade Is Back Among Currencies
- Long term treasury bonds are weak: iShares Barclays 20+ Year Treasury Bond TLT lost 3% so far this year, as opposed to some strength in high yield bonds (HYG returns 1.45% YTD, not the strongest for sure).
- All of risk assets are now ranked higher than cash (SHV) in our major asset trend table on 360° Market Overview, even though both International Developed stocks (EFA) and commodities (DBC) are still ranked below total U.S. bond index (BND).
On the negative side, stock volumes have been anemic, to say the least. Interesting readers are referred to various zerohedge.com’s reports such as Volumeless Equity Recovery Ignores Broad Risk Asset Derisking on this subject.
Whether this is the strong trend turning point remains to be seen. But markets are tilted to risk taking side up to now.
Model Portfolio Performance
Many users have asked us to provide regular updates on how our portfolios have been doing. We would like to present the following two links for those who care to track down our Featured ETF Portfolios (performance data will be updated daily, you can bookmark these links for future reference):
Featured ETF Porfolios Strategic Asset Allocation (TAA) Performance Comparison
Featured ETF Porfolios Strategic Asset Allocation (SAA) Performance Comparison
The following is the table for TAA performance (including year to date):
TAA Portfolio Performance Comparison (as of 2/3/2012)
| Portfolio/Fund Name | 2012 YTD | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Vanguard ETFs Tactical Asset Allocation Moderate | 3.18% | 3% | 29% | 10% | 74% | 9% | 58% |
| Permanent Global Portfolio ETF Plan Tactical Asset Allocation Moderate | 3.08% | 10% | 90% | 12% | 91% | 9% | 64% |
| Six Core Asset ETFs Tactical Asset Allocation Moderate | 2.84% | -0% | -3% | 9% | 77% | 8% | 59% |
| Retirement Income ETFs Tactical Asset Allocation Moderate | 1.8% | 4% | 34% | 10% | 80% | 7% | 55% |
| MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate | 4.55% | 1% | 6% | 11% | 87% | 10% | 73% |
The following is the table for SAA performance (including year to date):
Portfolio Performance Comparison (as of 2/3/2012)
| Portfolio/Fund Name | 2012 YTD | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Vanguard ETFs Strategic Asset Allocation Moderate | 5.75% | 2% | 10% | 14% | 84% | 4% | 18% |
| Six Core Asset ETFs Strategic Asset Allocation Moderate | 5.82% | 3% | 18% | 17% | 104% | 5% | 21% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | 4.07% | 2% | 15% | 16% | 102% | 2% | 8% |
| Permanent Global Portfolio ETF Plan Strategic Asset Allocation Moderate | 6.24% | 3% | 22% | 16% | 106% | 5% | 28% |
| MyPlanIQ Diversified Core Allocation ETF Plan Strategic Asset Allocation Moderate | 5.06% | 3% | 20% | 17% | 116% | 5% | 27% |
So far, SAA portfolios have out performed their TAA counterparts.
Latest Articles
- S&P 500 Earnings Continue To Be Uninspiring
- 401K Investments: More Diversification Needed In Tyco International Retirement Savings and Investment Plan
- Unemployment Rate: Commonsense Interpretation
- Stock Investment Strategy: Momentum Stocks Combined With Low Volatility Stocks
- Mutual Fund Asset Allocation: PIMCO Global Multi-Asset Fund Steady In Risk Asset Exposure
- Asset Class Trends: Dividend Stocks Are Still Solid In Risk Assets
- 401K Investments: Low Cost and Diversification in Google 401K Plan Paid Off
- ETF Review: Cambria Global Tactical ETF (GTAA) Turning Bullish In Stocks
- History of Financial Crisis Infographic
- 401K Investments: State Street Salary Savings Program
- Asset Class Trends: U.S. Small Cap Stocks Outperform
- How do you measure how far out of balance a portfolio is?
- Asset Class Trend: Carry Trade Is Back Among Currencies
- S&P 500 Golden Cross: How Much Does It Deliver?
- Is Your Brain a Barrier to Smart Investing?
- Americans Want To Save And Invest For Retirement, ICI Survey Found
How can we improve this newsletter — we value your inputs –Thanks to those who have already contributed — we appreciate it.
Diversified Asset Allocation Portfolios For Your Plans
