Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.
For regular SAA and TAA portfolios, we just had a rebalance today. The next re-balance will be on Monday, June 22, 2015. You can also find the re-balance calendar for 2014 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.
Portfolio Update
Brokerage Mutual Fund Portfolios
As we have outlined in previous newsletters:
- March 30, 2015: Brokerage Specific Core Mutual Fund Portfolios 2
- March 16, 2015: Brokerage Specific Core Mutual Fund Portfolios
we had planned to support brokerage specific core mutual fund portfolios instead of brokerage recommended mutual fund portfolios for our basic subscribers. Most responses we got are in favor of these new portfolios, though we would really like to see more users involved in such a discussion. As a result, we are now officially supporting these brokerage specific core mutual fund portfolios on Brokerage Investors page.
The following tables show how these portfolios are doing at the moment:
Tactical:
| Ticker/Portfolio Name | YTD Return** |
1Yr AR | 3Yr AR | 5Yr AR | 10Yr AR |
|---|---|---|---|---|---|
| Schwab Core Mutual Funds Tactical Asset Allocation Moderate | 1.5% | 3.5% | 10.9% | 9.3% | 12.5% |
| Fidelity Core Mutual Funds Tactical Asset Allocation Moderate | 2.7% | 3.9% | 11.7% | 9.3% | 11.7% |
| Etrade Core Mutual Funds Tactical Asset Allocation Moderate | 1.9% | 5.4% | 12.1% | 9.5% | 12.5% |
| Merrill Edge Core Mutual Funds Tactical Asset Allocation Moderate | 1.6% | 4.5% | 11.3% | 9.9% | 12.8% |
Strategic:
| Ticker/Portfolio Name | YTD Return** |
1Yr AR | 3Yr AR | 5Yr AR | 10Yr AR |
|---|---|---|---|---|---|
| Schwab Core Mutual Funds Strategic Asset Allocation – Optimal Moderate | 2.6% | 4.1% | 10.8% | 10.5% | 8.8% |
| Fidelity Core Mutual Funds Strategic Asset Allocation – Optimal Moderate | 3.8% | 6.3% | 10.9% | 10.6% | 8.3% |
| Etrade Core Mutual Funds Strategic Asset Allocation – Optimal Moderate | 3.7% | 6.6% | 11.6% | 10.5% | 9.1% |
| Merrill Edge Core Mutual Funds Strategic Asset Allocation – Optimal Moderate | 3.4% | 5.5% | 10.7% | 9.8% | 8.3% |
Again, you can find these up to date performance data on Brokerage Investors page.
Merrill Edge Support
Notice also we now support Merrill Edge portfolios. For ETF portfolios, one can use any of the three plans:
Even though Merrill Edge charges $6.95 per trade for a regular account, most people can have 30 commission free trades per month if their accounts have more than $25,000 combined value in their brokerage and Bank of America bank accounts (see details here). For these accounts, you are free to trade any ETFs in the plans above. Since 30 free trades per month are more than enough for rebalance purpose, Merrill Edge is perhaps the best brokerage for transaction cost conscious investors. The commission free ETF topic deserves a separate detailed discussion as other brokerages have their limited list of ETFs as commission free.
We also have a total return bond portfolio Merrill Edge Total Return Bond:
| Ticker/Portfolio Name | YTD Return** |
1Yr AR | 3Yr AR | 5Yr AR | 10Yr AR |
|---|---|---|---|---|---|
| Schwab Total Return Bond | 0.2% | 1.3% | 4.9% | 5.7% | 7.0% |
| Fidelity Total Return Bond | 0.2% | 1.3% | 4.2% | 5.2% | 6.3% |
| TDAmeritrade Total Return Bond | 1.2% | 2.6% | 6.4% | 6.1% | 7.2% |
| FolioInvesting Total Return Bond | 0.2% | 1.3% | 4.9% | 5.7% | 7.0% |
| Etrade Total Return Bond | 0.2% | 1.3% | 4.9% | 5.7% | 7.0% |
| Merrill Edge Total Return Bond | 0.6% | 3.3% | 8.0% | 9.3% | 8.3% |
| PTTRX (PIMCO Total Return Instl) | 0.5% | 2.3% | 2.8% | 4.4% | 5.9% |
| VBMFX (Vanguard Total Bond Market Index Inv) | 0.7% | 3.0% | 2.1% | 3.7% | 4.5% |
Careful readers might notice this portfolio has done much better than other brokerage portfolios. The reason is because the newly added PIMCO Investment Grade Bond Fund PBDDX. For other brokerage portfolios (such as Schwab Total Return Bond), this fund was added after the back testing was done more than one year ago. The addition of this fund helps to boost the portfolio performance in the past 5 or so years. This phenomenon is what many academic researchers term as ‘data snooping’: high performance funds are used for back testing purpose only after the fact that these funds were recognized as high performance. It is thus important to take the back testing results with a grain of salt.
One noticeable fund missing from the candidate funds in the Merrill Edge portfolio is Loomis Sayles total return bond fund LSBRX. Merrill charges transaction fee for this fund. Even though we feel this is an important fund, we are hopeful that the performance of the Merrill Edge portfolio will be comparable with other portfolios from now on.
Candidate no load no transaction fee total return bond funds available in Merrill Edge:
| FIXED INCOME | ||
|---|---|---|
| Intermediate-Term Bond | TGMNX | TCW Total Return Bond N |
| Intermediate-Term Bond | DLTNX | DoubleLine Total Return Bond N |
| Intermediate-Term Bond | PBDDX | PIMCO Investment Grade Corp Bd D |
| Multisector Bond | PONDX | PIMCO Income D |
| Intermediate-Term Bond | MWTRX | Metropolitan West Total Return Bond M |
| Intermediate-Term Bond | PTTDX | PIMCO Total Return D |
We now support all major brokerages including Fidelity, Schwab, TD Ameritrade, Merrill Edge, Etrade and Vanguard.
Advanced Portfolios
We mentioned several portfolios that use total return bond fund portfolios as CASH substitute in newsletter April 13, 2015: Total Return Bond Funds As Smart Cash. These long term timing portfolios can invest in CASH for a long period of time. By investing in a total return bond fund portfolio instead in these periods, one can boost portfolio returns by some big margin.
We have also updated our Advanced Strategies page.
Specifically, we replaced P Diversified Timing On Endowment Asset Allocation Model SMA 10 Months With Long Treasury with P Diversified Timing Asset Allocation Portfolio With Total Return Bonds.
As it stands right now, we have been in an over valued equity market for quite some time, several long term valuation based portfolios have turned into CASH for a long time now. By investing in a total return bond fund portfolio, investors can derive better returns from bonds than merely getting almost nothing from CASH.
The three updated portfolios:
| Strategy | Portfolio Name | YTD Return** |
1Yr AR | 3Yr AR | 5Yr AR | 10Yr AR |
|---|---|---|---|---|---|---|
| Warren Buffett Total Stock Market Value to GNP Ratio Strategy | P Warren Buffett Total Stock Market Valuation to GNP Ratio SO SU Weekly Strategy Total Return Bond Funds As Cash | 0.2% | 1.3% | 12.5% | 11.7% | 12.2% |
| Shiller Cyclically Adjusted PE 10 Stock Market Timing Strategy | P Shiller Cyclically Adjusted PE 10 SO SU Stock Market Timing Strategy Weekly Total Return Bond Funds As Cash | 0.2% | 1.3% | 14.1% | 12.6% | 12.5% |
| Hussman Peak PE Market Timing Strategy | P Hussman Peak PE SO SU Market Timing Strategy WeeklyTotal Return Bond Funds As Cash | 0.2% | 1.3% | 12.9% | 11.9% | 11.7% |
These portfolios are the representatives of true value based investing strategies. Though it is hard for investors to invest 100% their investments in these portfolios, one can however utilize them smartly. We will devote a future newsletter to discuss in details on how to combine these portfolios with our tactical (momentum) portfolios and/or other hedge portfolios to cope with the current investment environment.
Market Overview
The long term bonds rout might be or might not be over. Nevertheless, they are taking a breath at the moment. As discussed in the previous newsletter, the weakness of long term bonds can also affect economy (such as higher mortgage rates for housing and higher cost for refinancing or corporate bonds). It is thus worthwhile to watch them. REITs recovered somewhat while US stocks are again at record territory. International and emerging market stocks are showing strength. However how uncomfortable we are with the markets subjectively, at the moment, risk assets are rising and we shall follow our investment plans.
For more detailed asset trend scores, please refer to 360° Market Overview.
We would like to remind our readers that markets are more precarious now than other times in the last 5 years. It is a good time and imperative to adjust to a risk level you are comfortable with right now. However, recognizing our deficiency to predict the markets, we will stay on course.
We again copy our position statements (from previous newsletters):
Our position has not changed: We still maintain our cautious attitude to the recent stock market strength. Again, we have not seen any meaningful or substantial structural change in the U.S., European and emerging market economies. However, we will let markets sort this out and will try to take advantage over its irrational behavior if it is possible.
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.
Latest Articles
- May 11, 2015: Pain in Fixed Income?
- May 4, 2015: The Balanced Stock and Long Term Treasury Bond Portfolios
- April 27, 2015: Long Term Treasury Bond Behavior
- April 20, 2015: 529 College Savings Plan Rebalance Policy Change
- April 13, 2015: Total Return Bond Funds As Smart Cash
- April 6, 2015: The Low Return Environment
- March 30, 2015: Brokerage Specific Core Mutual Fund Portfolios 2
- March 23, 2015: Investment Arithmetic for Long Term Investments
- March 16, 2015: Brokerage Specific Core Mutual Fund Portfolios
- March 9, 2015: Newsletter Collection Update
- March 2, 2015: Total Return Bond ETFs
- February 23, 2015: Why Is Global Tactical Asset Allocation Not Popular?
- February 16, 2015: Where Are Permanent Portfolios Going?
- February 9, 2015: How Have Asset Allocation Funds Done?
- February 2, 2015: Risk Management Everywhere
- January 26, 2015: Composite Portfolios Review
- January 19, 2015: Fixed Income Investing Review
- January 12, 2015: How Does Trend Following Tactical Asset Allocation Strategy Deliver Returns
- January 5, 2015: When Forecast Fails
- December 22, 2014: Long Term Asset Returns: How Long Is Long?
- December 15, 2014: Beaten Down Assets
- December 8, 2014: Implementing Core Asset Portfolios In a Brokerage
- December 1, 2014: Two Key Issues of Investment Strategies
- November 24, 2014: Holiday Readings
- November 17, 2014: Retirement Spending Portfolios Update
- November 10, 2014: Fixed Income Or Cash
- November 3, 2014: Asset Trend Review
- October 27, 2014: Investment Loss, Mistakes And Market Cycles
- October 20, 2014: Strategic Portfolios With Managed Volatility
- October 13, 2014: Embrace Volatility
- October 6, 2014: Tips For 401k Open Enrollment
- September 29, 2014: What Can We Learn From Bill Gross’ Departure From PIMCO?
- September 22, 2014: Why Total Return Bond Funds?
- September 15, 2014: Equity And Total Return Bond Fund Composite Portfolios
- September 8, 2014: Momentum Based Portfolios Review
- September 1, 2014: Risk & Diversification: Mint.com Interview
- August 25, 2014: Remember Risk
- August 18, 2014: Consistency, The Most Important Edge In Investing: Tactical Case
- August 11, 2014: What To Do In Overvalued Stock Markets
- August 4, 2014: Is This The Peak Or Correction?
- July 28, 2014: Stock Musings
- July 21, 2014: Permanent Portfolios & Four Pillar Foundation Based Framework
- July 14, 2014: Composite Portfolios Review
- July 7, 2014: Portfolio Behavior During Market Corrections
- June 30, 2014: Half Year Brokerage ETF and Mutual Fund Portfolios Review
- June 23, 2014: Newsletter Collection Update
- June 16, 2014: There Are Always Lottery Winners
- June 9, 2014: The Arithmetic of Investment Mistakes
- June 2, 2014: Tips On Portfolio Rebalance
- May 26, 2014: In Praise Of Low Cost Core Asset Class Based Portfolios
- May 19, 2014: Consistency, The Most Important Edge In Investing: Strategic Case
- May 12, 2014: How To Handle An Elevated Overvalued Market
- May 5, 2014: Asset Allocation Funds Review
- April 28, 2014: Now The Economy Backs To The ‘Old Normal’, Should Our Investments Too?
- April 21, 2014: Total Return Bond Investing In The Current Market Environment
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Diversified Asset Allocation Portfolios For Your Plans
