AAII.com: AAII Model Portfolios

For over 25 years, AAII’s major emphasis has been on investment education and information. Our goal is to prepare individual investors to be their own advisers, and to provide the necessary data and systems to help them in that effort.

Over the years we have provided members with varying levels of services, the most adviser-like being the Stock Superstars Report (www.stocksuperstars.com), a complete portfolio advisory service. For those members interested in an intermediate level of support—not a complete stock advisory letter, but some specific guidance to help develop an effective investment program—we provide free access to two Model Portfolios.

The Shadow Stock Portfolio

The Shadow Stock Portfolio reflects the investing philosophy of AAII’s founder and chairman, Dr. James Cloonan:

• The best stocks for individual investors are not the same stocks that are best for institutions;
• The best returns come from giving major consideration to risk; and
• Success comes from concern more for the overall portfolio than for individual stocks.

The portfolio consists of micro-cap value stocks and is reviewed once per quarter—in conjunction with most company quarterly earnings announcements—when buy and sell decisions are made based on the explicit rules set forth at the inception of the portfolio. You can find a list of these rules in the “Shadow Stock Portfolio” section of AAII.com by choosing Shadow Stock Portfolio Rules. In addition, Cloonan writes his comments on the portfolio performance and reasons for buying and selling. These commentaries are posted on the Web site as well as printed in the AAII Journal in January, April, July and October.

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Each month, usually near the 15th, the portfolio performance is updated with previous month-end data. The list of current companies in the portfolio is updated with prior month-end price and statistical data (”Actual Portfolio” link), and a list of companies that currently pass the buy criteria is also posted (“Passing Companies” link). Through July 31, 2006, the Shadow Stock portfolio has returned 9.0% for the year.

The Mutual Fund Portfolio

For those who prefer mutual fund investing, AAII also offers a model mutual fund portfolio. This portfolio illustrates approaches to mutual fund selection that follow the same philosophy as that of the Shadow Stock Portfolio. The emphasis is on consistency, risk control and the selection of funds that follow approaches that an individual investor, rather than an institution, should follow. Twice per year, Cloonan makes buy and sell decisions based on the rules set forth at inception. You can read the rules by choosing “Mutual Fund Portfolio Rules” from the Mutual Fund Portfolio section at AAII.com.

CLICK ON IMAGE TO SEE FULL SIZE.

As with the Shadow Stock Portfolio, the fund portfolio’s performance is updated mid-month with prior month-end data. A list of recommended funds includes replacements for closed funds as well as performance and risk data. You can also read commentaries regarding the portfolio’s performance and reasoning for buying and selling; commentaries are posted twice a year and appear in the AAII Journal in February and August. As of July 31, 2006, the Model Mutual Fund Portfolio has returned 5.0% for the year.