Keeping Fund Portfolio Unchanged Despite Tough Start to 2010
by James B. Cloonan
In order to provide overall mutual fund data more quickly, our annual “Individual Investor’s Guide to the Top Mutual Funds” was moved to the February AAII Journal.
Consequently, the Model Mutual Fund Portfolio discussion will now appear in the March and August Journal issues.
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The Model Fund Portfolio trailed the overall market as measured by the Vanguard Total Stock Market Index fund (VTSMX) in January—returning –4.1% to the benchmark’s –3.5%—as both took a rest after a strongly bullish 2009. Longer term, the portfolio still outperforms, as can be seen in Figure 1 and Table 1.
Adapting the Rules
We have made no changes in the portfolio. As we discussed in last August’s article, the distortion caused by 2008 makes it impossible to apply the three-year rule (a fund cannot have a loss over any three-year period). We simulated five-year and 10-year performance with 2008 eliminated and on that basis all of the funds outperformed the S&P 500.
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