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A New Fund and Suggested Allocation for the Model Fund Portfolio

by James B. Cloonan

A New Fund And Suggested Allocation For The Model Fund Portfolio Splash image

The market continues strong, with all the indexes (except the NASDAQ Composite) reaching new highs.

The Model Fund Portfolio lags the S&P 500 index on a year-to-date basis. It is up 10.0% versus 10.6% for Vanguard 500 Index fund (VFINX).

The portfolio continues to outperform over the long term, and on June 30 it will see its 10th birthday. The Model Fund Portfolio performance history can be seen in Figure 1 and Table 3.

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James B. Cloonan is founder and chairman of AAII.


Discussion

Gary from California posted 11 months ago:

I think there's an error in the Market Cap Size shown for CHTTX in Table 1. All information I can find, including AAII's 2013 fund listings, points to this fund as a Mid-Cap fund.


Jerry from Tennessee posted 10 months ago:

I realize that the mutual fund portfolio has outperformed the Vanguard 500 Index fund over the long term, although it has trailed the Vanguard fund over the short term, but, I am concerned over the expense ratios of your four mutual funds. The highest one is 1.25%, while the lowest one is 0.77%.

With that being said, I am very fortunate to work for a company that has an excellent 401K plan with Vanguard. This plan mostly includes index funds, but it does have a few actively managed funds as well. My company also matches 50% contributions up to 10%. So in other words it will match my 10% contributions with a 5% contribution. I am currently up to 8% with a 4% match, but hopefully in less than a year, I will be at 10% and able to capture the full 50% match of 5%. Most of these funds are index funds, but even the active funds have expense ratios of of less than 0.4%. I am just confused on how you can justify expense ratios of greater than 1% and as much as 1.25%?


Peter from Florida posted 10 months ago:

Is the Model portfolio equak weight? If not, what is the distribution?


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