After the Storm, Stability Returns to the Model Mutual Fund Portfolio
by James B. Cloonan
The Model Mutual Fund Portfolio and the general market are up a bit year-to-date.
After 2008, I guess anything positive is good. The fund portfolio (up 2.6%) was behind the overall market as measured by the Vanguard Total Stock Market Index fund VTSMX, which was up 4.4%.
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The portfolio has been in existence for five years now, and has outperformed the Vanguard Total Market benchmark over that period, as can be seen in Figures 1 and 2, and in Table 1.
Weathering the Market
Certainly we have had every kind of market during that period, which included 2008—a year, I hope, that is a once-in-an-investing-lifetime event.
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Discussion
The U.S. economy is limping along right now due to the uncertainty that the Federal government has introduced (not extending current tax rates, health care cost - fines, fess,etc. & the possible "energy tax"). Natural Resources, Emerging Markets, and Energy related investments - along with Consumer Staples - are probably the only areas that will prosper. Mutual Funds concentrated in these sectors will most likely outperform all others for some time to come. Although this portfolio has performed OK historically, it is not likely to "keep up" in the future. It is too concentrated in U.S. stocks (which are under performing the global economy.
posted over 2 years ago by David from Pennsylvania
