• AAII Model Portfolios
  • Model Fund Portfolio: Adjust Risk Based on Personal Factors

    by James B. Cloonan

    The stock market continues its upward movement despite anticipation of a pullback.

    The Model Fund Portfolio is up 7.5% and the All-ETF Portfolio is up 7.7% year-to-date. This compares to 7.0% for the S&P 500 index as represented by the Vanguard S&P Index fund (VFINX).

    Results for the Model Fund Portfolio over longer periods can be viewed in Figure 1 and Tables 1 and 2. Performance for the All-ETF Portfolio is shown in Table 3. The Vanguard REIT Index (VNQ) exchange-traded fund continues to lead the pack and is making up for the weak period a year ago. The iShares MSCI Frontier 100 (FM) exchange-traded fund, up 9.9% year-to-date, is still outperforming the Vanguard Emerging Markets Stock Index (VWO) exchange-traded fund, which is up 7.1% year-to-date.

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    Discussion

    George Schmidt from NY posted over 2 years ago:

    In the model fund portfolio why not a lower cost ETF by Vanguard instead of Guggenheim?

    Example: Vanguard Mid Cap Value IVOV has an annual cost of 0.20% vs 0.38% for model fund RFV. Same lower cost for Vanguard IVOV vs RZV. They appear identical and track for the identical performance.


    George Schmidt from NY posted over 2 years ago:

    Correction: Vanguard S&P Small Cap 600 Value symbol is VIOV.


    Conrad Szymanski from FL posted over 2 years ago:

    I have just enrolled in AAII. I am curious as to why the strategy deployed favors mutual funds in the large and mid cap space, and ETF's in the small cap space. My thought has always been that mutual fund houses can add the most value in the small and foreign spaces. I think (but don't know) that the standard deviation analysis of the variation in performance would support my theory. Granted, after 2008, I am drawn to EFT's for their favorable tax consequences; I still believe in the value of first hand research in small and foreign spaces.


    Charles Rotblut from IL posted over 2 years ago:

    Conrad,

    Jim says "The funds were picked for their qualities. Just happened to be large-cap. I agree that managers should be able to add value among smaller cap stocks, but there is no small-cap fund that is currently available that I feel is enough better than the ETF."

    -Charles


    Charles Rotblut from IL posted over 2 years ago:

    George,

    Here's Jim's explanation for using the Guggenheim funds: "Only reason is I prefer to see five years of history. I will probably switch next year if all stays the same."

    -Charles


    Vaidy Bala from AB posted over 2 years ago:

    I like the all out ETF portfolio. From your work it seems reasonable for sustainability.Are ETFs readily cash able, upon need?


    Roy Beamer from NC posted over 2 years ago:

    Since Aston/Fairpointe Mid Cap N (CHTTX) and FMI Common Stock (FMIMX) continue to be closed to new investors, performance of the portfolio should be expressed without them or at least with and without.

    New investors are unable to compare their results the currently available options


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