Model Fund Portfolio Update: A 2004 Performance Report

    by James B. Cloonan

    As you can see in Figure 1, the Model Fund Portfolio outperformed the S&P 500 index by a wide margin in 2004 with a return of 17.7%, versus 10.7% for the S&P 500, as represented by VanguardÂ’s S&P 500 Index Fund (VFINX). The performance of the individual funds on both an absolute and a risk-adjusted basis can be seen in Table 1.

    Figure 1.
    Model Fund Portfolio

    Only Thompson Plumb (THPGX) performed below the S&P 500 for the year, in large part due to heavy investment in Fannie Mae. However, over the longer term (five- and 10-year periods) it is still ahead on both an absolute and risk-adjusted basis, and thus it qualifies to stay in the portfolio. The fund has also been one of the best-performing funds over the past 10 years. If, as many pundits are saying, it is time for the large-cap stocks to shine, then Thompson Plumb will be a real asset in the portfolio.

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    → James B. Cloonan