! Model Mutual Fund and ETF Portfolios: Value and Small Stocks Impact Returns
James B. Cloonan is founder and chairman of AAII. He is author of the book "Investing at Level3: Higher Returns With Minimal Risk for the Long-Term Individual Investor".


Rodney from ID posted over 4 years ago:

I am surprized that your model mutual fund portfolio is so heavy to small and midcap funds. This seems different from most other investment advice. Could you explain this?

Dan from HI posted over 4 years ago:

I have been using an upgrading system (NoLoad Fund X) in the past and it performed well until the '08 "crash", and doesn't seem to
work well now with the market not going anywhere, but constantly changing. Any advise/comments?

Matthew from WI posted over 4 years ago:

I too noticed that the portfolio seems heavy in small & mid caps.

Tom from TX posted over 4 years ago:

Should we expect to underperform in these 2 portfolioes most of the time when large cap and growth stocks are in style? It looks that way to me.

James from IL posted over 4 years ago:

Thanks for your comments. Given that individuals do not have assets they need within four years invested in stocks, I believe investments should be long-term oriented. In the long run, micro-cap stocks outperform small stocks which outperform midcaps which outperform large caps; giant caps are the worst of all. I believe in going for the greates gain. We mix them up a bit to reduce shorter term volatility. Micro-cap stocks, the best of all (see performance of the Shadow Stock portfolio in the April Journal), don't work as well in mutual funds because of poor liquidity in down markets when funds must sell because investors are getting out when they should be getting in. James Cloonan

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