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Model Portfolios

AAII Model Portfolios Update: This Way and That Way
The S&P 500 index declined 1.6% in September, although it was still within striking distance of its all-time highs going into October. Is this the much-talked-about pullback? Nobody knows. We’ve had some sharp declines followed by sharp rallies, so it doesn’t make sense to guess. We may sound like a broken record, but global instability continued to be a negative for the market last month. Still, oil prices continued their post-summer decline, and parts of the country are seeing $3 per gallon gas at the pumps. The market had few company earnings releases to digest, so it spent the month in a tight range of less than 45 points, with similar tight volume. While all stock styles underperformed, large-cap stocks fared better than small caps. This negative momentum is what weighed down the model portfolios for September. The Model Fund Portfolio was down 4.1%, while the Model Shadow Stock Portfolio, which is heavily concentrated in small-cap stocks, fell 11.6% for the month. The Model Shadow Stock Portfolio experiences greater short-term volatilities because it is made up of stocks trading in the “shadows” of Wall Street, which are more likely to be mispriced. While there may be negative periods in such a portfolio (as in September), over time the portfolio tends to significantly outperform the S&P 500. Short-term volatility is the price to be paid for higher long-term expected returns.
AAII model portfolios provide members with stock and fund research and analysis. Our ultimate goal with these portfolios is to provide you with the best of both worlds—investment ideas and investment education. Read More »

Model Shadow Stock Portfolio

YTD Return
(%)
Annual Return (%) Ann'l
Std
Dev (%)
3-Year Risk-Adjusted Return (%)*
1-Yr 3-Yr 5-Yr 10-Yr
-10.3 -2.2 33.9 23.7 16.2 20.4 19.3

1-Year Return: -2.2%
As Of 9/30/2014

Stock Portfolio

8.2 19.5 22.8 15.5 8.0 10.4 22.8
Compared to Vanguard S&P 500 Idx (VFINX)

Model Fund Portfolio

YTD Return
(%)
Annual Return (%) Ann'l
Std
Dev (%)
3-Year Risk-Adjusted Return (%)*
1-Yr 3-Yr 5-Yr 10-Yr
5.1 13.4 20.1 13.6 8.1 12.6 17.3

1-Year Return: 13.4%
As Of 9/30/2014

Fund Portfolio

8.2 19.5 22.8 15.5 8.0 10.4 22.8
Compared to Vanguard 500 Idx (VFINX)
Data as of 9/30/2014.
* See "Important Concepts."