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AAII Model Portfolios Update: Small Caps Lead the Way


The S&P 500 index climbed 2.3% in October, although it was far from a smooth ride. There was a sell-off in the early-to-mid part of the month, but the markets rebounded strongly from those lows. This could indicate strong buyer interest sitting on the sidelines waiting for an opportunity to buy in, which would be bullish, but the signs are far from clear. Instability across the globe continues to be an issue. We have seen defaults that are not defaults in Argentina and a shortage of, well, everything in Venezuela. Despite all this uncertainty, or perhaps because of it, the oil glut pushed prices down even more, and $3 per gallon gas was a welcome surprise for many Americans. While all stock styles performed well last month, small caps outpaced large-cap stocks. Whether this signifies a return of the small caps is unclear. The Model Fund Portfolio climbed 3.0%, while the Model Shadow Stock Portfolio, which is heavily concentrated in small-cap stocks, rose 3.2% during October.

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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
-7.4 1.6 28.7 27.6 16.3 18.8 15.8

1-Year Return: 1.6%
As Of 10/31/2014

Stock Portfolio

10.8 17.1 19.6 16.5 8.1 9.0 19.6
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
8.3 12.9 15.9 14.6 7.9 12.6 12.5

1-Year Return: 12.9%
As Of 10/31/2014

Fund Portfolio

10.8 17.1 19.6 16.5 8.1 9.0 19.6
Compared to Vanguard 500 Idx (VFINX)
Data as of 10/31/2014.
* See "Important Concepts."