Introducing the AAII Model Portfolios

By James B. Cloonan

For over 30 years, AAII's major emphasis has been on investment education and information. Our preferred function has been to prepare individual investors to be their own advisers, and to provide the necessary data and systems to help them in that effort.

Over the years, however, we became increasingly aware that many of our members wanted more specific help. We responded to this need by creating the AAII Model Portfolio series. They provide an intermediate level of support—not a complete stock advisory letter, but some specific guidance for individuals in developing an effective investment program.

The Model Shadow Stock Portfolio

The Shadow Stock Portfolio reflects my investing philosophy, which holds that:

  • The best stocks for individual investors are not the same stocks that are best for institutions;

  • Ultimately, the best returns come from giving major consideration to risk; and

  • Success comes more from concern for the overall portfolio than for individual stocks.

These principles continue to guide the strategy and my ongoing commentary reflects my opinion. I give specific direction as to how this model portfolio, and variations on it, fit into an investment program.

>> View the Shadow Stock Portfolio

The Model Fund Portfolio

I have also created a Model Fund Portfolio. This portfolio is not intended as a complete advisory service, but serves to illustrate approaches to mutual fund and exchange-traded fund selection that follow the same philosophy as that of the Shadow Stock Portfolio: The emphasis is on consistency, risk control, and the selection of funds that follow approaches that an individual investor, rather than an institution, should follow.

I examine the different selection criteria, discuss variations that can affect risk, and show how these funds can be combined with low-risk holdings to match a desired overall risk profile in my onging commentary. Once again, however, it is based on my opinion.

>> View the Fund Portfolio