Introducing the AAII Model Portfolios

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 advisors, 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 from more concern for the overall portfolio than for individual stocks.

These principles will continue to guide the strategy and my ongoing commentary will reflect my opinion. I will 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 Mutual Fund Portfolio

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

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

>> View the Mutual Fund Portfolio

The Model ETF Portfolio

The latest addition to AAII's Model Portfolios is a model exchange-traded fund (ETF) portfolio. This portfolio is comprised of ETFs and it focuses on low-cost ETFs selected to work together in a diversified portfolio. The rationale used in building this portfolio is to achieve diversification across the various equity classes while maintaining a weight that will provide the maximum opportunity for long-term rates of return. I will provide ongoing commentary to discuss the portfolio's performance and holdings.

>> View the Mutual Fund Portfolio