Mutual Funds for Level3?

Comments on “The Level3 Approach: Getting Exposure to Segments That Have Performed Well,” by John Bajkowski, in the March 2019 AAII Journal:

I’m a new member and I am interested in the Level3 Passive Portfolio. The majority of my investments are still in my 401(k) plan. I have a self-directed brokerage option with abilities to choose most mutual funds, but the plan does not allow me to select ETFs. I am looking for mutual funds correlating to the four ETFs in the Level3 portfolio. Can you suggest a resource?
—Tony from New Hampshire

Tony, here is list of mutual funds that correspond to the indexes tracked by the ETFs in the Level3 Passive Portfolio:

• S&P 500 Equal Weight: Index Funds S&P 500 Equal Weight NoLoad Fund (INDEX);
• CRSP U.S. Mid Cap Value Index: Vanguard Mid-Cap Value Index Fund Admiral Shares (VMVAX);
• Real estate: Vanguard Real Estate Index Fund Admiral Shares (VGSLX);
• Russell 1000 Sector Equal Weight: This is kind of a unique index; I can’t find a comparable mutual fund.

—Zach from New Hampshire

Bond Talk

Comment on “Will Stocks Always Outperform Bonds Over a Multi-Year Period?,” by Brian Haughey, CFA, FRM, CAIA, in the April 2019 AAII Journal:

Thanks for the overall well-done article. My concern with this and many other AAII articles, is that “this time it may well be different.” Historical look-backs do not incorporate our current low and possibly-going-lower interest rates. Or if rates rise from a current low, that means significant losses in bond principal. I would love to see a 5% return on one-year bonds, but we are nowhere near that now and getting there would be painful.

Also, these historical analyses do not consider the current market multiple. The Shiller CAPE ratio is currently over 31, a historically overvalued level. The next level of granular analysis would involve comparison in similar historical valuation scenarios.
—JLC from South Dakota

Seasoned Medicare Advice

Comments on “Health Insurance in Retirement: Medicare and Beyond,” by Steve Vernon, in the April 2019 AAII Journal:

I sold health insurance for over 30 years. The best favor you can do for yourself and your spouse is to buy the “original Medicare” and make sure you get the Medicare supplement within the six-month period of turning age 65—beyond this period, this coverage is medically written, and you could be turned down for medical reasons. At the same time get the Part D drug plan. You will have the Cadillac of health plans for 65 and over. Never change it.

If you get the itch to switch to a Medicare Advantage Plan and later you don’t like it, you may never get your Medicare supplement plan back because of health reasons. If you do get it back, you will pay a lot more for it because you are older. Some Medicare Advantage plans have co-insurance clauses, which means payments may be required before your plan pays anything. This is a real “getcha.” It’s not the same as a co-payment, which is a set amount.
—Richard Abbott from Florida

An excellent article, and good advice from Dick Abbott. With all the political discussion of “Medicare for all,” the supplemental insurance aspects are not mentioned. As the length of Steve Vernon’s article attests, these are important decisions and should not be glossed over.
—John Hallquist from Tennessee

A well-written article, which clearly demonstrates the high complexity of our Medicare system, and why it is so expensive and confusing for the average citizen. To learn about the lower cost and higher-performance medical systems in the world, read “The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care,” by T. R. Reid.
—Marilyn Kinsey from Michigan

Asset Allocation & Alzheimer’s

Comment on “Correlation Found Between Risk of Alzheimer’s and Asset Allocation,” Dispatch in the April 2019 AAII Journal:

I would disagree with the conclusions. I am a growth at a reasonable price (GARP) investor and at age 75 I am not concerned with Alzheimer’s disease or related dementia (ADRD). I will, at some point, change my allocations since neither the next generation nor my husband are stock pickers. I believe anyone who beats “the market” in their investments has surely done a DNA test for Alzheimer’s and Parkinson’s and has prepared someone to take over in their absence.
—Carol Dallal from Texas