The Model Fund Portfolio fell behind the S&P 500 index, as measured by the Vanguard 500 Index fund 
(VFINX), 1.1% versus 1.2% year-to-date as of June 30.
They were both victims of a weak stock market that can’t seem to decide what to do this year.
We get an upward movement for a short time but then a pullback, also for a very short time. Everyone seems to feel we are due for a long run, but the predictors are split on which direction it will take.
Despite this volatility and lack of significant movement, the indexes are staying close to their all-time highs.
There are no changes to the Model Fund Portfolio at this time.
I was afraid that Aston/Fairpointe Mid Cap fund (CHTTX) would experience a negative impact from closing its doors to new investors. But I think it has also been hurt by the general weakness of value stocks this year after a very long bullish run following the 2008 collapse.
Real estate turned down rapidly after a very favorable period, and Vanguard REIT Index ETF (VNQ) is the worst-performing holding in the Model Fund Portfolio year-to-date. Real estate is often out of step with the rest of the market. This makes it an excellent diversifier in a portfolio, while still providing a long-term return that is equal to the overall market.
iShares MSCI Frontier 100 ETF (FM) continues to be weak because of its perceived correlation to the price of oil. Over the long term, I feel these pre-emerging countries’ stocks will grow at an above-average rate. But I am not sure how to measure how related they really are to the price of oil.
In addition to the three situations above, our portfolio has a significant value bias. This year has not been a good year for value, at least so far.
On the brighter side, First Trust US IPO ETF (FPX) continues to outpace the market. I believe First Trust has uncovered an effective anomaly. We continue to hope that there will not be too many copycats.
The All-ETF Portfolio did somewhat better than the Model Fund Portfolio and the S&P 500, with a 1.4% year-to-date return. This was mainly due to the lesser weight (10%) on the two losers, iShares MSCI Frontier 100 and Vanguard REIT Index, and a higher weight (20%) on the largest gainer, First Trust US IPO.
The market just continues on, sort of drifting. I personally have a bullish bias, but it lacks strong conviction. So far, this year is not like the typical very bullish pre-election year.
Perhaps in three months when the next Model Fund Portfolio update appears in the AAII Journal, we will know who the real presidential candidates are for the Republican Party.
Get updates about the portfolio that has outperformed the market by 211.9%
since inception!
