New Fund Added To Portfolio

6/15/2015


Subscribers following our recommended fund portfolios have done well over the years. Quite well, in fact.

Since the start of 2000, a span that began with three consecutive down years for the S&P 500 Index and included an awful 2008, our recommended Growth Portfolio gained 142.6%, well above its benchmark return of 92.4%. The Conservative Portfolio returned 139.0%, compared to 110.1% for its benchmark. For comparison, the S&P 500 gained 90.1% and Barclays U.S. Aggregate Bond Index returned 128.7%.

FUND PORTFOLIOS DELIVER GAINS
----------------------------------- Total Returns -----------------------------------
------- Since Start Of -------
2011
(%)
2012
(%)
2013
(%)
2014
(%)
YTD
(%)
2000
(%)
2005
(%)
2010
(%)
Growth Portfolio
(3.0)
15.3
29.4
6.6
3.2
142.6
114.2
88.3
Benchmark
(2.1)
16.2
28.1
7.1
3.3
92.4
103.5
83.1
Conservative
Portfolio
(0.8)
14.1
25.9
6.5
2.9
139.0
110.9
81.3
Benchmark
(0.2)
13.3
19.7
5.9
3.1
110.1
96.3
64.4
S&P 500 Index
2.1
16.0
32.4
13.7
2.0
90.1
113.5
109.2
MSCI EAFE Index
(Int'l Stks.)
(12.1)
17.3
22.8
(4.9)
6.3
55.1
64.0
37.9
Barclays Aggregate
Bond
7.8
4.2
(2.1)
6.0
(0.4)
128.7
57.7
23.8

For the record, our benchmarks consist of Schwab International ($19; SWISX) (20% of growth, 18% of conservative), Vanguard Total Bond Market ($11; VBMFX) (10%, 22%), and Vanguard Total Stock Market ($53; VTSMX) (70%, 60%).

While your editors are proud of our returns, we're always looking for standout funds to improve the portfolios. Importantly, we have a disciplined process that leverages the advantages of our fund-rating system and individual fund analysis.

With that in mind, we're adding PRIMECAP Odyssey Stock ($24; POSKX) to both portfolios with 10% weightings. The fund, with an impressive score of 99 in our rating system, ranks among the top 3% of large-cap blend funds for 10-year returns. It has gained 3.3% so far in 2015, versus 2.0% for the S&P 500.

The fund, which on March 31 held 118 stocks, is tilted toward technology (27% of assets) and health care (23%). About 12% of the portfolio is invested in foreign stocks and 10% is in cash. The annual expense ratio is only 0.62%, below the category average of 0.82%. The fund yields about 1.2%.

To make room for PRIMECAP Odyssey, we're dropping Vanguard Dividend Growth ($23; VDIGX) from both portfolios. A middling performer in the large-cap blend category, Vanguard has seen its fund score slump to 56, down from 87 at the start of 2015. No other changes are being made to the portfolios.

OUR RECOMMENDED MUTUAL FUNDS
Year-To-Date *
--- % Of Portfolio ---
 
Fund (Price; Ticker)
Return
(%)
Rank
Conser-
vative
(%)
Growth
(%)
Fund
Rating †
Artisan International ($31; ARTIX)
5.0
E
9
9
91
Baird Core Plus Bond ($11; BCOSX)
(0.1)
C
9
4
94
Dreyfus Midcap Index ($39; PESPX)
4.6
B
0
0
50
Dreyfus Small Cap Stock Index
($30; DISSX)
3.6
C
0
0
81
Homestead Small Company
($41; HSCSX)
3.4
C
5
6
85
iShares MSCI EAFE Small-Cap ETF
($53; SCZ)
10.9
C
4
6
83
PRIMECAP Odyssey Stock ($24; POSKX)
3.3
A
10
10
99
T. Rowe Price Divers. Small-Cap Growth
($28; PRDSX)
8.1
B
7
7
100
T. Rowe Price Value
($35; TRVLX)
2.3
A
10
11
93
Thompson Bond ($12; THOPX)
1.8
A
9
4
81
Vanguard 500 Index ($193; VFINX)
1.9
C
7
8
84
Vanguard GNMA ($11; VFIIX)
0.0
B
0
0
98
Vanguard Growth Index
($56; VIGRX)
3.6
C
10
11
86
Vanguard High-Yield Corp. ($6; VWEHX)
2.2
E
5
6
94
Vanguard Inter.-Term Tax-Exempt
($14; VWITX)
(0.6)
C
0
0
88
Vanguard Selected Value
($29; VASVX)
3.3
B
5
8
88
Vanguard Short-Term Invest.-Grade
($11; VFSTX)
0.8
B
0
0
100
Vanguard Total Bond Mkt. Index
($11; VBMFX)
(0.5)
D
0
0
44
Vanguard Wellesley Income
($25; VWINX)
0.0
E
0
0
98
Vanguard Wellington ($39; VWELX)
1.0
D
10
10
98

* Year-to-date ranks through June 9 from Morningstar, comparing performance among funds with same objectives. A = top 20%; B = next 20%; C= middle 20%; D = next 20%;
E = bottom 20%. † Fund ratings are percentile ranks based on our fund-rating system.


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