Fund Portfolios Fine-tuned For 2011

12/20/2010


The Forecasts’ recommended fund portfolios have posted solid gains in 2010. Through Dec. 14, the Growth Portfolio has gained 16.7%, versus 12.3% for its passive benchmark portfolio. The Conservative Portfolio is up 14.7%, exceeding the 10.2% gain for its benchmark. So far this year, the S&P 500 Index has returned 13.5% and the Barclays Aggregate Bond Index has returned 5.6%.

The Growth Portfolio — with about 64% U.S. stocks, 26% foreign stocks, and 10% bonds/cash — is geared toward long-term investors. Since 2001, the portfolio has delivered a total return of 59.0%, versus 32.9% for its benchmark.

The Conservative Portfolio — roughly 55% U.S. stocks, 21% foreign stocks, and 24% bonds/cash — is for investors at or near retirement. Since 2001, the portfolio has gained 58.0%, compared to 49.5% for its benchmark.

Over the last 10 years, both portfolios have outstripped their benchmarks seven times and topped the S&P 500 in eight years. While our game plan works, we are always looking to make improvements:

• We are trimming bond exposure, reflecting the market’s bullish trend according to the Dow Theory and the fact that investors have piled into bond funds, driving up prices and lowering yields. Long-term bond funds are particularly sensitive to interest rates, retreating when rates climb.  

• Stock exposure is being increased slightly, particularly in midcap and small-cap stocks.

Vanguard Wellesley Income ($22; WWINX) is being dropped from the Growth Portfolio but remains in the Conservative Portfolio.

• Fidelity Leveraged Company Stock ($28; FLVCX), with a middling fund rating of 42, is being dropped from coverage. Dreyfus MidCap Index ($28; PESPX), which mimics the S&P MidCap 400 Index and boasts a fund score of 86, is taking its place.

HISTORICAL RETURNS
———————————————————————————— Total Return ————————————————————————————
Total
Return
Since
2001 *
2001
(%)
2002
(%)
2003
(%)
2004
(%)
2005
(%)
2006
(%)
2007
(%)
2008
(%)
2009
(%)
2010
(%)
Growth Portfolio
(8.0)
(20.0)
39.4
16.7
11.5
14.9
11.3
(39.9)
32.8
16.7
59.0
Benchmark
(13.0)
(17.8)
31.0
13.6
7.6
17.3
7.6
(35.8)
27.5
12.3
32.9
Conservative Portfolio
(7.9)
(13.4)
30.6
13.7
8.8
12.4
9.9
(30.9)
25.3
14.7
58.0
Benchmark
(8.1)
(10.9)
24.4
11.5
6.6
14.5
7.8
(25.6)
22.0
10.2
49.5
S&P 500 Index
(11.9)
(22.1)
28.7
10.9
4.9
15.8
5.5
(37.0)
26.5
13.5
13.5
MSCI EAFE Index
(Int’l Stocks)
(21.4)
(15.9)
38.6
20.3
13.5
26.3
11.2
(43.4)
31.8
7.3
40.6
Barclays Aggregate
Bond Index
8.4
10.3
4.1
4.3
2.4
4.3
7.0
5.2
5.9
5.6
74.6
* Through Dec. 14.

 

 

FORECASTS FUND RECOMMENDATIONS
Through Dec. 14, our recommended Growth Portfolio has returned 16.7% for the year, versus 12.3% for its benchmark portfolio. The Conservative Portfolio has returned 14.7%, versus 10.2% for its benchmark.
— Year-to-Date —
—– % of Portfolio –—
Fund (Price; Ticker)
Return
(%)
Rank
Conser-
vative
(%)
Growth
(%)
Fund
Rating
American Century Heritage
($21; TWHIX)
30.2
A
9
10
86
Buffalo Growth
($25; BUFGX)
21.9
A
9
10
98
Dreyfus MidCap Index
($28; PESPX)
24.4
A
0
0
86
Dreyfus Small Cap Stock Index
($21; DISSX)
24.2
C
0
0
66
Heartland Select Value
($29; HRSVX)
16.3
E
7
10
81
Heartland Value Plus
($30; HRVIX)
26.5
B
9
10
98
T. Rowe Price Int’l Discovery
($44; PRIDX)
18.5
D
5
6
65
T. Rowe Price New Horizons
($34; PRNHX)
32.3
A
9
10
97
Vanguard 500 Index
($115; VFINX)
13.4
B
5
5
61
Vanguard Dividend Growth
($14; VDIGX)
10.5
D
8
9
95
Vanguard Emerging Mkts.
Stock Indx. ($30; VEIEX)
16.3
C
0
5
90
Vanguard GNMA ($11; VFIIX)
5.8
A
4
0
90
Vanguard Inter.-Term Tax
Exempt ($13; VWITX)
1.6
C
0
0
68
Vanguard International Value
($33; VTRIX)
6.4
C
8
6
83
Vanguard Short-Term Invest.
Grade ($11; VFSTX)
4.9
A
0
0
77
Vanguard Total Bond Mkt. Index ($11; VBMFX)
5.5
D
12
0
67
Vanguard Total Int’l Stock
Index ($16; VGTSX)
9.8
C
6
6
85
Vanguard Wellesley Income
($22; VWINX)
9.4
C
0
0
95
Vanguard Wellington
($31; VWELX)
9.6
D
5
8
76
Wells Fargo Advantage High
Income ($7; STHYX)
12.6
D
4
5
60
* Year-to-date ranks through Dec. 14 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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