Asset Allocation for 2016

We are approaching 2016 as if we were starting from scratch. You will find that there are changes to the Asset Allocations, the Favorite Mutual Funds list, the Favorite ETFs list, along with our model portfolios. Of note, we have made a slight increase to our equity allocations and redistributed our fixed income allocations. The changes to our lists of favorites are numerous, so let’s just say that we have moved towards managers with a more conservative process as we move into the uncharted territory of interest rates rising from zero. While we would be comfortable investing in all of the mutual funds on our favorites list, many of the ETFs on that favorites list are there just to get a feel for state of financial markets and not for long term investing.

Asset Allocation 2016

If you need more information about which funds to include in these allocations, check our Favorite Mutual Funds list, Favorite ETFs, or Model Investment Portfolios.

Model Investment Portfolios 2016

Here are our model investment portfolios for 2016 with returns as of December 31, 2015.

Fund Name  Allocation% Return
No Load Mutual Fund PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM2%0.00.1
Baird Short-Term BondBSBSXSTB6%(0.3)0.6
American Century Short Dur Inf Prot DndAPOIXIPB3%(0.5)(0.5)
Metropolitan West Total Return BondMWTRXITB6%(0.6)(0.1)
Wells Fargo Short-Term Hi Yld BondSSTHXHYB4%0.42.1
RidgeWorth Seix Floating Rate Hi Income **SAMBXFRB3%(2.5)(1.2)
Payden Global Fixed IncomePYGFXGB4%0.61.5
Payden Emerging Markets BondPYEWXEB4%0.9(1.1)
Metropolitan West Unconstrained BondMWCRXUB4%0.0(0.0)
BlackRock Global Long/Short CreditBGCAXL/S B4%(0.6)(1.2)
Parnassus Core EquityPRBLXLCC3%4.8(0.6)
American Beacon Bridgeway Lg Cap ValBWLIXLCV3%6.0(1.5)
Scout Mid CapUMBMXMCC3%3.61.4
Congress Mid Cap GrowthCMIDXMCG3%4.2(0.2)
Brown Capital Mgmt Small Company **BCSIXSCG3%9.28.8
ASTON/Silvercrest Small CapASCTXSCV3%1.9(3.3)
Westcore Micro Cap OpportunityWTMIXMIC2%3.6(4.9)
FMI InternationalFMIJXIntl4%3.93.2
Wasatch International OpportunitiesWAIOXISC4%7.19.5
Harding Loevner Emerging MarketsHLEMXEE3%0.7(13.6)
Driehaus Emerging Markets Small Cap GrDRESXEE3%(2.2)(10.2)
AMG Managers Real Estate SecuritiesMRESXRE6%7.55.3
AQR Long/Short EquityQLENXL/S E4%5.916.8
Boston Partners Global Long/ShortBGRSXL/S E4%3.56.3
Wells Fargo Alternative StrategiesWALTXHdg4%1.41.5
AQR Managed Futures StrategyAQMNXMF4%(3.6)1.8
Credit Suisse Managed Futs Strategy **CSAAXMF4%(2.8)3.7
Portfolio Return / Value100%1.91.4
Fidelity Investments PortfolioTickerClass1/1/20163 Mo1 Yr
Cash ReservesFDRXXMM2%0.00.1
Limited Term BondFJRLXSTB8%(0.6)0.6
Intermediate GovernmentFSTGXIGB4%(1.0)0.8
Inplation Protected BondFINPXIPB4%(1.0)(2.2)
Total BondFTBFXITB8%(0.9)(0.6)
Short Duration High IncomeFSAHXHYB4%(2.8)(3.3)
Floating Rate High IncomeFFRHXFRB6%(2.0)(1.3)
New Markets IncomeFNMIXEMB6%1.30.2
Blue Chip GrowthFBGRXLCG10%7.46.3
Low Priced StockFLPSXMCC8%1.6(0.6)
Small Cap Discovery*FSCRXSCC6%(0.3)(6.2)
International GrowthFIGFXIntl6%4.73.9
Pacific BasinFPBFXIntl6%10.06.0
International Small CapFISMXISC5%3.06.4
Emerging MarketsFEMKXEE5%4.3(10.1)
Real Estate IncomeFRIFXRE6%1.91.7
Real Estate InvestmentFRESXRE6%8.96.0
Portfolio Return / Value100%2.40.8
Easy Mutual Fund PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM2%0.00.1
Baird Short-Term BondBSBSXSTB12%(0.3)0.6
American Century Short Dur Inf Prot DndAPOIXIPB6%(0.5)(0.5)
Metropolitan West Total Return BondMWTRXITB12%(0.6)(0.1)
Payden Global Fixed IncomePYGFXGB8%0.61.5
Parnassus Core EquityPRBLXLC14%4.8(0.6)
Congress Mid Cap GrowthCMIDXMC12%4.2(0.2)
ASTON/Silvercrest Small CapASCTXSC10%1.9(3.3)
FMI InternationalFMIJXIntl12%3.93.2
Harding Loevner Emerging MarketsHLEMXEE4%0.7(13.6)
AMG Managers Real Estate SecuritiesMRESXRE8%7.55.3
Portfolio Return / Value100%2.40.0
Fidelity NTF Mutual Fund PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market Fund (Cash Reserves)FDRXXMM2%0.00.1
Baird Short-Term BondBSBSXSTB4%(0.3)0.6
Fidelity Intermediate Government IncomeFSTGXIGB4%(1.0)0.8
American Century Short Dur Inf Prot DndAPOIXIPB4%(0.5)(0.5)
Metropolitan West Total Return BondMWTRXITB6%(0.6)(0.1)
Wells Fargo Short-Term Hi Yld BondSSTHXHYB4%0.42.1
Eaton Vance Floating RateEVBLXFRB4%(2.3)(1.9)
Payden Global Fixed IncomePYGFXGB4%0.61.5
Fidelity New Markets IncomeFNMIXEB4%1.30.2
Metropolitan West Unconstrained BondMWCRXAB4%0.0(0.0)
Parnassus Core EquityPRBLXLCC2%4.8(0.6)
Fidelity Blue Chip GrowthFBGRXLCG2%7.46.3
American Beacon Bridgeway Lg Cap ValBWLIXLCV2%6.0(1.5)
Scout Mid CapUMBMXMCC2%3.61.4
Congress Mid Cap GrowthCMIDXMCG2%4.2(0.2)
Fidelity Low-Priced StockFLPSXMCV2%1.6(0.6)
Fidelity Small Cap Discovery *FSCRXSCC2%(0.3)(6.2)
Rice Hall James Small CapRHJMXSCG2%0.7(1.4)
ASTON/Silvercrest Small CapASCTXSCV2%1.9(3.3)
Westcore Micro Cap OpportunityWTMIXMIC2%3.6(4.9)
Fidelity International GrowthFIGFXIntl6%4.73.9
Wasatch International OpportunitiesWAIOXIntl4%7.19.5
Harding Loevner Emerging MarketsHLEMXEE2%0.7(13.6)
Driehaus Emerging Markets Small Cap GrDRESXEE2%(2.2)(10.2)
AMG Managers Real Estate SecuritiesMRESXRE6%7.55.3
AQR Long/Short EquityQLENXL/S E4%5.916.8
Boston Partners Global Long/ShortBGRSXL/S E4%3.56.3
Wells Fargo Alternative StrategiesWALTXHdg4%1.41.5
AQR Managed Futures StrategyAQMNXMF4%(3.6)1.8
Credit Suisse Managed Futs Strategy **CSAAXMF4%(2.8)3.7
Portfolio Return / Value100%1.71.5
ETF / Fund NameAllocation% Return
ETF Investing PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM2%0.00.1
SPDR Barclays ST Corp BondSCPBSTB8%0.10.9
iShares 0-5 Year TIPS BondSTIPITB6%(0.4)(0.1)
iShares 7-10 Year Treasury BondIEFIPB8%(1.5)1.5
iShares Core US Aggregate BondAGGITB6%(0.5)0.5
iShares 0-5 Year High Yield Corp BondSHYGHYB3%(1.0)(3.8)
iShares International Agg BondIAGGGB4%0.00.0
PowerShares Emerg Mkts Sov DebtPCYEB3%1.02.3
PowerShares Nasdaq 100QQQLCG3%10.39.5
PowerShares S&P 500 Low VolatilitySPLVLCV3%7.94.0
SPDR S&P Mid Cap 400MDYMCC3%2.5(2.5)
WisdomTree MidCap DividendDONMCV3%4.9(1.1)
WisdomTree Small Cap EarningsEESSCC3%3.6(7.2)
PowerShares S&P Small Cap Low VolatiliyXSLVSCV3%5.32.7
First Trust Dow Jones Micro CapFDMMIC3%4.5(0.1)
iShares MSCI ACWI ex USACWXIntl4%2.2(5.8)
WisdomTree Intl Hdgd Qual Div GrIHDGIntl4%7.611.8
iShares MSCI EAFE Small CapSCZISC4%5.59.1
iShares MSCI Emerging Markets Min VolEEMVEE4%(1.0)(12.0)
iShares MSCI Emerging Markets Small CapEEMSEE2%4.1(7.1)
iShares Cohen & Steers REITICFRE5%8.36.0
First Trust Long/Short EquityFTLSL/S4%4.64.7
Credit Suisse Long/Short Eq ETNCSLSL/S4%4.56.0
Janus Velocity Volatility HedgedSPXHHdg4%2.8(4.0)
First Trust MS Mgd Futures StratFMFMF4%(0.7)(0.7)
Portfolio Return / Value100%2.50.9
ETF and Mutual Fund PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM2%0.00.1
Baird Short-Term BondBSBSXSTB4%(0.3)0.6
iShares 3-7 Year Treasury BondIEIIGB4%(1.2)1.6
iShares 0-5 Year TIPS BondSTIPIPB3%(0.4)(0.1)
Metropolitan West Total Return BondMWTRXITB6%(0.6)(0.1)
Wells Fargo Short-Term Hi Yld BondSSTHXHYB3%0.42.1
Payden Global Fixed IncomePYGFXGB6%0.61.5
Payden Emerging Markets BondPYEWXEB4%0.9(1.1)
RidgeWorth Seix Floating Rate Hi Income **SAMBXFRB4%(2.5)(1.2)
Metropolitan West Unconstrained BondMWCRXAB4%0.0(0.0)
Parnassus Core EquityPRBLXLCC2%4.8(0.6)
PowerShares Nasdaq 100QQQLCG2%10.39.5
PowerShares S&P 500 Low VolatilitySPLVLCV2%7.94.0
Scout Mid CapUMBMXMCC2%3.61.4
Congress Mid Cap GrowthCMIDXMCG2%4.2(0.2)
WisdomTree MidCap DividendDONMCV2%4.9(1.1)
ASTON/Silvercrest Small CapASCTXSCC2%1.9(3.3)
Rice Hall James Small CapRHJMXSCG2%0.7(1.4)
PowerShares S&P Small Cap Low VolatiliyXSLVSCV2%5.32.7
Westcore Micro Cap OpportunityWTMIXMIC2%3.6(4.9)
FMI InternationalFMIJXIntl4%3.93.2
Wasatch International OpportunitiesWAIOXIntl4%7.19.5
Harding Loevner Emerging MarketsHLEMXEE3%0.7(13.6)
Driehaus Emerging Markets Small Cap GrDRESXEE3%(2.2)(10.2)
AMG Managers Real Estate SecuritiesMRESXRE3%7.55.3
iShares Cohen & Steers REITICFRE3%8.36.0
AQR Long/Short EquityQLENXL/S E4%5.916.8
Boston Partners Global Long/ShortBGRSXL/S E4%3.56.3
Wells Fargo Alternative StrategiesWALTXHdg4%1.41.5
AQR Managed Futures StrategyAQMNXMF4%(3.6)1.8
Credit Suisse Managed Futs Strategy **CSAAXMF4%(2.8)3.7
Portfolio Return / Value100%1.91.6
Easy ETF PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM2%0.00.1
SPDR Barclays ST Corp BondSCPBSTB10%0.10.9
iShares 0-5 Year TIPS BondSTIPIPB6%(0.4)(0.1)
iShares Core US Aggregate BondAGGITB12%(0.5)0.5
iShares International Agg BondIAGGITB10%0.00.0
PowerShares Nasdaq 100QQQLC6%10.39.5
PowerShares S&P 500 Low VolatilitySPLVLC6%7.94.0
WisdomTree MidCap DividendDONMC10%4.9(1.1)
PowerShares S&P Small Cap Low VolatiliyXSLVSC8%5.32.7
WisdomTree Intl Hdgd Qual Div GrIHDGIntl12%7.611.8
iShares MSCI Emerging Markets Min VolEEMVEE6%(1.0)(12.0)
iShares Cohen & Steers REITICFRE6%8.36.0
First Trust Long/Short EquityFTLSLSE6%4.64.7
Portfolio Return / Value100%3.62.4
The 2% Solution PortfolioTickerClass1/1/20163 Mo1 Yr
Money Market FundMM0.00.1
Baird Short-Term BondBSBSXSTB2%(0.3)0.6
Pioneer Short Term IncomeSTABXSTB2%(0.2)0.6
Fidelity Intermediate Government IncomeFSTGXIGB2%(1.0)0.8
iShares 7-10 Year Treasury BondIEFIGB2%(1.5)1.5
American Century Short Dur Inf Prot DndAPOIXIPB2%(0.5)(0.5)
iShares 0-5 Year TIPS BondSTIPIPB2%(0.4)(0.1)
Baird Core Plus BondBCOSXITB2%(0.9)(0.1)
DoubleLine Total Return BondDLTNXITB2%(0.5)2.1
Metropolitan West Total Return BondMWTRXITB2%(0.6)(0.1)
AllianzGI Short Duration High IncomeASHAXHYB2%(1.5)(0.5)
Wells Fargo Short-Term Hi Yld BondSSTHXHYB2%0.42.1
iShares International Agg BondIAGGGB2%0.00.0
Payden Global Fixed IncomePYGFXGB2%0.61.5
Fidelity New Markets IncomeFNMIXEB2%1.30.2
Payden Emerging Markets BondPYEWXEB2%0.9(1.1)
Eaton Vance Floating RateEVBLXFRB2%(2.3)(1.9)
Fidelity Floating Rate High IncomeFFRHXFRB2%(2.0)(1.3)
RidgeWorth Seix Floating Rate Hi Income **SAMBXFRB2%(2.5)(1.2)
BlackRock Global Long/Short CreditBGCAXAB2%(0.6)(1.2)
Metropolitan West Unconstrained BondMWCRXAB2%0.0(0.0)
Parnassus Core EquityPRBLXLCC2%4.8(0.6)
PowerShares Nasdaq 100QQQLCG2%10.39.5
PowerShares S&P 500 Low VolatilitySPLVLCV2%7.94.0
Scout Mid CapUMBMXMCC2%3.61.4
Congress Mid Cap GrowthCMIDXMCG2%4.2(0.2)
WisdomTree MidCap DividendDONMCV2%4.9(1.1)
ASTON/Silvercrest Small CapASCTXSCC2%1.9(3.3)
Rice Hall James Small CapRHJMXSCG2%0.7(1.4)
PowerShares S&P Small Cap Low VolatiliyXSLVSCV2%5.32.7
Westcore Micro Cap OpportunityWTMIXMIC2%3.6(4.9)
Fidelity International GrowthFIGFXIntl2%4.73.9
FMI InternationalFMIJXIntl2%3.93.2
Matthews Asia Dividend InvestorMAPIXIntl2%4.93.9
Wasatch International OpportunitiesWAIOXISC2%7.19.5
Harding Loevner Emerging MarketsHLEMXEE2%0.7(13.6)
Driehaus Emerging Markets Small Cap GrDRESXEE2%(2.2)(10.2)
Matthews Emerging AsiaMEASXEE2%4.8(2.6)
Fidelity Real Estate IncomeFRIFXRE2%1.91.7
AMG Managers Real Estate SecuritiesMRESXRE2%7.55.3
iShares Cohen & Steers REITICFRE2%8.36.0
AQR Long/Short EquityQLENXL/S E2%5.916.8
Boston Partners Global Long/ShortBGRSXL/S E2%3.56.3
Hancock Horizon Long/Short **HHQAXL/S E2%0.40.1
Lazard Fundamental Long/ShortLLSOXL/S E2%2.55.6
AQR Global MacroQGMNXHdg2%(0.4)1.4
Wells Fargo Alternative StrategiesWALTXHdg2%1.41.5
Abbey Capital Futures Strategy **ABYAXMF2%(0.5)3.9
AQR Managed Futures StrategyAQMNXMF2%(3.6)1.8
Aspen Managed Futures Strategy **MFBPXMF2%(1.7)(2.8)
Credit Suisse Managed Futs Strategy **CSAAXMF2%(2.8)3.7
Portfolio Return / Value100%1.61.1
* Funds Closed to New Investors. Choose an open fund in the same category for your portfolio.
** Loaded funds that are available from some brokers, including Schwab, without load fee.

Asset Allocation for 3rd Quarter 2015

We are making a few changes to the asset allocation of our model portfolio by reducing the allocation to TIPS and High Yield Bonds to 3% and increasing the allocation to Short-Term Bonds and Long/Short Bonds to 5%. In addition, the allocation to TIPS and High Yield Bonds should be in funds of the short term variety. Also, since our Dynamic Rebalancing System is calling for returning our allocation to International Bonds to its target, this is a good time to rebalance the entire Fixed Income side of the portfolio, while leaving an overweight to equities.

We are replacing Wasatch Long/Short (FMLSX) with Boston Partners Global Long/Short (BGRSX), replacing Lazard Emerging Markets Equity (LZOEX) with Driehaus Emerging Markets Growth (DREGX) and reducing some of our liquid alternative mutual fund by removing Eagle MLP Strategy (EGLAX) and Arbitrage Event-Driven (AEDFX). On the ETF side of the house we are making wholesale changes to somoe of the liquid alternative ETFs by replacing PowerShares S&P 500 Downside Hedge (PHDG), ProShares RAFI Long/Short (RALS) and Barclays S&P 500 Dynamic Veqtor ETN (VQT) with Credit Suisse Long/Short Equity ETN (CSLS), First Trust Long/Short Equity ETF (FTLS), and First Trust CBOE® S&P 500 VIX®Tail Hedge ETF (VIXH).

If you need more information about which funds to include in these allocations, check our Favorite Mutual Funds list, Favorite ETFs , Model Mutual Fund Portfolios, or Model ETF Portfolios.
Asset Allocation July 2015

Asset Allocation for 2nd Quarter 2015

There are no changes to our Insightful Asset Allocation targets for the 2nd Quarter of 2015. That being said, we do recommend that it is time to rebalance the ‘Bond’ side of your portfolio. What we mean by that is to take your International Bond Fund(s) up to their target allocation by sell some of your US Bond Fund(s). If you need more information about which funds to include in these allocations, check our Favorite Mutual Funds list, Favorite ETFs , Model Mutual Fund Portfolios, or Model ETF Portfolios.

Asset Allocation April 2015