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