We are making trades in the Conservative portfolio, effective February 28th 2006.
Because of the relative complexity of these trades <b>we have created an easy-to-use <a href="https://maxadvisor.com/newsletter/worksheets/conservativetrades0206.pdf">trade worksheet</a>.</b>
Subscribers who invest in the Conservative Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Safety Portfolio Worksheet by <a href="https://maxadvisor.com/newsletter/worksheets/conservativetrades0206.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by clicking here.
<b>Sales</b>
<ul>
<li>Sell entire utilities sector allocation: American Century Utility Income (BULIX) from 5% to 0% of total portfolio.
<li>Sell entire large cap value allocation: Vanguard Dividend Growth from 10% to 0% of total portfolio.
</ul>
<b>Buys</b>
<ul>
<li>Buy new telecom allocation: Vanguard Telecom Viper (VOX) from 0% to 10% of total portfolio.
<li>Buy new larger cap value allocation: Vanguard U.S. Value (VUVLX) from from 0% to 10% of total portfolio.
</ul>
<b>Why:</b> We're keeping our broad bond/stock allocations in our Conservative portfolio to 70% bond and 30% stock (adjusting for a balanced fund). These are tough times for a conservative investor as bond yields are low and value stocks are not cheap anymore – making large allocations to value-oriented stock funds a bit risky. On the plus side, short-term bonds and money market funds finally offer a reasonable yield thanks to recent Federal Reserve rate increases.
We’ve been cutting back our large utility stakes in our Powerfund portfolios because they have beaten the broader market by a wide margin in recent years and are no longer out-of-favor with fund investors. As money comes in, valuations become stretched. Our Conservative portfolio is the lone standout with a 5% utility fund stake. We are selling this fund at the end of February.
Vanguard Dividend Growth is a fund we sort of inherited. We owned the Vanguard Utility Income fund, which was converted to a plain vanilla dividend-oriented fund. We kept the fund because it was cheap, safe, and had tax loss carryforwards from past losses. While there is currently nothing blatantly wrong with Vanguard Dividend growth – it has performed well in recent years – we think there are better Powerfund options now that value stocks are a little overpriced. We also think that buying high-dividend-yielding stocks will not be a particularly great strategy going forward.
Your new holding is Vanguard U.S. Value (VUVLX), already owned in our Moderate Portfolio since April 2005. This superior fund is sub-advised by GMO and remains small by Vanguard standards. We have had this fund on our favorite fund list since September 2002 and have recommended another fund managed by the same company since 2001– a fund that was converted to a load fund and dropped from our list.
Our new Vanguard Telecommunication Services VIPERs (VOX) is an exchange-traded fund (ETF). For a similar reason to why we once had a utility sector fund in this and other portfolios, we are now adding a telecom fund. This category has a strong Powerfund rating, as it is one of the most out-of-favor with fund investors. As partial proof, this fund has less than $50 million in assets, compared to close to $2 billion in top utility ETFs, which are now in favor after a few years of strong performance. Unlike other categories we find attractive, this fund is relatively safe, sports a high dividend for income, and is a reasonable choice for a small allocation in a safer portfolio.
<b>Redemption fee information:</b> There are no short-term redemption fees from the funds associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed, short-term penalty fees before selling.
We are making trades in the Aggressive Growth portfolio, effective February 28th 2006.
Because of the relative complexity of these trades <b>we have created an easy-to-use <a href="https://maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0206.pdf">trade worksheet</a></b>.
Subscribers who invest in the Aggressive Growth Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Safety Portfolio Worksheet by <a href="https://maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0206.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by clicking here.
<b>Sales</b>
<ul>
<li>Sell entire emerging markets allocation: SSgA Emerging Markets Fund (SSEMX) from 5% to 0% of total portfolio.
</ul>
<b>Buys</b>
<ul>
<li>Buy new telecom sector allocation: Vanguard Telecom VIPER (VOX) from 0% to 5% of total portfolio.
</ul>
<b>Why:</b> In late April 2005 we increased our stock allocation to 80% from 75% as stocks were a relatively good deal compared to bonds. We’re sticking with this allocation in our Aggressive Growth portfolio, but are considering dropping the stock allocation if stocks continue up and interest rates rise (hurting bonds).
We’re cutting our SSgA Emerging Markets Stake (SSEMX) completely. This is the first time we have not owned an emerging markets stock fund in this portfolio since we started it in April 2002. This fund has gained 14% so far this year and we are now up around 200% on this fund since we first bought it (though we have cut our stake down from 10% to 5% last year). There is almost $2 billion in this fund and many more billions flowing into other emerging market funds. We expect all the new investors to emerging markets will lose money in the coming years.
Our new Vanguard Telecommunication Services VIPERs (VOX) is an exchange-traded fund (ETF). Telecom has a very favorable Powerfund rating because it is one of the most out-of-favor with fund investors. As partial proof, this fund has less than $50 million in assets, compared to close to $2 billion in top utility ETFs, which are now in favor after a few years of strong performance. Unlike other categories we find attractive, this fund is relatively safe and sports a high dividend for income.
<b>Redemption fee/tax information:</b> There could be short-term redemption fees associated with this sale. SSgA Emerging Markets charges 2% for any sale made within 60 days of purchase. This does not apply to many subscribers as we originally added this fund to our portfolio in February 2003. If you bought this fund within the last two months, consider deferring this sale until the redemption period has expired.
Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed, short-term penalty fees before selling.
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We are making trades in the Conservative portfolio, effective February 28th 2006.
Because of the relative complexity of these trades <b>we have created an easy-to-use <a href="https://maxadvisor.com/newsletter/worksheets/conservativetrades0206.pdf">trade worksheet</a>.</b>
Subscribers who invest in the Conservative Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Safety Portfolio Worksheet by <a href="https://maxadvisor.com/newsletter/worksheets/conservativetrades0206.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by clicking here.
<b>Sales</b>
<ul>
<li>Sell entire utilities sector allocation: American Century Utility Income (BULIX) from 5% to 0% of total portfolio.
<li>Sell entire large cap value allocation: Vanguard Dividend Growth from 10% to 0% of total portfolio.
</ul>
<b>Buys</b>
<ul>
<li>Buy new telecom allocation: Vanguard Telecom Viper (VOX) from 0% to 10% of total portfolio.
<li>Buy new larger cap value allocation: Vanguard U.S. Value (VUVLX) from from 0% to 10% of total portfolio.
</ul>
<b>Why:</b> We're keeping our broad bond/stock allocations in our Conservative portfolio to 70% bond and 30% stock (adjusting for a balanced fund). These are tough times for a conservative investor as bond yields are low and value stocks are not cheap anymore – making large allocations to value-oriented stock funds a bit risky. On the plus side, short-term bonds and money market funds finally offer a reasonable yield thanks to recent Federal Reserve rate increases.
We’ve been cutting back our large utility stakes in our Powerfund portfolios because they have beaten the broader market by a wide margin in recent years and are no longer out-of-favor with fund investors. As money comes in, valuations become stretched. Our Conservative portfolio is the lone standout with a 5% utility fund stake. We are selling this fund at the end of February.
Vanguard Dividend Growth is a fund we sort of inherited. We owned the Vanguard Utility Income fund, which was converted to a plain vanilla dividend-oriented fund. We kept the fund because it was cheap, safe, and had tax loss carryforwards from past losses. While there is currently nothing blatantly wrong with Vanguard Dividend growth – it has performed well in recent years – we think there are better Powerfund options now that value stocks are a little overpriced. We also think that buying high-dividend-yielding stocks will not be a particularly great strategy going forward.
Your new holding is Vanguard U.S. Value (VUVLX), already owned in our Moderate Portfolio since April 2005. This superior fund is sub-advised by GMO and remains small by Vanguard standards. We have had this fund on our favorite fund list since September 2002 and have recommended another fund managed by the same company since 2001– a fund that was converted to a load fund and dropped from our list.
Our new Vanguard Telecommunication Services VIPERs (VOX) is an exchange-traded fund (ETF). For a similar reason to why we once had a utility sector fund in this and other portfolios, we are now adding a telecom fund. This category has a strong Powerfund rating, as it is one of the most out-of-favor with fund investors. As partial proof, this fund has less than $50 million in assets, compared to close to $2 billion in top utility ETFs, which are now in favor after a few years of strong performance. Unlike other categories we find attractive, this fund is relatively safe, sports a high dividend for income, and is a reasonable choice for a small allocation in a safer portfolio.
<b>Redemption fee information:</b> There are no short-term redemption fees from the funds associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed, short-term penalty fees before selling.
We are making trades in the Aggressive Growth portfolio, effective February 28th 2006.
Because of the relative complexity of these trades <b>we have created an easy-to-use <a href="https://maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0206.pdf">trade worksheet</a></b>.
Subscribers who invest in the Aggressive Growth Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Safety Portfolio Worksheet by <a href="https://maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0206.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by clicking here.
<b>Sales</b>
<ul>
<li>Sell entire emerging markets allocation: SSgA Emerging Markets Fund (SSEMX) from 5% to 0% of total portfolio.
</ul>
<b>Buys</b>
<ul>
<li>Buy new telecom sector allocation: Vanguard Telecom VIPER (VOX) from 0% to 5% of total portfolio.
</ul>
<b>Why:</b> In late April 2005 we increased our stock allocation to 80% from 75% as stocks were a relatively good deal compared to bonds. We’re sticking with this allocation in our Aggressive Growth portfolio, but are considering dropping the stock allocation if stocks continue up and interest rates rise (hurting bonds).
We’re cutting our SSgA Emerging Markets Stake (SSEMX) completely. This is the first time we have not owned an emerging markets stock fund in this portfolio since we started it in April 2002. This fund has gained 14% so far this year and we are now up around 200% on this fund since we first bought it (though we have cut our stake down from 10% to 5% last year). There is almost $2 billion in this fund and many more billions flowing into other emerging market funds. We expect all the new investors to emerging markets will lose money in the coming years.
Our new Vanguard Telecommunication Services VIPERs (VOX) is an exchange-traded fund (ETF). Telecom has a very favorable Powerfund rating because it is one of the most out-of-favor with fund investors. As partial proof, this fund has less than $50 million in assets, compared to close to $2 billion in top utility ETFs, which are now in favor after a few years of strong performance. Unlike other categories we find attractive, this fund is relatively safe and sports a high dividend for income.
<b>Redemption fee/tax information:</b> There could be short-term redemption fees associated with this sale. SSgA Emerging Markets charges 2% for any sale made within 60 days of purchase. This does not apply to many subscribers as we originally added this fund to our portfolio in February 2003. If you bought this fund within the last two months, consider deferring this sale until the redemption period has expired.
Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed, short-term penalty fees before selling.