Never miss a trade! Sign up for MAXfunds Powerfund Portfolio’s FREE email alerts! CLICK HERE!

August 2004 Performance Review

September 17, 2004

A strong bond market helped the Conservative portfolio gain 1.15% in August.

Foreign bonds led the way, with the American Century International Bond (BEGBX) up a sharp 2.4%. That funds strong performance was based largely on strength in bonds, but partially on a weakening dollar as our ongoing trade imbalances weighed on investor’s minds.

Junk bonds were a close second in terms of performance in the portfolio, as some signs of a slowing economy (or rather growing at a slower rate) didn’t drag down more speculative debt. Vanguard High Yield (VWEHX) was up near 2% in August and has done about as well as the S&P500 over the last year. The time to overweight junk bonds is officially over.

Even short term bonds were strong. Vanguard Short Term Corporate (VFSTX) rose .84%.

Bridgeway Balanced had a weak month, down .72%. This is surprising because many stocks were up slightly last month, and bonds were strong. Such an environment should be good for this fund.

Utility stocks have been strong for a year. Last month American Century Utility Income (BULIX) rose 2.9% and is up some 40% since added to the portfolio in early 2003, outpacing the S&P500 by more that 5% in that time.  We are considering easing up on our utilities allocation if this keeps up.

More speculative smaller cap stocks continued on a weak note. Forward International Small Company (PISRX) slipped .38%. Our lowering of our smaller cap exposure across all our portfolios is starting to pay off, and is one reason we’re beating the broad market for virtually all time periods in all of our portfolios.

Bonds posted larger gains than stocks in August, so the stock heavy Aggressive Growth portfolio was only up .82% - our worst showing but still ahead of the market.

Even short term bonds were strong. Payden Global Short Bond (PYGSX) was up .81%, while Vanguard Short Term Corporate (VFSTX) rose .84%.

More speculative smaller cap stocks continued on a weak note in August, but Artisan International managed a .9% return.

Microcap stocks continued to pull back. The once red hot Bridgeway Ultra Small Company Market (BRSIX) fell 2.28% and is down near 7% in the last three months. Our reduced stake in smaller cap stock funds is helping us stay ahead of the market indexes.

The hottest area in the portfolio was emerging markets, which bucked a trend against speculative stocks. SSgA Emerging Markets was up 4.78% - our best performer in August.