The Powerfund Portfolios are both ahead of the S&P so far in 2015 — down less than 1% in the Aggressive portfolio and less than 2% in the Moderate.

With interest rates heading back down and a global commodity slide intensifying, the Powerfund Portfolios are back to doing well relative to benchmarks. Our Aggressive portfolio matched the performance of the S&P 500 in July, even with the Aggressive port's 40% (roughly) bond allocation. 

Not our best showing last month, but with the recent slide in stocks joining the weakness in bonds, our Aggressive portfolio (up 1.45% YTD) is now just ahead of the S&P 500 (1.17% YTD) with dividends for the first half of 2015. The bond-heavier Conservative portfolio dipped more for the month and year-to-date than the Aggressive as bonds have underperformed so far in 2015. Considering Vanguard Long-Term Investment-Grade (VWESX) is down 4.8% for the year, we're classifying the Conservative portfolios -0.87% YTD showing as 'hanging in there'.

Our Conservative portfolio was down 2.18% for the month. The Aggressive portfolio dropped 1.57%. Benchmark Vanguard funds for June 2015: Vanguard 500 Index Fund (VFINX) down 1.93%; Vanguard Total Bond Market Index Fund (VBMFX) off 1.02%; Vanguard Developed Markets Index Fund (VTMGX) down 2.79%; Vanguard Emerging Markets Stock Index (VEIEX) down 2.39%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, fell 1.69%.

Small-cap growth was really the only area of positive returns in June (it's also is sporting some of the best year-to-date numbers at just over 7%).

U.S. sector funds were almost all down last quarter except for financials and healthcare, the latter being responsible for barely positive S&P 500 numbers YTD. Take Healthcare out and the S&P 500 would be in negative territory in 2015.

Most countries are having a good year rebounding from previous declines. The strongest markets are Japan and China.

But interest rates is where the hub-bub is. We don't expect the great rate increase to continue much longer — there is just too much money that says it will. Moreover, Greece is once again causing some alarm to investors, which could put more pressure on emerging market bonds and higher risk debt in general, both foreign and domestic.

There are many possible scenarios investors should consider when setting up their portfolios for the (supposedly) inevitable rate rise because rates might go up and they might not. There is no rational reason to believe that rates will rise to levels of the past. There is no inalienable rule of the universe that says investors in bonds (or stocks) have to earn a positive real return — there could be 1% yields and 2% inflation for years to come.

Just for fun, here's a list of possible scenarios that are as likely as the expected big run-up in rates that could burn most bond investors in ways they are not expecting to get burned:

• Flat to inverted yield curve
• Spread widens between Government and higher risk debt from a panic somewhere
• Even lower yields! Why is a 5% treasury bond more likely than a 1.5% ten year treasury?
• Higher inflation and negative real rates for all investment grade bonds below 10 duration
• Negative fee-adjusted yields for most bond funds
• Falling U.S. dollar with rising credit spreads in U.S. slowdown
• Rising euro if sketchy Greece gets a brand new second hand currency

Last month our Aggressive Powerfund Portfolio, which debuted on March 31st, 2002, moved past the 300% since-inception return mark (recent weakness in bonds and stocks currently put us just below that level).  In the warm glow of the rearview mirror, that 300% (or just over 11% annualized) seems pretty grand. But it’s important to look at what actually happened to generate that return and consider how repeatable it is. “Past performance is no indication of future results” is as true for us as anyone else.