The Flex portfolios, being globally diversified, took some hits and lagged the U.S. stock market, but they performed pretty closely to their benchmarks. And their 2-yr and longer track records are quite favorable relative to their benchmarks. In addition to favoring the "Flex portfolio" concept, I am pleased overall with the performance of these portfolios.
Most of my clients should continue to use a Flex portfolio for their core holdings.
Here are the performance #s through December 2011:
| US and Foreign Stocks | 1 month | 3 month | YTD | 2 year | 3 year | 5 year | 10 year |
| S&P 500 | 1.0% | 11.8% | 2.1% | 8.4% | 14.0% | -0.3% | 2.9% |
| MSCI EAFE | -1.0% | 3.3% | -12.1% | -2.7% | 7.7% | -4.7% | 4.7% |
| Moderately Aggressive Benchmark | 0.2% | 6.2% | -2.5% | 3.9% | 10.1% | -0.3% | 4.7% |
| 80 Flex III | -1.3% | 2.8% | -2.9% | 4.7% | n/a | n/a | n/a |
| 80 Flex II | -1.6% | 4.2% | -0.5% | 6.4% | 12.9% | 6.9% | 10.7% |
| 80 Fidelity | -0.3% | 6.5% | -3.3% | 3.8% | 10.1% | -0.4% | 4.6% |
| Moderate Benchmark | 0.4% | 4.8% | 0.1% | 4.8% | 9.0% | 1.6% | 5.3% |
| 60 Flex III | -0.7% | 2.5% | -1.9% | 4.9% | n/a | n/a | n/a |
| 60 Flex II | -1.0% | 3.5% | -0.1% | 6.1% | 11.9% | 7.3% | 10.2% |
| 60 Fidelity | -0.1% | 5.1% | -0.9% | 4.4% | 9.2% | 1.1% | 4.8% |
| Moderately Conservative Benchmark | 0.5% | 3.2% | 2.7% | 5.6% | 7.8% | 3.5% | 5.8% |
| 40 Flex III | -0.2% | 2.2% | -1.0% | 5.1% | n/a | n/a | n/a |
| 40 Flex II | -0.4% | 2.9% | 0.2% | 2.9% | 10.8% | 7.6% | 9.7% |
| 40 Fidelity | 0.3% | 3.7% | 1.8% | 5.2% | 8.3% | 2.8% | 5.1% |
* 80 Fidelity is a portfolio of very popular and widely-available index funds from Fidelity Investments allocated in a 80% stocks, 20% bonds strategy similar to that of the 80 Flex portfolios, and I want to compare the two; the 80 Fidelity portfolio uses a style-pure, buy-hold-rebalance method, while the 80 Flex portfolio allows for a great deal of tactical adjustments within the 80% stock long-term strategy.
** Not all Flex III funds were available for the full 3-, 5- and 10-year periods, but all Flex II funds were.
Approximate Stock-Bond-Cash-Alternative allocation as of 12/31/11 or most recently provided:
80 Flex III: 33-26-27-14
60 Flex III: 25-32-32-11
40 Flex III: 16-37-38-9
For long-term investors, I firmly believe a well diversified portfolio using "strategic asset allocation" but implemented with global and/or flexible mutual funds is a much better way to invest than trying to "time" the market.
Thank you, and make it a great 2012!
--Gary Partoyan
Potomac Wealth Strategies, LLC
www.PotomacWealthStrategies.com
