Flex Portfolio Performance Through August 2012

The Flex portfolios continue to outperform their benchmarks in the 3-, 5- and 10-year periods by significant amounts.  This is the objective.  If you are in a portfolio consisting of index funds or exchange-traded funds blended to meet a Moderately Conservative, Moderate, or Moderately Aggressive risk profile, you are very likely underperforming in those important time periods.  Same if you are using "actively managed" funds of the highest quality.  It is important to maintain a long-term strategy consistent with the asset allocations guided by Modern Portfolio Theory--it's how we strike the optimal balance of risk and reward over the long-haul--but I have determined that the use of global and/or flexible mutual funds, that can bring additional diversification and/or tactical adjustments to the portfolio, reduces risk and increases performance.

My commitment to clients is to self-police the Flex strategy.  If I find a trend away from benchmark-beating performance, I will make adjustments.  Thusfar, Flex remains the best way I have found to run a long-term portfolio.

Here are the #s through August of 2012:

US and Foreign Stocks/Bonds	1 mo	3 mo	YTD	1 yr	2 yr	3 yr	5 yr	10 yr
Stock Markets (50-40-10)	1.1%	11.0%	9.7%	10.8%	8.3%	8.4%	-1.5%	7.7%
S&P 500	1.2%	10.5%	13.4%	22.4%	15.2%	13.7%	1.0%	6.8%
MSCI EAFE	1.3%	12.4%	6.2%	1.6%	2.4%	2.8%	-0.5%	7.0%
Barclays Agg Bond--US	0.3%	1.4%	3.8%	5.0%	5.5%	6.5%	6.7%	5.4%
Barclays Agg Bond--Global	1.0%	2.3%	3.5%	1.3%	5.3%	5.4%	6.5%	6.3%
Moderately Aggressive	1.1%	9.4%	8.6%	10.1%	8.2%	8.0%	0.1%	7.0%
80 Flex II	1.4%	6.4%	7.3%	4.5%	7.9%	9.2%	7.1%	10.8%
80 Fidelity	1.0%	9.3%	8.6%	10.5%	7.9%	7.8%	0.0%	7.0%
80 Flex III	1.1%	6.9%	7.3%	3.3%	7.4%	8.7%
Moderate	1.0%	7.3%	7.2%	8.4%	7.7%	7.6%	1.9%	6.9%
60 Flex II	1.1%	6.0%	7.5%	4.6%	7.3%	8.8%	7.6%	10.2%
60 Fidelity	0.8%	7.2%	7.3%	9.0%	7.2%	7.3%	1.5%	6.5%
60 Flex III	0.9%	6.4%	7.5%	3.7%	6.9%	8.5%
Moderately Conservative	0.9%	5.3%	5.9%	6.6%	7.0%	7.1%	3.6%	6.6%
40 Flex II	0.8%	5.7%	7.7%	4.7%	6.7%	8.4%	8.1%	9.7%
40 Fidelity	0.7%	5.2%	6.1%	7.6%	6.5%	6.9%	3.1%	6.1%
40 Flex III	0.6%	5.9%	7.7%	4.1%	6.4%	8.2%
Asset Allocation	Cash	Stock	Bond	Other
80 Flex II	20%	54%	16%	10%
60 Flex II	24%	41%	27%	8%
40 Flex II	29%	27%	38%	6%