Strategic, Flex, and Index Portfolio Performance Through 2014-08-31

Here are the latest performance #s.  The Vanguard and Fidelity strategic portfolios have been taken out, replaced by similar portfolios comprised of index mutual funds available at Schwab and free of sales loads and transaction fees.  Schwab is the custodian I use for most of my clients' accounts, and I am now showing the actual Index-based portfolios that I would offer to clients who want to use low-cost index funds.

In the most recent 1-year period, the Index fund-based models have performed best.  Over the 3-, 5-, and 10-year periods, though, the Strategic models have performed best.  The Flex models remain an excellent way to "stay invested, even if we expect or are in rough markets", and they would have fared significantly better in the market crash of 2008.

I do not favor market-timing--I prefer we remain invested using Nobel Prize-winning portfolio theory.  Some points to consider:

• Index fund-based models will have the lowest internal costs (and my advisory fee remains the same) and each should most closely track the blended benchmark assigned to it.
• Strategic models should deviate more from the benchmarks, but they have demonstrated the ability to significantly outperform over the longer time periods, and most Strategic models have done so without performing significantly worse in down markets.
• Flex models show better performance in down markets, but they tend to lag their benchmarks in strong upward-moving markets.
• Most of my clients should be using Strategic models now.  In some cases, due to risk tolerance or sensitivity to mutual funds' internal expenses, the Flex or Index models are more suitable.

US and Foreign Indexes		3 mo	1 yr	3 yr	5 yr	10 yr	2008
Stock Markets (50-40-10)		2.4%	21.2%	15.1%	12.4%	8.2%	-39.7%
S&P 500		4.7%	25.3%	20.6%	16.9%	8.4%	-37.0%
MSCI EAFE		-1.2%	16.4%	11.4%	8.2%	7.0%	-43.4%
US OE Diversified Emg Mkts		5.5%	19.2%	4.2%	7.5%	11.2%	-54.4%
Barclays Agg Bond--US		0.9%	5.7%	2.9%	4.5%	4.7%	5.2%
Barclays Agg Bond--Global		0.4%	6.2%	1.3%	3.7%	4.8%	4.8%
Aggressive		1.6%	19.0%	14.5%	11.6%	7.5%	-36.3%
90 Flex V		1.5%	14.0%	10.3%	11.3%		-19.1%
90 Strategic II		1.5%	16.4%	15.8%	15.0%	10.2%	-34.0%
90 Schwab index		2.0%	18.4%	15.3%	12.9%	8.2%	-35.2%
Moderately Aggressive		1.5%	17.5%	13.1%	10.9%	7.4%	-32.0%
80 Flex V		1.5%	13.5%	9.9%	11.0%		-16.9%
80 Strategic II		1.5%	15.3%	14.7%	14.0%	9.8%	-30.2%
80 Schwab index		2.0%	17.0%	14.0%	12.1%	7.7%	-32.1%
Moderate		1.3%	14.3%	10.2%	9.2%	6.8%	-23.1%
60 Flex V		1.5%	12.6%	9.4%	10.8%		-13.1%
60 Strategic II		1.5%	13.4%	12.3%	12.3%	9.0%	-24.2%
60 Schwab index		1.9%	14.4%	11.4%	10.4%	6.8%	-25.6%
Moderately Conservative		1.0%	11.1%	7.3%	7.4%	6.2%	-13.3%
40 Flex V		1.5%	12.0%	9.4%	10.9%		-13.1%
40 Strategic II		1.1%	10.2%	9.2%	9.6%	7.6%	-16.8%
40 Schwab index		1.6%	11.4%	8.5%	8.4%	5.7%	-18.8%
Conservative		0.8%	8.0%	4.5%	5.6%	5.4%	-2.5%
20 Flex V		1.5%	11.0%	8.6%	10.4%		-5.2%
20 Strategic II		0.9%	7.5%	6.3%	7.2%	6.2%	-9.1%
20 Schwab index		1.2%	8.3%	5.5%	6.2%	4.5%	-11.7%
Asset Allocation		USA	x-USA	Bond	Cash	Other
20 Flex V		14%	5%	48%	30%	4%
20 Strategic II		11%	6%	52%	28%	3%
40 Flex V		28%	10%	31%	26%	5%
40 Strategic II		22%	12%	40%	22%	3%
60 Flex V		34%	16%	21%	24%	6%
60 Strategic II		35%	18%	27%	17%	3%
80 Flex V		44%	20%	8%	21%	7%
80 Strategic II		45%	25%	14%	14%	3%
90 Flex V		51%	22%	1%	19%	7%
90 Strategic II		50%	29%	8%	11%	3%
NOTE 1:  Past performance is no guarantee of specific future results.  This data is presented by Potomac Wealth Strategies, LLC.  This data is from Morningstar and should be accurate, but it has not been independently verified.
NOTE 2:  "Flex", "Strategic", and "Index" models are designed and managed by Potomac Wealth Strategies, LLC.  These models show track records of better returns, lower volatility, or both--or, in the case of the Index models, closest possible tracking--compared to their benchmarks and popular competitors.
NOTE 3:  "XX Schwab index" models are low-cost portfolios.  They are comprised of index funds available free of transaction charges to my clients at Schwab.  This is what many might recommend due to low-costs and portfolio efficiency.
NOTE 4:  Nothing on this blog post represents investment advice to any individual or organization.  If the information hereon is of interest to you, please contact me at Garo.Partoyan@PotomacWealthStrategies.com for a consultation.