Small-Cap Stocks Lag

Posted on August 14, 2015 | Model Portfolios

Performance in July varied significantly among the major indexes, with large-cap stocks outperforming small-cap stocks. The S&P 500 index’s total return was up 2.1%, which was similar to the performance of larger-capitalization indexes for the month of July.

The Model Fund Portfolio was declined by 0.7% in July, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, was down 6.0%.

The Model Shadow Stock Portfolio’s underperformed both of its comparison benchmarks: The Vanguard Small Cap Index fund (NAESX) declined 0.3% and the DFA U.S. Micro Cap Index fund (DFSCX) was down 2.4%. The Model Shadow Stock portfolio was hurt by weak performances in July from Rex American Resources (REX), SigmaTron International (SGMA) and Universal Stainless & Alloy (USAP); these three companies accounted for more than half of the portfolio’s decline in July. Year to date, the Model Shadow Stock Portfolio has declined 2.6%, while the Vanguard Small Cap Index fund is up 3.8% and the DFA U.S. Micro Cap Index fund is up 1.7%. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual average return of 16.3%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.3%.

The Model Fund Portfolio’s 0.7% decline in July compared to a 1.6% increase for the Vanguard Total Stock Market Index fund. Since its inception in June of 2003, the Model Fund Portfolio has a compound annual average return of 8.9%, slightly trailing the Vanguard Total Stock Market Index fund over the same time period, which gained 9.4%.

Read more »



Changes to Model Shadow Stock Portfolio Announced

Posted on June 16, 2015 | Model Portfolios

As we discuss below, several stocks are being added to and deleted from the Model Shadow Stock Portfolio. In addition, the buy and sell rules are being modified.

The Model Fund Portfolio was up for the month by 0.2%, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, was down 3.3%.

The Model Shadow Stock Portfolio’s 3.3% decline for May atypically trails both of its comparison benchmarks: The Vanguard Small Cap Index fund (NAESX) gained 2.0% and the DFA US Micro Cap Index fund (DFSCX) gained 1.4% in May. Year to date, the Shadow Stock Portfolio has gained 1.2%, while NAESX is up 5.0% and DFSCX is up 2.5% over the same time period. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual average return of 16.7%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 0.2% gain in May compared to a 1.4% increase for the Vanguard Total Stock Market Index fund. Since its inception in June of 2003, the Model Fund Portfolio has a compound annual average return of 9.2%, slightly below the Vanguard Total Stock Market Index fund over the same time period, which gained 9.5%.

Read more »



Small Caps Deflated in April After Big March

Posted on May 15, 2015 | Model Portfolios

Deflation seems to be all the rage these days, so it is probably appropriate that small-cap stocks took a breather in April after a big up month in March. Returns were mixed; the S&P 500 index’s total return was up 1.0%.

The Model Fund Portfolio was up for the month by 0.5%, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, was down 0.8%.

The Model Shadow Stock Portfolio’s 0.8% decline for April, coming off of a big March, handily beat both of its comparison benchmarks: The Vanguard Small Cap Index fund (NAESX) lost 1.7% and the DFA US Micro Cap Index fund (DFSCX) lost 2.0% in April. Year to date, the Model Shadow Stock Portfolio has gained 4.7%, while the NAESX is up 3.0% and the DFSCX is up 1.1% over the same time period. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual average return of 16.9%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.3% annually over the same period.

Read more »



A Spring Bounce

Posted on April 15, 2015 | Model Portfolios

Spring is in the air as temperatures warm up to a tolerable level here in Chicago. The S&P 500 index’s total return was down 1.6% for March, fairly typical of index performance for the month.

The Model Fund Portfolio was flat for the month, declining only 0.1%, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, gained 4.6%.

The Model Shadow Stock Portfolio’s 4.6% increase for March handily beat both of its comparison benchmarks: The Vanguard Small Cap Index fund (NAESX) gained 1.2% and the DFA US Micro Cap Index fund (DFSCX) gained 2.3% in March. Year to date, the Shadow Stock Portfolio has gained 5.5%, while the NAESX is up 4.7% and the DFSCX is up 3.1% over the same time period. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual average return of 17.0%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 0.1% decline in March compared to a 1.0% decrease for the Vanguard Total Stock Market Index fund. Since its inception in June of 2003, the Model Fund Portfolio has a compound annual average return of 9.3%, slightly trailing the Vanguard Total Stock Market Index fund over the same time period, which gained 9.5%.

Read more »



Cupid Rallies to the Cause

Posted on March 13, 2015 | Model Portfolios

Despite a loveless January, romance and stocks bloomed in February. The S&P 500 index’s total return was 5.8% for the month. The market love was fairly egalitarian in February, as most of the performance of indexes and portfolios was around the 6.0% level.

The Model Fund Portfolio gained 5.2% in February, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, gained 5.6% last month.

The Model Shadow Stock Portfolio’s 5.6% increase for the month slightly trailed both of its comparison benchmarks: The Vanguard Small Cap Index (NAESX) gained 5.8% and the DFA US Micro Cap Index fund (DFSCX) gained 6.0% in February. Year to date, the Shadow Stock Portfolio has returned 1.0% while the NAESX has returned 3.5% and the DFSCX has returned 0.8%. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual return of 16.8%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.5% annually over the same period.

The Model Fund Portfolio’s 5.2% increase in February compared to a 5.8% increase for the Vanguard Total Stock Market Index fund. Since its inception in June of 2003, the Model Fund Portfolio has a compound annual return of 9.4%, slightly underperforming the Vanguard Total Stock Market Index fund over the same time period, which returned 9.6%.

Read more »



February 2015 AAII MODEL PORTFOLIOS UPDATED: Love Is in the Air, But No Valentine for Stocks

Posted on February 13, 2015 | Model Portfolios

We may be approaching the season of love, but all is not a bed of roses in the stock market. The S&P 500 index’s total return was -3.0% in January. However, large-cap stocks were not alone in struggling through January: Cupid’s arrow also failed to strike small-cap stocks, as the S&P SmallCap 600 index’s total return was -3.5% in January.

The Model Fund Portfolio saw a decline in January, losing 2.4%, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, lost 4.4% last month.

The Model Shadow Stock Portfolio’s 4.4% decline for the month trailed one of its comparison benchmarks and beat the other: The Vanguard Small Cap Index (NAESX) lost 2.2% and the DFA US Micro Cap Index fund (DFSCX) lost 4.9% in January. As we have just completed the first month of 2015, year-to-date returns are the same as one-month returns. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual return of 16.5%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

Read more »



January 2015 AAII MODEL PORTFOLIOS UPDATED: Small Is the New Black

Posted on January 15, 2015 | Model Portfolios

The S&P 500 index lost 0.4% in December, as large caps ended an up-and-down month on a negative note. Apparently large-cap stocks were on Santa’s naughty list last month, as small-cap stocks seemed to be favored instead. The S&P SmallCap 600 index gained 2.9% in December. Last month two new stocks were added to the Model Shadow Stock Portfolio—Global Power Equipment Group (GLPW) and L.S. Starrett Co. (SCX), which James Cloonan discusses in the January AAII Journal.

The Model Fund Portfolio saw a very modest gain in December, rising 0.2%, while the Model Shadow Stock Portfolio, which specifically invests in small-company stocks, rose 4.3% last month.

The Model Shadow Stock Portfolio’s 4.3% increase for the month beat its comparison benchmarks: The Vanguard Small Cap Index (NAESX) gained 1.3%, and the DFA US Micro Cap Index fund (DFSCX) rose 3.4%. Last year, the Model Shadow Stock Portfolio declined 5.8%, trailing the Vanguard Small Cap Index fund (up 7.4%) and the DFA US Micro Cap Index fund (up 2.9%). The Model Shadow Stock Portfolio has a compound annual return of 16.9% since its inception in 1993, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 0.2% gain in December compares to virtually no change for the Vanguard Total Stock Market Index fund. Last year, the Model Fund Portfolio gained 9.9%, while the Vanguard Total Stock Market Index fund rose 12.4%. The Model Fund Portfolio has a compound annual return of 9.4% since inception in June of 2003, slightly underperforming the Vanguard Total Stock Market Index fund over the same time period, which returned 9.5%.

Read more »



December 2014 AAII MODEL PORTFOLIOS UPDATED: Large Cap Gains Leave Small Caps Lagging

Posted on December 15, 2014 | Model Portfolios

The S&P index climbed 2.5% in November. Energy prices and strengthening economic data in the US continued to be the themes for the market. With gasoline $3 a gallon (and under) now a reality for consumers, analysts expect that that money will return to the market in the form of consumer spending This would be a welcome change, given the rather poor Black Friday retail sales numbers that came out. Additionally, a weakening China also cast a pall over the market as its economy struggled with a bursting housing bubble and slowing demand across the globe for everything except iPhones. The Model Fund Portfolio climbed 1.3% during November, while the Model Shadow Stock Portfolio, which specifically invests in small-company stocks, fell 2.4%.

The Model Shadow Stock Portfolio’s 2.4% decline for the month trailed its comparison benchmarks: The Vanguard Small Cap Index (NAESX) was up 1.0% and the DFA US Micro Cap Index fund (DFSCX) was down 0.7%. Year-to-date, the Model Shadow Stock Portfolio has declined 9.6%, trailing the Vanguard Small Cap Index fund (up 6.0%) and the DFA US Micro Cap Index fund (down 0.4%). The Model Shadow Stock Portfolio has a compound annual return of 16.8% since its inception in 1993, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 1.3% gain in November compares to a gain of 2.4% for the Vanguard Total Stock Market Index fund. Year-to-date, the Model Fund Portfolio is up 9.7%, while the Vanguard Total Stock Market Index fund is up 12.4%. The Model Fund Portfolio has a compound annual return of 9.4% since inception in June of 2003 beating the performance of the Vanguard Total Stock Market Index fund over the same time period, which returned only 9.6%.

Read more »



November 2014 AAII MODEL PORTFOLIOS UPDATED: Small Caps Lead the Way

Posted on November 14, 2014 | Model Portfolios

The S&P 500 index climbed 2.3% in October, although it was far from a smooth ride. There was a sell-off in the early-to-mid part of the month, but the markets rebounded strongly from those lows. This could indicate strong buyer interest sitting on the sidelines waiting for an opportunity to buy in, which would be bullish, but the signs are far from clear. Instability across the globe continues to be an issue. We have seen defaults that are not defaults in Argentina and a shortage of, well, everything in Venezuela. Despite all this uncertainty, or perhaps because of it, the oil glut pushed prices down even more, and $3 per gallon gas was a welcome surprise for many Americans. While all stock styles performed well last month, small caps outpaced large-cap stocks. Whether this signifies a return of the small caps is unclear. The Model Fund Portfolio climbed 3.0%, while the Model Shadow Stock Portfolio, which is heavily concentrated in small-cap stocks, rose 3.2% during October.

The Model Shadow Stock Portfolio’s 3.2% gain for the month trailed its comparison benchmarks: The Vanguard Small Cap Index (NAESX) was up 4.5%, and the DFA US Micro Cap Index fund (DFSCX) was up 6.5%. Year-to-date, the Model Shadow Stock Portfolio has declined 7.4%, also trailing the Vanguard Small Cap Index fund (up 5.0%) and the DFA US Micro Cap Index fund (up 0.3%). The Model Shadow Stock Portfolio has a compound annual return of 17.1% since its inception in 1993, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 3.0% gain in October compares to a gain of 2.7% for the Vanguard Total Stock Market Index fund. Year-to-date, the Model Fund Portfolio is up 8.3%, while the Vanguard Total Stock Market Index fund is up 9.8%. The Model Fund Portfolio has a compound annual return of 9.4% since inception in June of 2003, matching the performance of the Vanguard Total Stock Market Index fund over the same time period.

Read more »



October 2014 AAII MODEL PORTFOLIOS UPDATED: MODEL FUND PORTFOLIO SPECIAL ALERT

Posted on October 23, 2014 | Model Portfolios

There are two changes to the Model Fund Portfolio. As of October 1, 2014, we removed FMI Common Stock (FMIMX) from the Model Fund Portfolio. Underperformance compared to its high fees was the primary driver to sell, along with the risk associated with the fund operating as a closed fund.

We are replacing FMIMX with First Trust US IPO (FPX). First Trust US IPO is an exchange-traded fund that tracks an index of larger U.S. initial public offerings. It modifies the capital weighting so that very large capitalized companies do not dominate.

If you are following the Model Fund Portfolio, then all existing holdings, including the new holding, should be equally weighted (nine if you own the closed fund CHTTX, or eight if you don’t). You can accomplish this easily by selling FMI Common Stock fund and putting the proceeds into the First Trust US IPO fund.

Read more »



Older Entries »