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


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.

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