JULY 2014 AAII MODEL PORTFOLIOS UPDATED – An Exhausted Bull Reaches New Highs

Posted on July 15, 2014 | Model Portfolios

On June 24, the S&P 500 index touched a new high of 1968.17. While many bears have been patiently waiting for what they feel is a long-overdue correction, the market pushed into record territory during a bumpy June. Fuel for the upward move was provided by the Federal Reserve, which recently reaffirmed its focus on jobs over financial stability, as well as by improving jobs and consumer confidence data. This move higher lifted all boats, but the Model Shadow Stock Portfolio especially benefited as it invests in more volatile micro- and small-cap stocks. The Model Fund Portfolio trailed the Model Shadow Stock Portfolio as it holds less risky assets, but it still performed well for the month.

The Model Shadow Stock Portfolio gained 7.4% in June, outperforming the Vanguard Small Cap Index fund (NAESX), which gained 5.0%, and the DFA US Micro Cap Index fund (DFSCX), which gained 4.3%. For the year, the Model Shadow Stock Portfolio is now down 0.7%, trailing NAESX, which is up 6.4%, and DFSCX, which is up 1.5%. The Model Shadow Stock Portfolio has a compound annual return of 17.8% from its inception in 1993, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

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