Model Portfolio Update

The objective of our first set of model portfolios is to deliver higher returns than their respective benchmarks over a one-year holding period, while taking on no more risk. The benchmark for the first portfolio in this group is an aggressive mix of 80% domestic equities, and 20% domestic bonds. Through the end of October, this benchmark had returned 3.8%, while our model portfolio had returned 7.4%. We have also compared our model portfolios to a set of global benchmarks. In this case, the global benchmark is a mix of 80% global equities, and 20% global bonds. Through the end of last month, it had returned 5.5%.

The benchmark for the second portfolio in this group is a mix of 60% domestic equities and 40% domestic bonds. Through the end of last month, it had returned 3.9%, while our model portfolio had returned 7.4%, and the global benchmark had returned 5.2%.

The benchmark for the third portfolio in this group is a conservative mix of 20% domestic equities and 80% domestic bonds. Through the end of last month, it had returned 4.0%, while our model portfolio had returned 6.3% and the global benchmark 4.7%.The objective of our second set of model portfolios is to deliver less risk than their respective benchmarks, while delivering at least as much return over a one-year holding period. The benchmark for the first portfolio in this group is an aggressive mix of 80% domestic equities, and 20% domestic bonds. Through the end of last month, this benchmark had returned 3.8%, while our model portfolio had returned 7.9%. We have also compared our model portfolios to a set of global benchmarks. In this case, the global benchmark is a mix of 80% global equities, and 20% global bonds. Through the end of last month, it had returned 5.5%.The benchmark for the second portfolio in this group is a mix of 60% domestic equities and 40% domestic bonds. Through the end of last month, it had returned 3.9%, while our model portfolio had returned 6.3%, and the global benchmark had returned 5.2%. The benchmark for the third portfolio in this group is a conservative mix of 20% domestic equities and 80% domestic bonds. Through the end of last month, it had returned 4.0%, while our model portfolio had returned 6.8% and the global benchmark 4.7%.

The objective of our third set of model portfolios is not to outperform a benchmark index over a one year holding period, but rather to maximize the probability of achieving a minimum level of compound annual real return over a twenty-year period while taking on as little risk as possible. Through last month, our 7% target real return portfolio had returned, in nominal terms, 9.0% year-to-date, our 5% target real return portfolio had returned, in nominal terms, 8.0%, and our 3% target real return portfolio had returned, in nominal terms, 7.9%.

Our fourth set of model portfolios are also target real return portfolios; however, they include the possibility of investing in a hedge fund index, in addition to the asset classes used in our other portfolios. For more information on these portfolios, please see our January, 2004 issue. Through last month, our 7% target real return HF portfolio had returned, in nominal terms, 8.2% year-to-date, our 5% target real return HF portfolio had returned, in nominal terms, 7.2%, and our 3% target real return HF portfolio had returned, in nominal terms, 8.1%.

To review all of the portfolios please click here: Portfolios