The 2011 IRA portfolio

Last year about this time I created the 2010 portfolio as a result of an email I received from an acquaintance. At this time it is late December and the Standard and Poor’s 500 index is up about 14.5%. The 2010 portfolio is up over 20 percent. The 2010 portfolio has outperformed the indices for 2010 and I will not have to eat crow. Just for the fun of it I will try this again. I would consider the 2010 portfolio a fairly aggressive investment. Those wishing a more stable investment might be interested in my low risk portfolio.

Times change and your investments should change as well. The 2011 portfolio is significantly different from the 2010 version. I like the funds in the 2010 portfolio and believe they will outperform the market in 2011. That said some of the funds are being dropped from this year’s portfolio. The PIMCO Low Duration Bond Fund symbol PLDDX is being dropped in favor of an increased weighting in balanced funds. In 2011 it is likely that bond yields will fluctuate and at this time investors will be better served by investing in funds which can move money into various asset classes instead of pure bond funds. The Artio Global High Income symbol BJBHX a high yield bond fund is also being replaced for the same reason.

Other funds which are off the list are the GAMCO (Gabelli) Gold fund symbol GOLDX. This is a specialty fund investing primarily in mining stocks. While this fund to date has been the top performer in the 2010 portfolio given the tremendous run up in gold, I think that a pure gold fund may not be the best choice for 2011. Lastly the Yacktman Focus Fund symbol YAFFX has not performed to expectations and will be dropped from the 2011 portfolio.

What are the investments in the 2011 portfolio?

The 2011 portfolio is a diversified portfolio of no load mutual funds. To be on the list it must be open to new investors. The funds and percentages are as follows:

Returning from the 2010 portfolio is the Janus overseas fund symbol JAOSX. The fund invests globally and has a great track record. This fund was featured in my hub entitled “The best international funds”. Fifteen percent of the funds are going into this well run fund.

Another fund which has performed well last year is the Royce Low-Priced Stock Fund Symbol RYLPX. This fund is up almost 30 percent year over year Halloween 2009 to Halloween 2010. In 2009 this fund was up 59.58 percent. This fund is one of my largest personal holdings and is a fund I can recommend in moderation to almost any investor. It is a small cap fund and a fine one at that! Like the Janus fund fifteen percent of the funds are going to this fund.

The next few funds are balanced funds. Balanced funds are funds which have a mix of stocks bonds and other assets the manager will place money in various asset classes to obtain nice returns without a high degree of risk. The 2010 portfolio had no balanced funds. Since this portfolio is static (also known as buy and hold) I felt it might be wise to include balanced funds in what could be a very turbulent year.

The balanced funds are as follows:

Permanent Portfolio symbol PRPFX. This fund just keeps on producing year after year. This fund invests in many asset classes. Fifteen percent is also going into this fund. The Permanent Portfolio is up over 11 percent per year over the last 10 years and seldom loses money.This fund does hold Gold at times keeping some of the portfolio in Gold.

Ten percent of the portfolio’s money goes to the Greenspring Fund symbol GRSPX. This is a balanced fund which has a great track record and invests globally. The Greenspring fund investment philosophy differs from the Permanent Portfolio fund but the results have been good for both funds.

Ten percent goes to the Westcore Select Fund symbol WTSLX. This fund does well and was up over 31 percent over the past year. This fund beat all funds in the 2010 portfolio except for the Gabelli Gold Fund which only managed a couple of percentage points more. Last year I thought 2010 would be the year to own gold. I was correct. I personally still own the Gabelli Gold Fund but have scaled back my holdings.

Ten percent goes into the Gabelli Asset fund symbol GABAX. This is a fund I have owned for years. It has never been a top performer but always seems to beat the market. People ask me what mutual fund should I own if I own just one fund and my answer is you should not own one fund but if I had to put all of my money in one fund this would be the Gabelli Asset Fund.

Ten percent of the money goes to the Akre Focus Fund. This fund is cash rich and still managed to outperform the markets in 2010. The manager is scouting and waiting for buying opportunities. I suspect 2011 may be the year and this fund should perform handsomely.

Five percent goes into the CGM Realty fund. This is a speculation on my behalf that real-estate will do well in 2011. As with most specialty funds keep your holdings under 7 percent.

Five percent goes to the Lazard Emerging Markets Equity Fund. I like this fund a lot. As with the CGM Realty fund this fund is also a specialty fund and should not go above 7 percent of your portfolio.

Lastly five percent goes to a fund new to my hubs. This is a small cap growth fund. . The Wasatch Small Cap Growth symbol WAAEX).

Some of the funds I like but did not make the portfolio are the Royce Value Trust Fund symbol RVT. This is a closed end fund selling at a handsome discount. Since this fund trades like a stock I chose not to have it in this portfolio. I do own this fund. Another closed end fund is the Aberdeen Asia-Pacific Income Fund symbol FAX. This also is a closed end fund. This fund is a bond fund and was up 19 percent in 2010. An open end fund which I almost added was the FMI Large Cap Fund symbol FMIMX. This fund is number 1 in its category over the last three years and number 2 in the last 5.

Well there you have it the 2011 portfolio. Please invest your hard earned savings wisely.

All of the funds above are avalable through Fidelity. I assume they are avalable through other large firms.

Bad news for the 2011 portfolio! The S&P 500 is up 6.8 percent year to date as of Easter. The portfolio is up only 5.8 percent. The global funds have not done as well as domestic funds. The US market has outperformed the global markets. The Greenspring fund which is a pretty conservative fund is up only 2.3 percent. The Westcore Select fund leads the way being up a very handsome 11.3 percent year to date. This marks the first time one of my portfolios has ever lagged the market. There are still 8 months to go. One percent is not much of a lead.