New Video by NoLoad FundX Newsletter

We just completed our first web-based educational video geared toward individual investors.  This five minute piece focuses on the Monthly Upgrader Portfolio (MUP) on page 2 of DAL’s monthly investment newsletter, NoLoad FundX.  This step-by-step tool guides viewers through how and why to use the MUP.

We invite you to view the program below:

We welcome your feedback on this new tool. We are developing videos on other topics related to NoLoad FundX and the Upgrading strategy, and would appreciate hearing what topics youd like to see us cover in this on-going series.

Thanks for watching!

See the Most Recent Changes to the Monthly Upgrader Portfolio
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Managers’ Special Report: Buys & Sells – Core Equity Funds

Based on data from May 11, 2010

Core equity funds (Class 3 for newsletter subscribers)

For the last several months, our rankings have led us to sell foreign funds and buy mid cap domestic funds. The first foreign funds we sold (January and February 2010) were the ETFs that concentrate in developed Europe.  Continued weak foreign performance and relative strength from domestic funds has prompted us to incrementally sell nearly all foreign funds, and our core holdings are now less than 10% in foreign funds. Those few foreign funds we continue to hold are broadly diversified, including exposure to Australia and Canada. While we continue to favor mid-cap stocks, we are also finding persistent leadership from value over growth strategies.

We recognize that some European fund weakness is currency related and that trend may eventually reverse. That said, we have learned in over 40 years of Upgrading that it is best to follow our ranks, investing with the current leaders and selling laggards. We have benefited from holding a global portfolio for much of the past several years, but we have also been rewarded for selling foreign funds when prompted by our ranks.

For more details about how our core holdings have evolved, please see last months’ comments.

Summary: Leadership among core funds is dominated by domestic mid-cap funds and ETFs, especially mid-cap value funds and ETFs.

Managers’ Special Report: Buys & Sells – Speculative Equity Funds

Based on data from May 11, 2010

Speculative equity funds (Classes 1 and 2 for newsletter subscribers)

This month we sold our remaining emerging markets funds and ETFs in favor of domestic small caps. This  trend  began a few months ago, especially among ETF holdings. As recently December 2009, the aggressive component of our portfolios held as much as 50% emerging market funds.  Currently, our speculative holdings are mainly small cap domestic funds, but also include domestic mid-cap growth and micro caps. As with our core holdings, value leads growth investment strategies.

Summary: Our speculative holdings are mainly domestic small cap funds and ETFs, especially small cap value. We also hold micro cap and domestic mid-cap growth ETFs.

Managers’ Special Report: Buys & Sells – Flexible Income Funds

Based on data from May 11, 2010

We made no changes to our Flexible Income portfolios with this month’s upgrades. Our Flexible Income portfolios have enjoyed a good run over the past 12-months and year-to-date, beating the benchmark aggregate bond index handily and earning much higher total returns than one might assume given the current very low yields offered by traditional fixed income. We’ve also enjoyed remarkable stability despite recent volatility in traditional bonds and bond interest rates. We did make a modest shift in the turbulence of early May:  we took advantage of weakness and added 5% to a high-yield bond ETF, reducing our exposure to short-term bond funds.

Our flexible income portfolios remain broadly diversified and maintain a lower average duration than the benchmark. Please see last months’ post for more details about our flexible income holdings.

Summary: Our flexible income portfolios remain broadly diversified and maintain a lower average duration than the benchmark. We had no Upgrades this month but did move to capitalize on weakness in high-yield bonds by increasing exposure modestly in our flexible income portfolios.

Managers’ Special Report: Tactical Model Perspective

Based on data from May 11, 2010

Current Tactical Model perspective

Our tactical portfolios have held considerable defensive positions for several months, and have lagged much of the bull market advance.  Our defensive posture paid off during periods of increased volatility, such as we saw in early May. During the panic-selling through May 7th, we increased equity exposure, allowing us to capitalize on the rally May 10^th.

For the last several months, we have expressed concern about investor complacency and the notion that the market’s steady grind higher could eventually encounter turbulence. Although we did not expect the speed and force of the recent sell off, we were well positioned to mitigate any significant damage. Our tactical portfolios are positive this month-to-date through May 11, 2010

We re-hedged our tactical portfolios into the powerful rally on Monday, May 10^th, but  we are not bearish.  In fact, the recent correction helped alleviate concerns that the market was over-bought. The up-trend has clearly weakened, but has not broken down to a point of concern.

Intra-day, this latest pullback took most indexes down by more than 10%, although the S&P 500 index has yet to close 10% below its recent peak. We can’t know whether or not the correction is truly over and we don’t attempt to forecast future market action. Our models are neutral, and although we currently hold considerable defensive positions,  we also expect to modestly participate in further gains if the rally resumes.

Summary: The market rally continued through April, then corrected sharply in early May. Several prominent indexes gave back all of this year’s gains in less than 2 weeks. Our models are neutral. We hold considerable defensive positions, but also seek partial participation if the recent correction has ended and the market resumes its relentless rally.