Model Portfolio Allocation Changes- This Week
New Sector Purchases in Energy, Gold and Real Estate
The Performance Xtender model has triggered new purchases in all three of its "defensive" market sectors -- Energy, Precious Metals and Real Estate.
The model exited the Energy and Gold sectors most recently in June. Since then, both of these sectors have traced out extended patterns of correction and recovered. The picture for Real Estate (the commercial Real Estate Investment Trusts) is different. This sector is in the midst of a strong rally that got started back in the June/July timeframe of this year. However, the Performance Xtender model was triggered out of this investment a month ago after a sharp selloff in Real Estate tripped a "volatility stop". Real Estate stocks then quickly recovered and renewed the rally and the model's "relative strength optimization" logic has once again included Real Estate in the portfolio.
The new purchases in Gold and Energy were also triggered by the model's relative strength optimization logic. Each of these sectors is on an individual buy signal and has now shown a persistent trend of out-performing the broad market.
The model's actions are corroborated by a traditional chart analysis. Seen above in the chart of an Energy stock fund, the sector's strong uptrend came to a halt mid-year. Thereupon a correction of moderate duration began, tracing out a "wedge-shaped" sequence as highlighted above by the red trend lines. Almost six weeks ago, Energy stocks broke out of the wedge-shaped pattern, taking the first step toward ending the corrective sequence. The break-out was then given corroboration this past week by the sector's break above the previous high established during the correction (designated by the blue trend line).
Technically speaking, last week's break-out by Energy stocks (and Gold stocks as well) still lacks full confirmation. Both sectors will need to prove they can hold this breakout. Until we see further strength and a breakout to new highs, we must be wary of a certain risk that either sector could rollover and initiatate another corrective sequence before moving substantially higher.
Portfolio Changes in the Performance Xtender: Investors following this model portfolio are recommended to sell 30% of their Large-cap stock fund and reinvest 10% in each of the following sector funds -- Energy stocks, Precious Metals stocks and Real Estate stocks (REITs).
Model Portfolio: Performance Xtender
REDUCE __________ Large Cap Stock Fund
BUY ______________ Energy Stock Fund
BUY ______________ Precious Metals Fund
BUY ______________ Real Estate Stock Fund
Model Portfolio: Max Xtender
No Changes
New Model Portfolio Allocations
Model Portfolio: Performance Xtender
70% Large Cap Stock Fund
10% Energy Stock Fund
10% Precious Metals Stock Fund
10% Real Estate Stock Fund
Model Portfolio: Max Xtender
100% Leveraged Large Cap Fund
Model Portfolio Details
The tables below provide the percentage allocation details and mutual fund ticker symbols for investors following the Model Portfolios by using funds from either of the Rydex Investments or ProFunds mutual fund companies -- or alternatively, investors using exchange traded funds (ETFs).
'Performance Xtender'
(A model portfolio that invests selectively in stock market index funds, plus certain market sectors such as Energy, Gold and Real Estate, and in an Inverse Fund ("Bear Fund"), depending on current market trends for each type of investment. The allocation mix is designed to beat the market significantly during both bull and bear markets with only limited risk of volatility.)
| Model Portfolio Changes for this week | Rydex Funds | ProFunds | ETFs | |||
|---|---|---|---|---|---|---|
| Allocation | Ticker | Allocation | Ticker | Allocation | Ticker | |
| REDUCE LargeCaps | 30% | RYZAX | 30% | BLPIX | 30% | SPY |
| BUY Energy stocks | 10% | RYEIX | 7% | ENPIX | 10% | XLE |
| BUY Gold stocks | 10% | RYPMX | 7% | PMPIX | 10% | GLD |
| BUY Real Estate | 10% | RYHRX | 7% | REPIX | 10% | ICF |
| Corporate Bonds, or Money Market |
The percentage allocations for the ProFunds sector funds is reduced to adjust for their leverage factor of 1.5 to 1. The 9% of proceeds left over should be invested in Money Market Funds. | |||||
| New Model Portfolio Allocations | Rydex Funds | ProFunds | ETFs | |||
|---|---|---|---|---|---|---|
| Allocation | Ticker | Allocation | Ticker | Allocation | Ticker | |
| LargeCap Stock Fund | 70% | RYZAX | 70% | BLPIX | 70% | SPY |
| Energy Stock Fund | 10% | RYEIX | 7% | ENPIX | 10% | XLE |
| Precious Metals Fund | 10% | RYPMX | 7% | PMPIX | 10% | GLD |
| Real Estate Fund | 10% | RYHRX | 7% | REPIX | 10% | ICF |
| Corporate Bonds, or Money Market |
Money Market Funds: 9% for ProFunds investors only. | |||||
'Max Xtender'
(A model portfolio that invests selectively in stock market index funds and in an Inverse Fund ("Bear Fund"), depending on current market trends for each type of investment. During strong market trends ... either bullish or bearish ... the model uses up to 2-to-1 leverage to magnify returns. The allocation mix is designed to beat the market substantially during both bull and bear markets but results in a relatively high risk of volatility.)
| Model Portfolio Changes for this week | Rydex Funds | ProFunds | ETFs | |||
|---|---|---|---|---|---|---|
| Allocation | Ticker | Allocation | Ticker | Allocation | Ticker | |
| No Changes | - | - | - | - | - | - |
| Corporate Bonds, or Money Market |
- | |||||
| New Model Portfolio Allocations | Rydex Funds | ProFunds | ETFs | |||
|---|---|---|---|---|---|---|
| Allocation | Ticker | Allocation | Ticker | Allocation | Ticker | |
| Lev'd LargeCaps | 100% | RYTNX | 100% | ULPIX | 200% | SPY |
| Corporate Bonds, or Money Market |
ETF Investors: Note that the SPY position should be leveraged 2 to 1. | |||||
