EQUITY FUND OUTLOOK FREQUENTLY ASKED QUESTIONS
Do I have to follow a model portfolio to benefit from Equity Fund Outlook?
Not at all. Many subscribers note what we are doing in the model portfolios
only a one of many inputs to selecting and upgrading funds. The Wish List
shows the most promising funds as of that issue for those starting from cash.
The Funds by Rating Within Class report is helpful in spotting the best funds
for further consideration. The alphabetical Fund Surveys contain a wealth of
details about each fund such as reward-risk efficiency, portfolio turnover,
tax impact and portfolio characteristics.
Will EFO be compatible with my mutual fund marketplace brokerage account?
Yes, the portfolios use funds that are available without a trading fee
at brokers such as Charles Schwab and TDAmeritade (Waterhouse) We prefer Schwab for
its better selection of "boutique" funds, its 90-day holding period to avoid a fee on
sale of no-transaction-fee
fund (at Fidelity it's 180 days) and, because of its better
trading technology and
ability to keep up with all the various requirements of the fund groups.
How much trading is there in EFO model portfolios?
EFO readers are more investors than traders. If its funds selection is based
on manager skill, then frequent switching doesn't fit. Also to consider are
trading fees, since some brokers would charge a fee for selling a
no-transaction-fee fund before 180 days. The idea is to hold for at
least a year in the Taxable Portfolio as there is a preference for taking
gains as long-term, so the average turnover is less than for the
Tax-Advantaged portfolio for IRA accounts and the like. There the assumed
broker is Schwab, so the 90-day holding requirement allows for tax-free
trading where advantageous, but not just to keep busy.
EFO's Model Portfolios are market risk, but my risk ceiling is
(higher/lower). What do I do?
The detailed information in each issue will enable you to identify
substitute funds for one of more portfolio holdings to bring the risk level
down or increase the growth potential. For example, if you are an aggressive
investor and wanted to increase the upside potential and didn't mind somewhat
above-market risk, you might first spot which holding had the least Growth
(upside) Potential. Then you would check the Funds by Rating within Class
report for highly rated funds with a higher growth potential and a similar
stock-selection style and capitalization focus. Its risk will also probably
be higher, but the high rating tells you that the fund is also efficient
reward/risk wise.
Conversely, if you were more conservative than a model portfolio you were
following, you could spot one or two of the highest-risk holdings and check
the Fund by Rating Within Class report for highly rated funds with a lower
Risk Exposure score. Chose substitute funds that have a similar stock
selection style and capitalization focus.