Three Things to Know About Asset Allocation
The Month in Brief
Bears presumed stocks would retreat in May. Instead, the three major
U.S. indices posted gains – the Nasdaq Composite led the way with a
2.60% advance. This happened even as the U.S. Dollar Index rose and
Federal Reserve chair Janet Yellen reemphasized the probability of an
interest rate hike in the fall. The latest hiring and housing numbers were
strong; other stateside indicators pointed to moderation in the pace of
manufacturing, and consumers saving cash instead of spending it.
Overseas stock markets were up and down. Oil topped the $60 level
while ag futures slumped. All in all, the month turned out better than
Wall Street expected.1,15
% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+1.05
+7.86
+15.54
+7.08
NASDAQ
+7.05
+19.35
+24.93
+14.43
S&P 500
+2.36
+9.76
+18.69
+7.58
REAL YIELD
5/29 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.32%
0.22%
1.32%
1.67%
Quote of the Month
“In great affairs men show
themselves as they wish to
be seen; in small things they
show themselves as they
are.”
– Nicholas Chamfort
Monthly Tip
When financial decisions are
made out of impulse rather
than practicality, there is
often a downside or
opportunity cost that closer
examination would have
revealed.
Monthly Riddle
How many times can you
subtract the number 9 from
the number 36?
Last month’s riddle:
Its teeth are sharp and its
spine is straight. It is not
innately vicious, it does not
hunt, but to cut things up is
definitely its fate. What is it?
1,19,20
Sources: wsj.com, bigcharts.com, treasury.gov – 5/29/15
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These
returns do not include dividends. 10-year TIPS real yield = projected return at maturity given
expected inflation
© 2015 Capstone Retirement Group, LLC
Last month’s answer:
A saw.
Page 1 of 3
1. Different Assets Play Different Roles
While stocks have significant appreciation and
wealth-building potential, bonds can generate
steady income. Cash can buffer the effect of
market losses, while alternative investments can
help improve a portfolio’s diversification
potential.
2. Markets Are Unpredictable
Capital markets are dynamic, and today’s asset
class leader may be tomorrow’s laggard. A
diversified investment approach that includes a
range of asset classes can help investors pursue
their long-term financial goals while managing
the risks along the way.
3. The Mix Matters
Selecting the mix of assets in your portfolio may
be the dominant contributor to total return—
more so than the choice of individual holdings. In
fact, an influential, decade-long study of 82 large
pension plans revealed that this asset mix
explained, on average, nearly 92% of the
variation in total return.¹
The investment universe is expanding
Today, there are over 100
Morningstar categories,
which now include niche
58
The number of fund
categories tracked by
Morningstar in 2003
112
The number of fund
categories tracked by
Morningstar
TODAY
styles and alternative
investments. This variety of
asset classes and
specialized managers
presents new opportunities
for investors.²
This was originally published by John Hancock Investments in their Portfolio Insight. Asset
Allocation | Redefining diversification in your portfolio.
for investors.²
© 2015 Capstone Retirement Group, LLC
Page 2 of 3
Disclosures:
This material is not intended to replace the advice of a qualified attorney, tax advisor, investment professional or insurance agent.
Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), member FINRA/SIPC. NFPAS is not
affiliated with Capstone Retirement Group, LLC. This material was prepared by MarketingLibrary.Net Inc., and does not necessarily
represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we
make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee
of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the
reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or
legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices
are unmanaged and are not illustrative of any particular investment.
Citations:
Article:
06 June 2015 – Three Things to Know About Asset Allocation – RPAG ACR#143521 05/15
¹ Brinson, Singer, and Beebower, 1991.
² Morningstar, as of 12/31/2014. Static categories, those currently without description and without funds, are omitted from this figure.
Economic Update:
1 - wsj.com/mdc/public/page/2_3023-monthly_gblstkidx.html [5/29/15]
15 - money.cnn.com/data/commodities/ [5/31/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F29%2F14&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F29%2F14&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F29%2F14&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F28%2F10&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F28%2F10&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F28%2F10&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F27%2F05&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F27%2F05&x=0&y=0 [5/29/15]
19 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F27%2F05&x=0&y=0 [5/29/15]
20 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/1/15]
About Capstone Retirement Group
Capstone Retirement Group is a professional retirement plan consulting
firm. We partner with plan fiduciaries to identify and implement the optimal
retirement plan for their organization.
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Suite 350
Vienna, VA 22182
Tel: 703.291.8200
Fax: 202.747.5267
Email: info@capstoneRG.com
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© 2015 Capstone Retirement Group, LLC
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