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April 2012 Performance Review

May 2, 2012

Stocks stalled in April as fears of a European collapse came back into play. Emerging markets appear shaky too while the U.S. market and economy were relatively strong. 

Our portfolios performed well relative to the benchmarks this past month. Our Conservative Portfolio was up 0.44%. Our Aggressive Portfolio gained 0.60%.

Benchmark Vanguard index funds for April: the Vanguard 500 Index (VFINX) was down 0.64%, while Vanguard Total Bond Market (VBMFX) gained 1.14%. Vanguard International Index (VTMGX) dropped 2.29% and Vanguard Emerging Markets Stock Index (VEIEX) fell 1.75%

The U.S. stock market has been outperforming the rest of the world for the better part of five years. Our own relatively recent moves back into foreign have proved to be a bit early.. 

Fund investors continue pulling money out of stock funds. We see around $10+ billion a month come out of ordinary mutual funds – an investment class that is in long term decline. If it wasn’t’ for 401k assets, there would be big problems in the mutual fund industrial complex. ETFs continue to bring in money to offset these losses in total fund assets.

The best performing stock fund categories last month included Utilities, up in the 1%-2% range, funds invested in Asia notably China, with returns in the 0.50% - 1% range.  Funds that short were up marginally, and smaller cap foreign funds did well with a 0.40% return. Bonds were much better, as is often the case when fear returns to markets. These funds were up 4.75% for the month, while more diversified long term bond funds gained 1.70%. Municipal bond funds did well, posting returns in the 1.3%-1.5% range.

At the bottom of the performance list in April: Latin American funds fell 4.3% and Japan funds dropped 3.48%. Foreign value oriented funds fell in the 1.3%-2.5% range.

April's Powerfund Winners

Our Government Bond fund Vanguard Extended Duration Treasury (EDV) rose 7.50% in April, ahead of its benchmark bond index by 6.4%.

American Century Utility Income (BULIX) climbed 1.79% last month. Utility stocks tend to do well when riskier parts of the market slide and bonds outperform.

Vanguard Long-Term Bond Index ETF (BLV) climbed 3.44% in April, better than the bond market by 2.3% as interest rates slid anew.

Scout International Discovery (UMBDX) gained 1.38% in April – a good showing for foreign stocks.

Health Care Select SPDR (XLV) slipped 0.27% in April, beating the S&P 500 by 0.4% as safer stock categories preformed relatively well.

April's Powerfund Losers

iShares MSCI Japan Index (EWJ) fell 4.28% in April, worse than the S&P 500 by 3.6%.

Vanguard European ETF (VGK) dropped 2.50% as fears resumed in the euro region.

Vanguard Europe Pacific ETF (VEA) lost 2.38% in April, on twin weakness in Japan and European stocks. 

Our Long/Short fund PowerShares DB Crude Oil Double Short (DTO) fell 2.29% in a month where renewed fears over the economy should have led to oil falling.

Jensen Value J (JNVSX) dropped 1.88% in April, worse than the S&P 500 by 1.2%, as value stocks globally were weak (other than healthcare, telecom, and utilities).