Rick Ferri's Sample Portfolio in today's (April 18, 2011)WSJ

[Bitzer]

I have backtested Mr. Ferri's recommendations and with some minor modifications (add some DBC [commodities] and increase the percentage allocation to equities with a commensurate decrease in the percentage allocation to fixed income) and have decided that I would like to dedicate a portion of my investment portfolio to his strategy.

As I understand it, to invest with Mr. Ferri, one must transfer assets to his preferred custodian. Although I have full investment discretion, I cannot transfer assets due to a family (brother-in-law) situation.

Does anyone know if this is Mr. Ferri's "long term" recommendation or does he make tactical changes from time to time? Is there a way to follow Mr. Ferri's recommendations without transferring assets? I'd be willing to pay for a periodic newsletter or the like. Thanks!

[Chuck T]

The best place to go for this information is the website of Rick Ferri's firm. The address is portfoliosolutions.com. You might want to call and speak with a member of is firm about your situation. the # is on the website. Good luck.

[Random Musings]

and have decided that I would like to dedicate a portion of my investment portfolio to his strategy.

In what manner? Are there constraints involved? Or are you allocating various % of portfolio to various strategies (including active)?

RM

[Rick Ferri]

Bitzer,

The portfolios I provided for today's Wall Street Journal article were created under a strict WSJ mandate. I was to take only the free trade ETFs available at each firm and form as similar as possible portfolios across all platforms. Since each platforms is different with many asset class choices being very limited, the portfolios contained only a very basic asset allocation. An ETF/index fund portfolio would hold more asset classes without the WSJ constraints.

Rick Ferri

[Bitzer]

Thanks for your reply, Mr. Ferri. Is there some way to obtain your investment allocation advice short of transferring assets to your firm? Of course, I'd be willing to subscribe to a newsletter or the like. Due to family consideration my assets must remain where they are.

[NYCPete]

For those interested, here's a link to the article...

http://online.wsj.com/article/SB1000142 ... lenews_wsj

Best,
Peter

[NYCPete]

Thanks for your reply, Mr. Ferri. Is there some way to obtain your investment allocation advice short of transferring assets to your firm? Of course, I'd be willing to subscribe to a newsletter or the like. Due to family consideration my assets must remain where they are.

Bitzer, I'm not Rick Ferri, but I'll point out that the whole focus of Mr. Ferri's recommendations in the article is that you can build these portfolios using ETFs, which can be bought using a brokerage account anywhere. You don't have to transfer assets to his firm to follow his advice in the article. You just build the portfolio yourself.

Though ongoing portfolio management is a different thing, and maybe that's what you're inquiring about...

Best,
Peter

[Rick Ferri]

Here is a link to another WSJ articlethat has a sample portfolio. This article givea you a good flavor for the equity selection and the bond selection in an account.

The allocation in the WSJ article is 50% in stocks and 50% in bonds. However, this isn't to say that all clients have 50/50. To the contrary, we have about 50 strategies in total with allocations range from 20/80 to 80/20 depending on the circumstances. In addition, people in high tax brackets have an allocation to tax-free bonds rather than taxable bonds.

Rick Ferri

[Bitzer]

In response to an earlier question, it is my intention to divide my investments among several ETF "portfolios to go". Another one that I'm looking at is Craig Israelsen's 7Twelve portfolio

I'm having a problem gathering sufficient information to compare various portfolios to go. One source is folioinvesting. Another is myplaniq (their research is great although I find their writing style occasionally difficult to follow).

Does anyone have other sources to evaluate what some are now calling portfolios to go?

[Bitzer]

Thanks for your replies NYCPete. My interest is in obtaining ongoing advice to maintain my ETF portfolio.

For example, I'm not certain whether suggested allocations change over time for Mr. Ferri's and Mr. Israelsen's portfolios. I am aware of the need to rebalance periodically, though.

Is there a way to follow the advice of these individuals over time without transferring assets? Again, I'd be willing to pay for the advice, even if it's just a quarterly (or so) newsletter.

[Rick Ferri]

Craig has a book out titled 7Twelve. It explains how to allocation across ETFs using that strategy.

If it's your intent to self-manage an ETF portfolio, you should talk with MarketRiders.com. For $99 per year, their software will tell you when to rebalance and were to allocate new money.

Rick Ferri

PS. I have a website where I blog www.RickFerri.com

[Random Musings]

Bitzer wrote:

In response to an earlier question, it is my intention to divide my investments among several ETF "portfolios to go". Another one that I'm looking at is Craig Israelsen's 7Twelve portfolio

In the end, you will have certain percentages assigned to each asset class. What "portfolios to go" you chose and how you weight them, IMHO, will basically drive how much slice & dicing is going on.

I guess, for example, if you choose four of the PTG's and equally weight them at 25%, you won't have chosen the best one, nor would you have chosen the worst one.

RM

[NYCPete]

In response to an earlier question, it is my intention to divide my investments among several ETF "portfolios to go". Another one that I'm looking at is Craig Israelsen's 7Twelve portfolio

I'm having a problem gathering sufficient information to compare various portfolios to go. One source is folioinvesting. Another is myplaniq (their research is great although I find their writing style occasionally difficult to follow).

Does anyone have other sources to evaluate what some are now calling portfolios to go?

I've yet to find a better evaluation tool than here!

Thanks for your replies NYCPete. My interest is in obtaining ongoing advice to maintain my ETF portfolio.

For example, I'm not certain whether suggested allocations change over time for Mr. Ferri's and Mr. Israelsen's portfolios. I am aware of the need to rebalance periodically, though.

Is there a way to follow the advice of these individuals over time without transferring assets? Again, I'd be willing to pay for the advice, even if it's just a quarterly (or so) newsletter.

For a one-time cost of $4.69 at Amazon you can pick up All About Asset Allocation by the aforementioned Rick Ferri, and continue to follow his blog and postings here on Bogleheads.

Best,
Peter

[Bitzer]

Thanks, Mr. Ferri. I'm familiar with your blog, marketriders and Mr. Israelsen's book.

From the limited information I have, it looks like you have marketriders beaten hands down.

Haven't a lot of time for books, unfortunately (job, children, etc). So I prefer to "cut to the chase" and review allocations directly, whenever I can.

[yobria]

Haven't a lot of time for books, unfortunately (job, children, etc). So I prefer to "cut to the chase" and review allocations directly, whenever I can.

Pity. A few hours of education goes a long way when it comes to investing.

Keep it simple.

Nick

[jbdiver]

For example, I'm not certain whether suggested allocations change over time for Mr. Ferri's and Mr. Israelsen's portfolios. I am aware of the need to rebalance periodically, though.

In my experience Rick Ferri doesn't offer market timing advice or suggest strategic allocation changes. Asset allocation is driven by personal requirements and not market changes. He may potentially substitute funds in a recommended portfolio as new fund products are introduced. I think he has also tweaked his recommended portfolios over the past 5 years. I haven't seen any significant changes over the past year though.

Is there a way to follow the advice of these individuals over time without transferring assets? Again, I'd be willing to pay for the advice, even if it's just a quarterly (or so) newsletter.

Yes, read this website. Read their books. Determine your asset allocation and plug it into online software like MarketRiders if necessary to help you rebalance. You don't need to pay anyone for quarterly advice because that advice is not really going to change from quarter to quarter. Rick isn't going to tell you to increase your allocation to emerging in one quarter and small caps the next.

Haven't a lot of time for books, unfortunately (job, children, etc). So I prefer to "cut to the chase" and review allocations directly, whenever I can.

Danger. You can't rely solely on back testing data in lieu of gaining the basic knowledge necessary to select an asset allocation. You are setting yourself up for disappointment.

[Rick Ferri]

I'm not certain whether suggested allocations change over time for Mr. Ferri's and Mr. Israelsen's portfolios. I am aware of the need to rebalance periodically, though.

In my experience Rick Ferri doesn't offer market timing advice or suggest strategic allocation changes. Asset allocation is driven by personal requirements and not market changes. He may potentially substitute funds in a recommended portfolio as new fund products are introduced. I think he has also tweaked his recommended portfolios over the past 5 years. I haven't seen any significant changes over the past year though.
.

That's a good summary. Asset allocation changes are driven by individual circumstances, and there's a lot that goes into that. Also, fund changes are rare. Perhaps we make one fund change every three or four years. That being said, there's a lot to do in a portfolio ongoing; dividend and interest reinvestment as needed, tax management, rebalancing, etc.

Thanks, Mr. Ferri. I'm familiar with your blog, marketriders and Mr. Israelsen's book.

From the limited information I have, it looks like you have marketriders beaten hands down.

MarketRiders is more a portfolio assistant than an investment manager. Basically, you select one of their model portfolios or you put your own model together (7Twelve or whatever). Then the service notifies you via email when it's time to rebalance.

Rick Ferri

[BornInCA]

Rick,

I liked the WSJ article of the commission-free ETFs for portfolio building. However, I noticed an error in the listing of the Ameritrade commission-free ETFs. At the time of this writing, Vanguard Total International stock ETF (VXUS) is NOT a commission free ETF on TD Ameritrade. However, Vanguard FTSE All-world ex-US (VEU) is. Maybe VEU would be an appropriate substitute for VXUS. In the meantime, I hope VXUS will be added to the list of TD Ameritrade's commission-free ETFs.

best regards!!!

[Rodc]

Craig has a book out titled 7Twelve. It explains how to allocation across ETFs using that strategy.

If it's your intent to self-manage an ETF portfolio, you should talk with MarketRiders.com. For $99 per year, their software will tell you when to rebalance and were to allocate new money.

Rick Ferri

PS. I have a website where I blog www.RickFerri.com

MarketRider seems to offer help in selecting an index fund/ETF portfolio target allocation and tracks your real-time allocation relative to that target allocation?

For an investor who can pick a target allocation and can check his portfolio on-line or in a homemade spread sheet, is there anything else?

Does it help for example with consolidating management across 401K, IRA, Roth and Taxable accounts?

Looks useful for someone starting out or who is not spread sheet savy.

[stratton]

Let's make this thread easier to "see."





Paul

[46goat]

Bitzer,

You mentioned MyPlanIQ and their website in one of your posts above. I hate their website and find it to be totally useless, but their articles on Seeking Alpha are sometimes quite useful. Here is a link to the only article I have ever seen them write that actually explains what they do to adjust the allocations to a 6-ETF Simple Portfolio :

http://seekingalpha.com/article/263465- ... rom_friend

[Bongleur]

Rick -- in the 2009 portfolio you linked to,

http://online.wsj.com/article/SB1000142 ... ORDS=ferri

you have equal parts TIPS and Junk bonds. Why?

Compare to this, where someone noticed a favorable correlation:

viewtopic.php?p=1024784#1024784

I also see that in your current WSJ portfolio you have omitted the junk. Why?

And why doesn't the Vanguard portfolio include TIPS? No ETF version ?

[Rick Ferri]

My instructions from the WSJ for this ETF article were to create comparable portfolios across each free-ETF trade platform. Since the offerings are different from each firm, I had to leave out several asset classes and improvise on others. For example, Vanguard doesn't have a TIPS ETF. I think I got the job done to their satisfaction given the large amount of press they gave me.

Rick Ferri

[rinder]

Looking at the TD Ameritrade website, it looks like the free ETF trades at TD Ameritrade are available to new accounts only. No existing accounts will get this option. Here is a quote from their website taken from the small print:

“Offer valid for one new Individual or Joint TD Ameritrade account opened by 06/30/2011 and funded within 30 days of account opening with $2,000 or more. ”

Can anyone verify or refute this?

If I am wrong, how does one sign up an existing account for the free ETF trades?