Model portfolios in market uncertainty
Q4 market commentary and model portfolio asset allocation
Samir Mathur
Chair of the Portfolio Solutions Committee
Mario DiVito
Investment director
Stanley Moy
Multi-asset investment product manager
Key takeaways for the quarter ended December 31, 2023
- Model portfolio asset allocation remains focused on long-term goals through the changing economic environment and in a highly concentrated equity market.
- Cash allocations declined across model portfolios over the last year; underlying fund managers are finding opportunities across a wide range of companies, sectors and regions.
- American Funds Model Portfolios draw from Capital’s vast network of active, bottom-up research while the Portfolio Solutions Committee and Capital Solutions Group continue to monitor allocations with long-term model portfolio goals in mind.
Market review
Equity markets rebounded in the fourth quarter, extending robust gains for the year as investors absorbed a more dovish tone from the U.S. Federal Reserve in December. The S&P 500 Index rose 11.69% for the quarter, climbing 26.29% in 2023. Mega-cap stocks fueled U.S. equity gains for the year, while dividend payers lagged. For the 12-month period ended December 31, 2023, the Russell 1000 Growth Index climbed 42.68% while the Russell Value 1000 Index rose 11.46%. Meanwhile, small-cap equities bounced back in the fourth quarter, with the Russell 2000 Index jumping 16.93% for the year. International equities posted strong gains but lagged U.S. stocks for the quarter and year; the MSCI All Country World Index (ACWI) ex USA gained 9.75% for the quarter, ending the year 15.62% higher.
Within fixed income markets, U.S. Treasuries rebounded over the quarter spurred by increased expectations for U.S. interest rate cuts in the new year. The Fed left its benchmark interest rate unchanged in December at a range of 5.25% to 5.50% for the third consecutive meeting but indicated likely rate cuts in 2024. The Bloomberg U.S. Aggregate Index rallied 6.82% for the quarter and 5.53% for the year, while the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index rose 7.15% for the quarter, taking 2023 gains to 13.44%.
Model portfolio results for the quarter and year
Growth portfolios
American Funds Global Growth Model Portfolio produced positive absolute and relative returns versus its benchmark for the quarter and year, though net returns trailed for the year. (All comments about model composite returns versus the benchmark are true on a gross and net-of-fees basis, unless otherwise noted.)
- Positive U.S. and non-U.S. stock selection drove relative results for the quarter.
- Strong selection in consumer discretionary (including several commerce platforms) boosted quarterly results as did information technology (semiconductors), non-U.S. industrials and U.S. health care.
- The Growth Fund of America®, The New Economy Fund® and SMALLCAP World Fund® were strong relative contributors for the quarter while EuroPacific Growth Fund® and New World Fund® detracted on a relative basis.
- Security selection across all equity sectors (except for financials and utilities) helped for the year.
American Funds Growth Model Portfolio had robust absolute and relative returns for the quarter and year.
- U.S. and non-U.S. stock selection lifted results for the quarter, especially selection in consumer discretionary and information technology.
- The Growth Fund of America and AMCAP Fund® had strong relative underlying fund returns.
- Selection in all equity sectors except materials and consumer staples helped for the year.
American Funds Moderate Growth Model Portfolio had strong absolute and relative returns for the quarter and year.
- U.S. and non-U.S. stock selection were primary contributors for the quarter, especially selection in information technology, U.S. consumer discretionary and non-U.S. industrials.
- The Growth Fund of America, AMCAP Fund, Fundamental Investors® and The Investment Company of America® had strong relative quarterly returns while American Balanced Fund® had weaker relative returns.
- For the year, all sectors except consumer staples and real estate were positive on a relative basis.
Growth-and-income portfolios
American Funds Growth and Income Model Portfolio had positive absolute and relative results for the quarter and year except for net results, which lagged for the year.
- U.S. stock selection primarily drove returns for the quarter, particularly information technology, consumer discretionary and industrials.
- Within fixed income, selection in Treasuries and emerging markets debt was outweighed by negative selection in securitized debt over the quarter.
American Funds Moderate Growth and Income Model Portfolio had positive absolute and relative returns for the quarter though net returns lagged. Absolute returns were positive for the year but relative results trailed.
- Equity selection helped for the quarter; positive stock selection in information technology outweighed negative selection in communication services.
- Within fixed income, selection in Treasuries combined with emerging markets debt exposure partially offset negative selection in securitized debt for the quarter.
- Capital World Growth and Income Fund® had strong relative returns as did New Perspective Fund® and SMALLCAP World Fund. American Funds Multi-Sector Income Fund supported relative fixed income returns while American Funds Strategic Bond Fund detracted.
- Equity selection held back relative returns for the year, especially as dividend-focused underlying funds were a headwind amid the rally in growth-oriented equities.
American Funds Conservative Growth and Income Model Portfolio had positive absolute returns but trailed its respective benchmark over the quarter and year, reversing the trend in 2022.
- Having limited exposure to information technology hurt on a relative basis for the quarter and year. The portfolio has significant allocations to traditionally higher yielding sectors such as health care, consumer staples and energy.
- Selection within Treasuries and high yield helped outweigh negative security selection in securitized debt for the quarter.
American Funds Conservative Income and Growth Model Portfolio had strong absolute returns but trailed its respective benchmark over the quarter and year in a reversal from 2022.
- U.S. equity selection held back returns for the quarter. Positive stock selection in financials was outweighed by negative selection in consumer staples and communication services.
- Positive security selection within Treasuries and exposure to emerging market debt was nullified by selection in securitized debt for the quarter.
- For the year, the model’s focus on dividend-focused underlying funds held back relative results.
Preservation and income portfolios
American Funds Conservative Income Model Portfolio had positive absolute returns but trailed its benchmark for the quarter and the year.
- Selection in U.S. equities was the biggest detractor for the quarter, specifically within the consumer staples, communication services and health care sectors.
- Within fixed income, selection in securitized debt detracted from quarterly relative results, although selection in Treasuries and emerging market debt partially offset the weakness.
American Funds Preservation Model Portfolio posted positive absolute and relative returns over the quarter though net returns lagged. Relative results trailed for the year.
- Selection in securitized debt and corporates outweighed negative selection in Treasury Inflation-Protected Securities (TIPs).
Retirement income models
American Funds Retirement Income models outpaced their benchmark for the quarter except net returns for the Conservative portfolio trailed. All models lagged for the year on a net basis.
- Significant exposure to equities helped for the quarter even though dividend-paying equities in the U.S. trailed. Within international and emerging markets equity markets, some dividend payers led the lowest yielders. Two core building blocks, Capital Income Builder® and The Income Fund of America®, both had meaningful concentration in higher yielding dividend payers.
- Fixed income contributions were mixed for the quarter. Greater exposure to securitized debt in Moderate and Conservative hurt relative results while high-yield debt helped in Moderate and Enhanced. American Funds Multi-Sector Income Fund was a positive relative contributor in all three models.
Tax-aware model portfolios
American Funds Tax-Aware model portfolios had positive absolute returns but relative results were mixed for the quarter and year.
- American Funds Tax-Aware Moderate Growth Model Portfolio, American Funds Tax-Aware Growth and Income Model Portfolio and American Funds Tax-Aware Moderate Growth and Income Model Portfolio outpaced their respective benchmarks over the quarter, driven by strong stock selection in information technology and consumer discretionary.
- American Funds Tax-Aware Conservative Growth and Income Model Portfolio, American Funds Tax-Aware Moderate Income Model Portfolio and American Funds Tax-Aware Conservative Income Model Portfolio trailed their benchmarks for the quarter driven by negative security selection in municipal bonds, with selection in the housing sector a primary detractor.
Model portfolio asset allocation in 2023
A year in review with Samir Mathur, chair of the Portfolio Solutions Committee
- First, the committee has remained focused on long-term model objectives through the uncertain market environment this past year. We’re pleased to see the strong rebound across growth portfolios after some weakness in results during 2022’s volatility. As equity investment styles rotate, the committee maintains its long-term focus: portfolio managers in underlying growth funds who had turned defensive during 2022’s growth selloff, found opportunities to add quality growth companies back to portfolios in 2023, and reduced cash levels as growth equities led the market resurgence. This year, we also highlighted enhancements to our model portfolios such as the inclusion of New World Fund in our Global Growth portfolio and the addition of several Capital Group active ETFs to tax-aware portfolios.
- Second, the more conservative growth-and-income portfolios have trailed on a relative basis this year as dividend-focused underlying funds lagged the market. These models are built with a focus on multiple objectives, such as income, capital preservation and lower volatility. As a result, these model portfolios held up through the 2022 volatility as expected and still produced positive absolute returns this year. While we would hope for these models to outpace their benchmarks, we feel it is more important to focus on success metrics such as lower portfolio volatility, higher risk-adjusted returns and higher yield given these models’ long-term objectives. The Capital Solutions Group uses an innovative multi-objective optimization modeling for portfolio construction combined with the qualitative overlay of our Portfolio Solutions Committee. This has been helpful in fine-tuning the underlying fund allocations to track towards these various success metrics.
- Finally, higher interest rates last year have contributed to the momentum of cash piling by investors. Interest rates last reached these highs more than 15 years ago. Given the Fed’s recent guidance and lowering inflation trends, we believe the rates being collected on short-term cash-like instruments such as money market funds and certificates of deposit may not be as attractive going forward. Throughout this year, underlying fund managers have put cash to work in a variety of areas as they see bottom-up opportunities in specific companies, sectors and markets, which has resulted in reduced cash levels across model portfolios.
Looking ahead
Markets are currently facing a variety of geopolitical and economic crosscurrents, including the highest levels of equity market concentration since the dot-com bubble along with questions about economic growth and inflation. “Heading into 2024, it’s difficult to remember another time when the outlook was so uncertain,” according to Capital Group Chairman and Chief Investment Officer Martin Romo, who prefers to focus on “larger trends, events that may shape not just the next year, but the next decade or more.” As Romo says in Capital’s 2024 Outlook, “It’s our job to explore [opportunities] through exhaustive bottom-up, fundamental research … [Longer-term shifts may] bring a high degree of volatility, but also unprecedented opportunities. That’s prime time for active investing.”
American Funds Model Portfolios draw from Capital’s vast network of active, bottom-up research via underlying fund allocations. In a heavily concentrated equity market, we look across a wide range of sectors and regions to include companies likely to benefit from technology innovation in health care and industrials.
For growth-and-income mandates, we continue to favor steady dividend payers, with a focus on companies with strong balance sheets that can sustain economic uncertainty and dampen portfolio volatility while supporting total return. The broader global landscape also offers opportunities, despite potential headwinds from a strong U.S. dollar, given the global energy transition, pharmaceutical developments and the revival in commercial airspace.
In fixed income, our model portfolios lean on underlying fund allocations to access selective opportunities in higher income sectors including emerging markets debt as well as other areas such as mortgage-backed securities. Meanwhile, the Portfolio Solutions Committee and Capital Solutions Group continually assess model allocations to balance the four roles of fixed income for each model: providing income, inflation protection, capital preservation and diversification from equities.
Given all these factors, we think that being more fully invested in the market offers a better chance of achieving objectives as investors evaluate their goals in the new year.
Model portfolios are only available through registered investment advisers. This content is intended for registered investment advisers and their clients.
Results as of December 31, 2023. Past results are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. For current information and month–end results, visit capitalgroup.com. Composite returns reflect changes, if any, in the underlying fund allocations over the model’s lifetime. Underlying funds may have been added or removed during a model’s lifetime. Rebalancing is performed in accordance with the investment adviser’s strategic asset allocation views for the model. Please refer to capitalgroup.com/advisor/investments/ model-portfolios.htm for historical underlying fund allocations. Composite net results are calculated by subtracting an annual 3% fee, (which is equal to or higher than the highest actual model portfolio wrap fee charged by a program sponsor) from the gross composite monthly returns, which are net of underlying mutual fund fees and expenses. Composite gross results are net of underlying mutual fund fees and expenses and gross of any advisory fees charged by model providers. Results would have been lower if such fees had been deducted. Results and results-based figures shown are preliminary and subject to change.
Investments are not FDIC–insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Contribution to returns commentary is based on representative accounts of the model composites and is net of all fees and expenses applicable to the underlying funds and gross of any advisory fee charged by model providers. The net of fees composite results shown illustrate the impact of fees on the portfolio. Attribution for underlying ETFs is based on market price.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. Returns for one year or less are not annualized, but calculated as cumulative total returns.
When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Read details about how waivers and/or reimbursements affect the results for each fund. View results and yields without fee waiver and/or expense reimbursement.
There may have been periods when the results lagged the index(es). Certain market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
Model portfolios are subject to the risks associated with the underlying funds in the model portfolio. Investors should carefully consider investment objectives, risks, fees and expenses of the funds in the model portfolio, which are contained in the fund prospectuses. Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional cash securities, such as stocks and bonds.
Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness. If agency ratings differ, the security will be considered to have received the highest of those ratings, consistent with the portfolio's investment policies. Securities in the Unrated category have not been rated by a rating agency; however, the investment adviser performs its own credit analysis and assigns comparable ratings that are used for compliance with applicable investment policies.
A nondiversified fund has the ability to invest a larger percentage of assets in securities of individual issuers than a diversified fund. As a result, a single issuer could adversely affect a nondiversified fund’s results more than if the fund invested a smaller percentage of assets in securities of that issuer. See the applicable prospectus for details.
For more information about the risks associated with each investment, go to its detailed information page or read the prospectus, if applicable.
Portfolios are managed, so holdings will change.
Model portfolios are provided to financial intermediaries who may or may not recommend them to clients. These portfolios consist of an allocation of funds for investors to consider and are not intended to be investment recommendations. The portfolios are asset allocations designed for individuals with different time horizons investment objectives and risk profiles. Allocations may change and may not achieve investment objectives. If a cash allocation is not reflected in a model, the intermediary may choose to add one. Capital Group does not have investment discretion or authority over investment allocations in client accounts. Investors should talk to their financial professional for information on other investment alternatives that may be available. In making investment decisions, investors should consider their other assets, income, and investments. Visit capitalgroup.com for current allocations.
The underlying funds for each model portfolio as of December 31, 2023, are as follows (allocations may not equal 100% due to rounding):
American Funds Global Growth Model Portfolio: Growth (80%): SMALLCAP World Fund 15%, The New Economy Fund 15%, EuroPacific Growth Fund 10%, The Growth Fund of America 15%, New Perspective Fund 20%, New World Fund (5%); Growth and income (20%): Capital World Growth and Income Fund 20%.
American Funds Growth Model Portfolio: Growth (80%): SMALLCAP World Fund 15%, The New Economy Fund 10%, The Growth Fund of America 25%, New Perspective Fund 10%, AMCAP Fund 20%; Growth and income (20%): Fundamental Investors 20%.
American Funds Moderate Growth Model Portfolio: Growth (40%): SMALLCAP World Fund 10%, The Growth Fund of America 20%, AMCAP Fund 10%; Growth and income (40%): Fundamental Investors 10%, Capital World Growth and Income Fund 20%, The Investment Company of America 10%; Balanced (20%): American Funds Global Balanced Fund 10%, American Balanced Fund 10%.
American Funds Growth and Income Model Portfolio: Growth (15%): SMALLCAP World Fund 8%, The Growth Fund of America 7%; Growth and income (50%): Capital World Growth and Income Fund 20%, The Investment Company of America 20%, Washington Mutual Investors Fund 10%; Equity Income (10%): Capital Income Builder 10%; Balanced (10%): American Balanced Fund 10%; Bond (15%): The Bond Fund of America 5%, American Funds Strategic Bond Fund 5%, American Funds Multi-Sector Income Fund 5%.
American Funds Moderate Growth and Income Model Portfolio: Growth (10%): SMALLCAP World Fund 5%, New Perspective Fund 5%; Growth and income (25%): Capital World Growth and Income Fund 10%, Washington Mutual Investors Fund 15%; Equity Income: (10%): The Income Fund of America 10%; Balanced (40%): American Funds Global Balanced Fund 15%, American Balanced Fund 25%; Bond (15%): The Bond Fund of America 5%, American Funds Multi-Sector Income Fund 5%, American Funds Strategic Bond Fund 5%.
American Funds Conservative Growth and Income Model Portfolio: Growth and income (20%): Washington Mutual Investors Fund 10%, American Mutual Fund 10%; Equity Income (38%): Capital Income Builder 19%, The Income Fund of America 19%; Bond (42%): American High-Income Trust 10%, American Funds Multi-Sector Income Fund 16%, The Bond Fund of America 16%.
American Funds Conservative Income and Growth Model Portfolio: Growth and income (20%): Capital World Growth and Income Fund 5%, American Mutual Fund 15%; Equity income (10%): The Income Fund of America 10%; Balanced (15%): American Funds Global Balanced Fund 5%, American Balanced Fund 10%; Bond (55%): American Funds Multi-Sector Income Fund 15%, American Funds Strategic Bond Fund 10%, The Bond Fund of America 20%, Intermediate Bond Fund of America 10%.
American Funds Retirement Income Model Portfolio — Enhanced: Growth (5%): AMCAP Fund 5%; Growth and income (15%): Capital World Growth and Income Fund 10%, American Mutual Fund 5%; Equity Income (38%): Capital Income Builder 14%, The Income Fund of America 24%; Balanced (25%): American Funds Global Balanced Fund 5%, American Balanced Fund 20%; Bond (17%): American High-Income Trust 5%, American Funds Multi-Sector Income Fund 7%, American Funds Inflation Linked Bond Fund 5%.
American Funds Retirement Income Model Portfolio — Moderate: Growth and income (12%): Capital World Growth and Income Fund 7%, American Mutual Fund 5%; Equity Income (38%): Capital Income Builder 14%, The Income Fund of America 24%; Balanced (20%): American Funds Global Balanced Fund 5%, American Balanced Fund 15%, Bond (30%): American Funds Multi-Sector Income Fund 9%, American Funds Inflation Linked Bond Fund 5%, The Bond Fund of America 5%, American Funds Strategic Bond Fund 6%, U.S. Government Securities Fund 5%.
American Funds Retirement Income Model Portfolio — Conservative: Growth and income (7%): American Mutual Fund 7%; Equity income (33%): Capital Income Builder 14%, The Income Fund of America 19%; Balanced (12%): American Funds Global Balanced Fund 4%, American Balanced Fund 8%; Bond (48%): American Funds Inflation Linked Bond Fund 6%, The Bond Fund of America 15%, American Funds Strategic Bond Fund 10%, American Funds Multi-Sector Income Fund 5%, Intermediate Bond Fund of America 5%, U.S. Government Securities Fund 7%.
American Funds Conservative Income Model Portfolio: Growth and income (10%): American Mutual Fund 10%; Equity Income (10%): The Income Fund of America 10%; Balanced (5%): American Balanced Fund 5%; Bond (75%): The Bond Fund of America 20%, American Funds Strategic Bond Fund 10%, American Funds Multi-Sector Income Fund 5%, Intermediate Bond Fund of America 25%, Short-Term Bond Fund of America 15%.
American Funds Preservation Model Portfolio: Bond (100%): Intermediate Bond Fund of America 45%, Short-Term Bond Fund of America 55%.
American Funds Tax-Aware Moderate Growth Model Portfolio: Growth (45%): SMALLCAP World Fund 10%, CGGR — Capital Group Growth ETF 25%, AMCAP Fund 5%; American Funds Global Insight Fund 5% Growth and income (45%): Capital World Growth and Income Fund 20%; CGUS — Capital Group Core Equity ETF 25%; Bond (10%): The Tax-Exempt Bond Fund of America 5%, American High-Income Municipal Bond Fund 5%.
American Funds Tax-Aware Growth and Income Model Portfolio: Growth (15%): SMALLCAP World Fund 8%, CGGR — Capital Group Growth ETF 7%; Growth and income (65%): Fundamental Investors 5%, Capital World Growth and Income Fund 20%, The Investment Company of America 5%, CGUS — Capital Group Core Equity ETF 25%, CGDV — Capital Group Dividend Value ETF 10%; Bond (20%): American High-Income Municipal Bond Fund 10%, The Tax-Exempt Bond Fund of America 10%.
American Funds Tax-Aware Moderate Growth and Income Model Portfolio: Growth (10%): SMALLCAP World Fund 5%, CGGO — Capital Group Global Growth Equity ETF 5%; Growth and income (55%): Capital World Growth and Income Fund 20%, CGUS — Capital Group Core Equity ETF 15%, CGDV — Capital Group Dividend Value ETF 15%, Washington Mutual Investors Fund 5%; Bond (35%): American High-Income Municipal Bond Fund 20%, The Tax-Exempt Bond Fund of America 15%.
American Funds Tax-Aware Conservative Growth and Income Model Portfolio: Growth and income (50%): Capital World Growth and Income Fund 20%, CGDV — Capital Group Dividend Value ETF 15%, Washington Mutual Investors Fund 5%, American Mutual Fund 10%; Bond (50%): American High-Income Municipal Bond Fund 25%, The Tax-Exempt Bond Fund of America 15%, Limited-Term Tax- Exempt Bond Fund of America 10%.
American Funds Tax-Aware Moderate Income Model Portfolio: Growth and income (40%): Capital World Growth and Income Fund 15%, CGDV — Capital Group Dividend Value ETF 15%, American Mutual Fund 10%; Bond (60%): American High-Income Municipal Bond Fund 20%, The Tax- Exempt Bond Fund of America 20%, Limited-Term Tax-Exempt Bond Fund of America 15%, American Funds Short-Term Tax-Exempt Bond Fund 5%.
American Funds Tax-Aware Conservative Income Model Portfolio: Growth and income (20%): Capital World Growth and Income Fund 5%, CGDV — Capital Group Dividend Value ETF 5%, American Mutual Fund 10%; Bond (80%): American High-Income Municipal Bond Fund 15%, The Tax-Exempt Bond Fund of America 20%, Limited-Term Tax-Exempt Bond Fund of America 25%, American Funds Short-Term Tax-Exempt Bond Fund 20%.
American Funds Tax-Exempt Preservation Model Portfolio: Limited-Term Tax-Exempt Bond Fund of America 60%, American Funds Short-Term Tax-Exempt Bond Fund 40%.
Model portfolio index/index blends
Global Growth — MSCI ACWI.
Growth — Index Blend: 75% S&P 500 and 25% MSCI ACWI ex USA indexes.
Moderate Growth — Index Blend: 60% S&P 500, 25% MSCI ACWI ex USA and 15% Bloomberg U.S. Aggregate indexes.
Growth and Income — Index Blend: 50% S&P 500, 25% MSCI ACWI ex USA and 25% Bloomberg U.S. Aggregate indexes.
Moderate Growth and Income — Index Blend: 45% S&P 500, 35% Bloomberg U.S. Aggregate and 20% MSCI ACWI ex USA indexes.
Conservative Growth and Income — Index Blend: 35% S&P 500, 35% Bloomberg U.S. Aggregate, 15% MSCI ACWI ex USA and 15% Bloomberg U.S. Corporate High Yield 2% Issuer Capped indexes.
Conservative Income and Growth — Index Blend: 25% S&P 500, 65% Bloomberg U.S. Aggregate and 10% MSCI ACWI ex USA indexes.
Retirement Income portfolios — S&P Target Date Retirement Income index.
Conservative Income — Index Blend: 50% Bloomberg U.S. Aggregate Index, 30% Bloomberg U.S. Government/Credit (1-3 years, ex BBB) Index and 20% S&P 500 indexes.
Tax-Aware Moderate Growth — Index Blend: 60% S&P 500, 25% MSCI ACWI ex USA and 15% Bloomberg Municipal Bond indexes.
Preservation — Bloomberg 1-5 Years U.S. Government/Credit A+ Index.
Tax-Aware Growth and Income — Index Blend: 25% Bloomberg Municipal Bond, 50% S&P 500 and 25% MSCI ACWI ex USA indexes.
Tax-Aware Moderate Growth and Income — Index Blend: 45% S&P 500, 35% Bloomberg Municipal Bond and 20% MSCI ACWI ex USA indexes.
Tax-Aware Conservative Growth and Income — Index Blend: 35% Bloomberg Municipal Bond, 35% S&P 500, 15% Bloomberg High Yield Municipal and 15% MSCI ACWI ex USA indexes.
Tax-Aware Moderate Income — Index Blend: 65% Bloomberg Municipal Bond, 25% S&P 500 and 10% MSCI ACWI ex USA indexes.
Tax-Aware Conservative Income — Index Blend: 40% Bloomberg Municipal Bond, 40% Bloomberg Municipal 1–7 Years Blend and 20% S&P 500 indexes.
Tax-Exempt Preservation — Bloomberg Municipal Bond 1–7 Years Blend.
The index blends are rebalanced monthly. MSCI index results reflect dividends gross of withholding taxes through 12/31/00 and dividends net of withholding taxes thereafter. The indexes are unmanaged, and their results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes. Investors cannot invest directly in an index. There have been periods when the model portfolio has lagged the index/index blend.
S&P 500 Index is a market capitalization–weighted index based on the results of approximately 500 widely held common stocks.
The S&P Target Date Retirement Income Index, a component of the S&P Target Date Index Series, has an asset allocation and glide path that represent a market consensus across the universe of target date fund managers.
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MSCI All Country World ex USA Index is a free float–adjusted market capitalization weighted index that is designed to measure equity market results in the global developed and emerging markets, excluding the United States. The index consists of more than 40 developed and emerging market country indexes. Results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter.
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Bloomberg Municipal Bond Index is a market–value–weighted index designed to represent the long–term investment–grade tax–exempt bond market.
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Bloomberg 1-3 Year U.S. Government/Credit Index is a market-value weighted index that tracks the total return results of fixed-rate, publicly placed, dollar-denominated obligations issued by the U.S. Treasury, U.S. government agencies, quasi-federal corporations, corporate or foreign debt guaranteed by the U.S. government, and U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements, with maturities of one to three years.
Bloomberg 1–5 Year U.S. Government/Credit A+ Index is a market–value weighted index that tracks the total return results of fixed–rate, publicly placed, dollar–denominated obligations issued by the U.S. Treasury, U.S. government agencies, quasi–federal corporations, corporate or foreign debt guaranteed by the U.S. government, and U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements, with maturities of one to five years, including A–rated securities and above.
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