Fund Information: SAM News Q1 2013
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SAM News Q1 2013
- Flexible Income
- Conservative Balanced
- Balanced
- Conservative Growth
- Strategic Growth
The Edge Asset Management Asset Allocation Team actively manages each Principal Strategic Asset Management (SAM) Portfolio by employing a rigorous investment discipline. We examine dozens of domestic and global economic forces to develop risk-adjusted investment strategies. Leveraging these strategies, we determine the continual reallocation of the Portfolios so that you can react to and benefit from evolving investment conditions. The following presents our outlook for the economy and financial markets and recounts the strategies we implemented this quarter.
2013 Opens with Improving Economic Conditions
A positive yet cautious outlook supports first quarter strength in financial markets
The year opened with a strengthening of the economic recovery as early results for the first quarter showed improvements across employment, housing, and consumer confidence. The economy added 236,000 jobs in February — much stronger than in January, as the unemployment rate fell to 7.7 percent, its lowest level in four years.1 However, we are careful to maintain some caution, as this improvement could be offset by some of the effects of forced spending cuts by government agencies given stalled budget negotiations — otherwise known as the "Sequester." The housing market also moved higher, with existing home sales ticking up in January to a level that is 9 percent higher than the same time last year, and median prices increasing 12 percent over the same period.2
Improving economic and market fundamentals pushed equity markets to all-time highs in the first quarter, yet we continue to be cautious in our outlook since there are still headwinds that could hold back economic growth both in the U.S. and overseas. Because of this, we continue to favor wide diversification levels to help shield against potential movements in any one area of the investment markets.
Source: U.S. Bureau of Labor Statistics.
Strategic Asset Management Positioning
The SAM Portfolios have benefited from the equity markets advance in early 2013, as they have maintained an overweighting to equities across the board. The widely quoted Dow Jones Industrial Average, a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq, broke through its previous 2007 high in early March, and investors have been rewarded across small-, mid-, and large-sized companies as well as in both foreign and domestic stocks. The Federal Reserve remains very supportive with historically low short-term interest rates, yet there is debate about how long they can keep rates this low. Equity diversification looks to be a very prudent strategy in this cautiously optimistic environment, as positions in asset classes such as real estate or emerging markets can behave differently than traditional equity markets.
Within fixed-income securities, long-term interest rates have begun to inch higher and the SAM Portfolios have continued to benefit from an overweighting to higher-yielding bonds and corporate-backed issues, which have outpaced Treasuries. Portfolio management continues to look for opportunities to add to positions that could perform better in a flat to slightly rising interest rate environment.
- The SAM Portfolios continue to have a bias favoring equities and will continue to be managed opportunistically, as management will look to add to these positions when attractive, while working to control and manage overall risk levels.
- Within fixed income, there is a larger allocation to corporate-backed debt, as both high-yield and higher-rated investment-grade bonds provide a potential yield advantage and better characteristics in the current environment, especially if longer-term rates continue to edge higher.
For additional information including allocation changes and performance, click on your Portfolio to the right.
This commentary represents the opinions of the Edge Asset Management Asset Allocation Team. It should not be considered as investment advice. No forecast based on the opinions expressed can be guaranteed, and they may be subject to change without notice.
1 U.S. Department of Labor, March 9, 2013.
2 National Association of Realtors, February 21, 2013.
Flexible Income Portfolio Q1 2013
The key to financial planning is understanding that risk is inevitable but not unmanageable. And that strategies such as asset allocation and diversification can be used to manage risk. They give you the potential to benefit from the amount of risk you're comfortable taking.
Performance | Month-End | Quarter-End
As a fund-of-fund investment - a mutual fund that invests in other mutual funds - each SAM Portfolio is highly diversified across more than 1,000 individual securities representing multiple asset classes, to fit your individual goals and risk tolerance.
Portfolio Composition
May not reflect current allocations.
The SAM Portfolios have among the longest track records in the industry. They allow you to take advantage of a long-term investing perspective while avoiding the perils of market timing.
A Share performance is shown below, for more information on other share classes, visit: A Shares | C Shares | J Shares
Year by Year Performance
The Growth of $10,000 Over Ten Years
Glossary of Technical Terms
Average Market Cap - The overall "size" of a stock investment option's portfolio. It is the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Price/Book (P/B) Ratio - The weighted average of the price/book ratios of all the stocks in an investment option's portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company's per share book value. Stocks with negative book values are excluded from this calculation.
Price/Cash Flow (P/CF) Ratio - This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings (P/E) Ratio - The weighted average of the price/earnings ratios of the stocks in an investment option's portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months' earnings per share.
Turnover Ratio - This is a measure of the portfolio manager's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Portfolio turnover does not reflect turnover of the underlying funds. Weighted average portfolio turnover reflects the weighted turnover of the underlying funds and the SAM Portfolio.
Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
Conservative Balanced Portfolio Q1 2013
The key to financial planning is understanding that risk is inevitable but not unmanageable. And that strategies such as asset allocation and diversification can be used to manage risk. They give you the potential to benefit from the amount of risk you're comfortable taking.
Performance | Month-End | Quarter-End
As a fund-of-fund investment - a mutual fund that invests in other mutual funds - each SAM Portfolio is highly diversified across more than 1,000 individual securities representing multiple asset classes, to fit your individual goals and risk tolerance.
Portfolio Composition
May not reflect current allocations.
The SAM Portfolios have among the longest track records in the industry. They allow you to take advantage of a long-term investing perspective while avoiding the perils of market timing.
A Share performance is shown below, for more information on other share classes, visit: A Shares | C Shares | J Shares
Year by Year Performance
The Growth of $10,000 Over Ten Years
Glossary of Technical Terms
Average Market Cap - The overall "size" of a stock investment option's portfolio. It is the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Price/Book (P/B) Ratio - The weighted average of the price/book ratios of all the stocks in an investment option's portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company's per share book value. Stocks with negative book values are excluded from this calculation.
Price/Cash Flow (P/CF) Ratio - This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings (P/E) Ratio - The weighted average of the price/earnings ratios of the stocks in an investment option's portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months' earnings per share.
Turnover Ratio - This is a measure of the portfolio manager's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Portfolio turnover does not reflect turnover of the underlying funds. Weighted average portfolio turnover reflects the weighted turnover of the underlying funds and the SAM Portfolio.
Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
Balanced Portfolio Q1 2013
The key to financial planning is understanding that risk is inevitable but not unmanageable. And that strategies such as asset allocation and diversification can be used to manage risk. They give you the potential to benefit from the amount of risk you're comfortable taking.
Performance | Month-End | Quarter-End
As a fund-of-fund investment - a mutual fund that invests in other mutual funds - each SAM Portfolio is highly diversified across more than 1,000 individual securities representing multiple asset classes, to fit your individual goals and risk tolerance.
Portfolio Composition
May not reflect current allocations.
The SAM Portfolios have among the longest track records in the industry. They allow you to take advantage of a long-term investing perspective while avoiding the perils of market timing.
A Share performance is shown below, for more information on other share classes, visit: A Shares | C Shares | J Shares
Year by Year Performance
The Growth of $10,000 Over Ten Years
Glossary of Technical Terms
Average Market Cap - The overall "size" of a stock investment option's portfolio. It is the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Price/Book (P/B) Ratio - The weighted average of the price/book ratios of all the stocks in an investment option's portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company's per share book value. Stocks with negative book values are excluded from this calculation.
Price/Cash Flow (P/CF) Ratio - This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings (P/E) Ratio - The weighted average of the price/earnings ratios of the stocks in an investment option's portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months' earnings per share.
Turnover Ratio - This is a measure of the portfolio manager's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Portfolio turnover does not reflect turnover of the underlying funds. Weighted average portfolio turnover reflects the weighted turnover of the underlying funds and the SAM Portfolio.
Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
Conservative Growth Portfolio Q1 2013
The key to financial planning is understanding that risk is inevitable but not unmanageable. And that strategies such as asset allocation and diversification can be used to manage risk. They give you the potential to benefit from the amount of risk you're comfortable taking.
Performance | Month-End | Quarter-End
As a fund-of-fund investment - a mutual fund that invests in other mutual funds - each SAM Portfolio is highly diversified across more than 1,000 individual securities representing multiple asset classes, to fit your individual goals and risk tolerance.
Portfolio Composition
May not reflect current allocations.
The SAM Portfolios have among the longest track records in the industry. They allow you to take advantage of a long-term investing perspective while avoiding the perils of market timing.
A Share performance is shown below, for more information on other share classes, visit: A Shares | C Shares | J Shares
Year by Year Performance
The Growth of $10,000 Over Ten Years
Glossary of Technical Terms
Average Market Cap - The overall "size" of a stock investment option's portfolio. It is the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Price/Book (P/B) Ratio - The weighted average of the price/book ratios of all the stocks in an investment option's portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company's per share book value. Stocks with negative book values are excluded from this calculation.
Price/Cash Flow (P/CF) Ratio - This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings (P/E) Ratio - The weighted average of the price/earnings ratios of the stocks in an investment option's portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months' earnings per share.
Turnover Ratio - This is a measure of the portfolio manager's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Portfolio turnover does not reflect turnover of the underlying funds. Weighted average portfolio turnover reflects the weighted turnover of the underlying funds and the SAM Portfolio.
Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
Strategic Growth Portfolio Q1 2013
The key to financial planning is understanding that risk is inevitable but not unmanageable. And that strategies such as asset allocation and diversification can be used to manage risk. They give you the potential to benefit from the amount of risk you're comfortable taking.
Performance | Month-End | Quarter-End
As a fund-of-fund investment - a mutual fund that invests in other mutual funds - each SAM Portfolio is highly diversified across more than 1,000 individual securities representing multiple asset classes, to fit your individual goals and risk tolerance.
Portfolio Composition
May not reflect current allocations.
The SAM Portfolios have among the longest track records in the industry. They allow you to take advantage of a long-term investing perspective while avoiding the perils of market timing.
A Share performance is shown below, for more information on other share classes, visit: A Shares | C Shares | J Shares
Year by Year Performance
The Growth of $10,000 Over Ten Years
Glossary of Technical Terms
Average Market Cap - The overall "size" of a stock investment option's portfolio. It is the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Price/Book (P/B) Ratio - The weighted average of the price/book ratios of all the stocks in an investment option's portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company's per share book value. Stocks with negative book values are excluded from this calculation.
Price/Cash Flow (P/CF) Ratio - This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings (P/E) Ratio - The weighted average of the price/earnings ratios of the stocks in an investment option's portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months' earnings per share.
Turnover Ratio - This is a measure of the portfolio manager's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Portfolio turnover does not reflect turnover of the underlying funds. Weighted average portfolio turnover reflects the weighted turnover of the underlying funds and the SAM Portfolio.
Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
Asset allocation/diversification does not guarantee a profit or protect against a loss.
Past performance is no guarantee of future results.
Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise. Lower-rated securities are subject to additional credit and default risks. International investing involves increased risks due to currency fluctuations, political or social instability, and differences in accounting standards. REIT securities are subject to risk factors associated with the real estate industry and tax factors of REIT registration.
International investing involves increased risks due to currency fluctuations, political or social instability, and differences in accounting standards. These risks are magnified in emerging markets.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
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