CWM Model Portfolios

I recently reviewed all of CWM's model portfolios. I started by looking at all of the asset class I thought might be appropriate for our portfolios. I considered 30 distinct asset classes:

ultra short bond fund
short term gov bond
short term bond
inter term gov bond
inter term bond
multi sector bond
world bond
emerging markets bond
inflat protected bond - short
inflat protected bond
intl inflat protected bond
large cap growth
large cap value
large cap blend
small cap growth
small cap value
small cap blend
micro cap
foreign large growth
foreign large value
foreign large blend
foreign small cap growth
foreign small cap value
foreign small cap blend
emerging markets large
emerging market small-mid
frontier markets
REIT - US
REIT - Foreign
commodities
Cash

I then searched for the no load mutual funds and exchange traded funds that are currently available for each of these asset classes. One asset class had no options. Other asset classes had several to choose from. I select 2-3 funds for each asset class and added them to my preferred list. My selections were based on the size of the fund, the cost of the fund, and the composition of the fund.

Next I reviewed the broad weighting of each of CWM model portfolios. I tweaked the level of stocks, bonds, and cash in each model. I broke down the amount of domestic and international exposure for both equities and fixed income.

Finally, I allocated specific weightings to each of the funds I placed in each of the asset classes. I ended up with 18-25 funds in each model portfolio.

I then used Morningstar's data to determine the expected return and risk associated with each portfolio. I also established a benchmark for each of the seven portfolios.

In comparison to the prior version of the CWM models, the revised versions are
• more tilted to international in both equities and fixed income
• include no long term or intermediate term bond funds
• include asset classes for which there were not fund options a few years ago
• no longer contain high yield bonds
• no longer contain preferred stocks

I believe these portfolios are well positioned for the future. When interest rates rise, the impact on these portfolios will be muted. As emerging markets develop, these portfolios will benefit.