After the close on Monday, November 3rd, seasonal FSM models had their quarterly evaluations.
After the close on Monday, November 3rd, seasonal FSM models had their quarterly evaluations with trades coming out Tuesday morning. As a quick refresher, FSM seasonal models are evaluated at the beginning of February, May, August, and November with each evaluation taking place 91 days after the previous evaluation date (except for February which is the starting point of each annual cycle). To make sure the evaluations are not missed be sure to set an alert on the model(s) utilized by selecting the “Bell Icon” on the Models page. Users will receive an email any time there is a trade or a rebalance for that model(s). Below are notable changes to select seasonal FSM models.
FSM CoreSolution All Cap World 2S PR4050 Model (FSMCORESOL2-ACW-2S-PR4050) – This quarter, the FSM CoreSolution All Cap World Model sold the iShares MSCI USA Momentum Factor ETF (MTUM) and bought the Invesco QQQ Trust (QQQ), the highest scoring fund within the model universe. While the iShares MSCI Emerging Markets ETF (EEM) currently scores second within the model universe, FSM models utilize a score threshold for new holdings in which the new potential holding must outscore the current holding it is replacing by at least a tenth (1/10th) of a point in fund score. The rule is in place to not cause potential whipsaw trades as well as in an effort to not end a long-term trend that continues. Current model holding, the iShares Morningstar Growth ETF (ILCG), maintains a fund score of 5.59 as of Monday’s (11/3) evaluation and resides within a tenth of a point of EEM (5.63), allowing ICLG to maintain as a current holding. With the change, the model will rebalance QQQ and ICLG to equally weighted at 50%. Note that the changes and explanation also apply to the FSM CoreSolution All Cap World 2M PR4050 Model (FSMCORESOL5-ACW-2M-PR4050).
FSM T Rowe Price 5S PR4050 Model (FSMWFTROWEPRICE5SPR4050) – This quarter the T Rowe Price Model saw a shift away from U.S. equities and into international. The three funds being removed are the T Rowe Price International Value Equity Fund (TRIGX), Equity Index 500 (PREIX), and Financial Services (PRISX) funds, and their replacements are the T Rowe Price Science & Tech (PRSCX), New Asia (PRASX), and Global Stock (PRGSX) funds. The model also utilizes a score threshold for new holdings in which the new potential holding must outscore the current holding it is replacing by at least a tenth (1/10th) of a point in fund score. While the T Rowe Price Growth Stock Fund (PRGFX) currently ranks fifth as of the quarterly evaluation at 5.66, the fund scores less than a tenth of a point from the current holding, the T Rowe Price Blue Chip Growth Fund (TRBCX) (5.65), warranting TRBCX's continued inclusion in the model along with the T Rowe Price Global Technology Fund (PRGTX). Note that the changes and explanation also apply to the FSM T Rowe Price 5S MMPR50 Model (FSMWFTROWEPRICE5SMM50), and both models are now overweight international equities.
FSM American Funds 5S Model (FSMAMERFUNDS5S) – This quarter, the FSM American Funds 5S Model sold the American Funds Washington Mutual Fund (AWSHX) and bought the American Funds EuroPacific Growth Fund (AEPGX), the highest scoring fund within the model universe now already owned. The change increases the model’s exposure to international equities and still overweight U.S. equities with the other holdings being the American Funds New Economy Fund (ANEFX), Fundamental Investor (ANCFX), Investment Co. of America (AIVSX), and Growth Fund of America (AGTHX). With the change, the model will rebalance the five holdings to equally weighted at 20%. Note that the changes and explanation also apply to the FSM American Funds 5S PR4050 (FSMAMERFUNDS5SPR4050), FSM American Funds 5S MMPR70 (FSMAMERFUNDS5SMM70), and FSM American Funds 5S MMPR50 (FSMAMERFUNDS5SMM50) models.
