PCA Model Portfolio Changes

Published October 28th, 2016 in News, Updates and Announcements | No Comments »

The PCA Investment Committee regularly reviews and conducts research on the PCA Model Portfolios. In normal course, these efforts may lead to occasional changes to the asset allocation.   As such, please be advised that we will be making asset allocation changes to our Pre-Tax and Post-Tax Portfolios. No changes will be made to our Global Allocation Portfolios at this time. Changes will begin taking place Monday, October 31, 2016 for new accounts and will continue through the week of November 14th for current accounts. Importantly, changes do not indicate any deviation from the existing investment philosophy and are consistent with direction provided by Dimensional Funds and research diligence conducted by the Investment Committee over the past 2 quarters. The changes are as follows:

Pre-Tax Portfolio:

The Committee has concluded that the equity allocations in the Pre-Tax Portfolios were well represented, diversified, and in line with allocations of other firms using Dimensional Funds (DFA). Regarding our fixed income allocations in the Pre-Tax Portfolios, the Committee concluded that it would add the Investment Grade Portfolio fund in conjunction with building a core approach to the fixed income allocations similar to our approach on the equity side. Specifically, the changes to the Pre-Tax Portfolios are as follows:

Equity: None

Fixed Income:

  • Add Dimensional Investment Grade Portfolio (DFAPX)
  • Increase the allocation to Dimensional Two-Year Global Fixed Income (DFGFX) and Dimensional Five-Year Global Fixed Income (DFGBX)
  • Eliminate Short-Term Extended Quality (DFEQX) and Intermediate-Term Extended Quality (DFTEX)

Post-Tax Portfolio:

On the equity side, the Committee decided to slightly reduce exposure to small cap equity and international value and enhance alignment between the Pre-Tax and Post-Tax Portfolios. Specifically, the changes to the Post-Tax Portfolios are as follows:

Equity:

  • Reduce the number of domestic equity funds from 3 to 2
  • Add Tax Managed Equity Portfolio (DTMEX)
  • Increase the allocation to TA Core Equity 2 Portfolio (DFTCX)
  • Eliminate Tax-Managed US Small Cap (DFTSX) and Tax-Managed Marketwide Value (DTMMX)
  • Reduce the number of International Funds from 2 to 1
  • Increase the allocation to TA World ex US Core Equity Portfolio (DFTWX)
  • Eliminate Tax Managed International Value Fund (DFTMIX)

Fixed Income:

  • Adjust the fixed income allocations in order to keep the overall structure as closely aligned with the Pre-Tax model allocations per our review with analysts at Dimensional

Thank you for your cooperation and efforts in this process.