The movement in the finacial markets was a little more for some of our ETFs with Bonds and Real Estate leading the way. iShares Barclays 20+ Year Treasury Bond (TLT) gained 4.6%, iShares Dow Jones US Real Estate (IYR) added 2.6%, SPDR Dow Jones Global Real Estate (RWO) returned 2.4%, PowerShares Emerging Markets Debt (PCY) was up 2.1%, and iShares Barclays TIPS Bond (TIP) increased by 2.0%. The only significant positive move for equity ETFs was iShares FTSE China 25 Index Fund (FXI), earning 3.4% in April.

Commodities had a difficult month, which is reflected by our ETFs more than our Mutual Funds. While iShares Silver Trust  (SLV) took the worst hit in this category, with a drop of 3.8%, PowerShares DB Agriculture (DBA) also had a difficult time with a fall of 2.9%. The most significant loss came from the Emerging Markets as iShares MSCI Brazil Index (EWZ) fell 6.5%, while surprisingly, the next in line were a couple of old world economies as iShares MSCI Japan Index (EWJ) lost 3.2%, and iShares MSCI Germany Index (EWG) gave back 3.1%. Several sector ETFs had a tough time in April as well, with iShares S&P Global Timber & Forestry Index (WOOD) dropping 2.8%, iShares Dow Jones US Technology (IYW) losing 2.6%, and Financial Select Sector SPDR (XLF) falling 2.4%.

Once again, we reiterate that it is time to rebalance your portfolio to its target asset allocation at the beginning of this month. After significant gains over the past 7 months, stocks are running out of steam, so this is a good time for you to take some profits.

Our May 2012 Mutual Fund Portfolios, ETF Investment Portfolios, and Best Fidelity Funds have been updated through April 2012. The Mutual Funds in our Mutual Fund Portfolios are chosen from our Best Mutual Funds. The ETF’s in our ETF Investment Portfolios are chosen from our List of 100 Best Exchange Traded Funds. The investment performance history of our mutual fund portfolios and ETF investment portfolios are tracked on our investment portfolio performance page.

At the beginning of this month our Active Asset Allocation strategy signaled that it was time to rebalance your portfolio to its target asset allocation. After a Fall and Winter that brought stock investors returns in excess of 25%, it is time to take some profits with the expectation that stocks are not likely to do much between now and the US elections.

We have made significantly more additions than subtractions to our mutual fund list this quarter, mostly in an effort to provide additional choices in some asset classes that had limited availability of good funds. One reason for this is that Wells Fargo Advantage Growth (SGROX) and Wasatch Emerging Markets Small Cap (WAEMX) have both closed to new investors, which is too bad because they have been excellent performers.

PIMCO Emerging Markets Bond (PEMDX) and Westcore Micro Cap Opportunity (WTMIX) have both been moved up to our model portfolios from our List of Best Mutual Funds, while Yacktman Focused (YAFFX) has replaced the Yactman Fund (YACKX) because it has recently become available for no transaction fee at Fidelity. On the other hand, Dreyfus International Bond (DIBRX) has been replaced by PIMCO Foreign Bond (Unhedged) (PFBDX) because it is no longer available to retail investors without additional fees.

Bond Fund additions to our Best Mutual Funds List this quarter include American Century Short Duration (ACSNX), Harbor High Yield Bond (HYFIX), American Century High Yield (ABHIX), and PIMCO Senior Floating Rate (PSRDX).

On the stock side of the house, we had added Dreyfus Appreciation (DGAGX), ASTON/Montag & Caldwell Growth (MCGFX), Aston/Montag & Caldwell Mid Cap Growth (AMCMX), FMI Focus (FMIOX) , Artisan Small Cap Investor (ARTSX), Adirondack Small Cap (ADKSX). We now also include Oakmark International (OAKIX), Wasatch International Growth (WAIGX), and Harding Loevner Emerging Markets (HLEMX) on our List of Best Mutual Funds.

To round out the changes to our List of Best Mutual Funds, Pyxis Long/Short Equity (HEOZX) and Guggenheim L/S Commodities Strategy (RYLFX) are new names Highland Long/short Equity and Rydex L/S Commodities Strategy.

Asset Allocation April 2012

International Small Cap funds did even better, as Westcore International Small Cap (WTIFX) and Harding Loevner Internatioanl Small Company (HLMSX) both picked up 16.4%. In the Alternative space, Cohen & Steers Realty Shares (CSRSX) was up 10.4%, Guggenheim Long Short Commodities Strategy (RYLFX) gained 9.5% and Marketfield Fund (MFLDX) added 6.8%.

While it was an excellent quarter for all stock ETFs, there were a few sectors that outperformed the rest. Leading the way was SPDR S&P Homebuilders (XHB) which gained 25.1%, followed by iShares Dow Jones US Technology (IYW) with a gain of 21.9%, followed by PowerShares Nasdaq 100 (QQQ) and SPDR S&P Biotech (XBI) both returning 21.2%. A couple of the other strong performers this quarter were iShares Russell Microcap Index (IWC) which was up 15.4% and iShares Russell Midcap Growth Index (IWP) which returned 14.4%.

Internationally, the rebound in stock markets was felt most by SPDR S&P Emerging Markets Small Cap (EWX) which added 21.7% while the biggest beneficiary of the Greek bail out was iShares MSCI Germany Index (EWG) which picked up 21.1%.   The recovery in financial markets in Europe helped international bonds as well with SPDR Barclays Capital International Corporate Bonds (IBND) up 7.8% and SPDR DB International Government Inflation-Protected Bond (WIP) gaining 6.5%.

On the downside in the first quarter of 2012 was iShares Barclays 20+ Year Treasury Bond (TLT) which fell -7.0% and WisdomTree Managed Futures (WDTI) which lost -4.4%.

Our April 2012 Mutual Fund Portfolios, ETF Investment Portfolios, and Best Fidelity Funds have been updated through March 2012. The Mutual Funds in our Mutual Fund Portfolios are chosen from our Best Mutual Funds. The ETF’s in our ETF Investment Portfolios are chosen from our List of 100 Best Exchange Traded Funds. The investment performance history of our mutual fund portfolios and ETF investment portfolios are tracked on our investment portfolio performance page.

It was a tough quarter for Long Term Bonds which fell 5.8% thanks in part to an improvement in the European liquidity crisis. What was bad for Bonds was good for International Stocks which picked up 11.3%, with Emerging Markets up 14.4% for the quarter. REITs picked up 5.1% in March to help them to a 10.7% return for the first quarter of 2012.

A strong stock market was good for Emerging Markets Bonds and High Yield Bonds. Fidelity New Markets Income (FNMIX), gained 3.7%, Payden Emerging Markets Bond (PYEMX) earned 2.9% and Artio Global High Income (BJBHX) added 2.2% in February. In that same ball park were a couple of our Long/Short funds as Marketfield Fund (MFLDX) and Pyxis Long/Short Equity (HEOZX) both gained 2.8%. Thanks to the retreat from safety in the financial markets, most government bond funds lost ground, but it was less than one percent.

There was not a lot of difference on the ETF side of the house, with iShares MSCI Sweden Index (EWD) adding 9.5%, and iShares MSCI Chile Index (ECH) and Market Vectors Russia (RSX) each gaining 9.1% in February. Domestically, Technology led the way with PowerShares Nasdaq 100 (QQQ) up 6.4% and iShares S&P MidCap 400 Growth Index (IJK) adding 5.0% for the month.

Bond ETFs did not have it quite so easy, but PowerShares Emerging Markets Sovereign Debt (PCY) gained 2.9%, SPDR Barclays Capital International Corporate Bond (IBND) added 2.6%, and SPDR Barclays Capital High Yield Bond (JNK) returned 2.1%. On the other hand, iShares Barclays 20+ Year Treasury Bond (TLT) took a 2.6% hit as investors bailed out of the safety net provided by US Treasury Long Bonds.

Rising Oil prices helped PowerShares DB Energy (DBE) lead our sector ETFs with a gain of 8.6% in February. Given the drop in REITs, it was somewhat surprising that next in line was SPDR S&P Homebuilders (XHB) which added 7.8% for the month. Technology Select SPDR (XLK) also had a good month, with a return of 7.1%. On the other hand, with investors no longer seeking safe havens, SPDR Gold Shares (GLD) fell 3.0% for the month.

Our March 2012 Mutual Fund Portfolios, ETF Investment Portfolios, and Best Fidelity Funds have been updated through February 2012. The Mutual Funds in our Mutual Fund Portfolios are chosen from our Best Mutual Funds. The ETF’s in our ETF Investment Portfolios are chosen from our List of 100 Best Exchange Traded Funds. The investment performance history of our mutual fund portfolios and ETF investment portfolios are tracked on our investment portfolio performance page.