Back to top
more

Zacks In The News

WHILE INVESTORS SEEK DIRECTION, MODEL PORTFOLIOS SERVE AS A GUIDING LIGHT

Chicago, IL-February 13, 2006 – As investors still try to decipher mixed signals on the direction of stocks and the economy, many of the top retail brokerages’ model portfolios continue to post returns exceeding those of the stock market.
The latest results of the Zacks Broker Model Portfolio Survey show that, once again, brokerage model portfolios are creating alpha for investors. “Clearly the ability to achieve a return in excess of what could be achieved by simply following a market index, such as the S&P 500, is demonstrated in the latest model portfolio results”, says Charles Rotblut, CFA, Senior Market Analyst at zacks.com, the online unit of Zacks Investment Research. “Especially noteworthy with these results is the ability of certain brokers to generate strong returns in the second half of last year, despite the relative underperformance of large-cap stocks to mid- and small-cap stocks.”

Taking top honors in the 4Q of 2005 is Citigroup, followed by Morgan Stanley and Goldman Sachs. Merrill Lynch and Morgan Stanley placed 4th and 5th respectively in the second half. Citigroup also placed first in the 3-year performance category with an 87.12% return, Goldman Sachs was second with 86.72%. Charles Schwab was third with 83.12% In the 3-year category all brokerages surveyed posted double digit returns.

Morgan Keegan placed first for the second half of 2005 with an 11.72% return. Goldman Sachs was second with a return of 11.61% followed by Charles Schwab with 9.87%. In the 1-year performance category, Morgan Stanley took the top spot with a 16.59% return. Charles Schwab ranked first in 5-year performance with a 58.69% return, while Merrill Lynch topped the list in the 7-year category with 60.71%.

“Another important lesson underscored by the survey results,” says Rotblut, “is that it is very possible to make money with a diversified portfolio. Managing risk is a key component of any investment strategy and plays a big role in achieving positive long-term returns.”
 
Zacks complete 4Q, year-to-date, three, five and seven year rankings are available to the media upon request. Zacks calculates the performance of the brokerage “model portfolios” it tracks, on an equal-weighted basis. Total return performance figures include stock price changes, dividends and hypothetical trading commissions of 1% for each addition and deletion to the model portfolios.  

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor\'s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. 

Zacks Investment Research, Inc., developed the concept of the EPS Surprise and created the first quantitative model to predict stock prices based on patterns, estimate revisions and surprises, called the Zacks Rank. You are receiving this news either because you asked to be included in our media database or your email address was provided to a media database provider. If you do not wish to receive news from Zacks, please reply to truffolo@zacks.com with REMOVE in the subject line. Zacks Investment Research, 155 N. Wacker Drive, Chicago, IL 60606.