For American Pilots December 2017 Newsletter November 26, 2017

Transcription

1 For American Pilots December 2017 Newsletter November 26, 2017 The EZTracker model portfolios continue to outpace the S&P for both 2017 and more importantly, for the long-term. The market crash of 2008 happened 10 years ago after making record highs in October of The EZTracker portfolio strategy helped keep losses during the crash to a fraction of those of the market indices. See the Performance page page 5. Portfolio Update on page 2 Retirement Savings Plan for US Air Pilots: see page 6 for information on the termination of this plan. Consumer and Business Confidence Two leading indicators we like to watch are the University of Michigan s Index of Consumer Sentiment and the OECD Business Confidence Index. Attitudes are a good measure of future action. Rising indicators measure the likelihood of increased consumer spending and increased business investment. After dipping in July, Consumer Sentiment hit a 13-year high in October although the November measure is down a couple of points. Business Confidence continues its upward trend reaching its highest level since August of We ll be looking at the November number to see if we see the same downturn we saw in Consumer Sentiment Index of Consumer Sentiment The S&P 500 and the NASDAQ both hit record highs this past Friday (the Dow did it on Tuesday) as investors see a growing domestic economy, a continued strong international marketplace (which benefits mega cap blue chip stocks), and corporate profit growth helped by the anticipated tax cut. One change in our portfolios for the coming month: We are selling half of our position in Large Cap Growth and adding Small Cap Growth. This will help expand our diversification in the top performing market sector as growth stocks continue to outpace value stocks U.S. Business Confidence Index Help Hotline: We help new subscribers get started and help current subscribers get back on track or contact@eztracker401k.com Ignoring the Experts Once again, we watched the market predictions miss the expert s guesstimates in The consensus going into the year was that we would see much higher bond yields due to Federal Reserve interest rate increases; a stronger dollar against foreign currencies; higher inflation; and a consensus growth estimate for the S&P of 6.3%. All wrong. Why? Because the market and the above economic factors do not have a direct correlation either from a data standpoint or a timing standpoint. With the market making new highs, warning signals are up. Market analysts are telling us: We re due for a correction. It s been too long since we ve had even a 10% sell-off. Continued on page 4 1

2 Model Portfolio Changes Effective November 26, 2017 STEP 1: Update Your Current Portfolio Log on to Fidelity NetBenefits at Portfolios for Pilots. Make sure you have the correct newsletter. Step-by-step directions for updating your portfolio are on the next page. Current Subscribers: 1. Aggressive, Moderate and Conservative Portfolios: Exchange 50% of U.S. Large Cap Growth Stock Index for 100% of U.S. Small Cap Growth Stock Index. 2. Brokerage Portfolio: There are no changes in this portfolio for the month. New Subscribers: Rebalance your 401k using the chart below for the portfolio you want to follow. Rebalance directions on the next page. After you complete the necessary Exchange or Rebalance, copy your confirmation number. EZTracker Model Portfolios Aggressive Moderate Conservative Brokerage Buy* Penalty for early sale. US LG CAP GR STK IDX 10% 6% 4% 10/30/17 US LG CAP STK IDX 32% 26% 16% 8/28/17 US MID CAP STK IDX 15% 11% 6% 8/28/17 US SM CAP GR STK IDX 10% 6% 4% 11/27/17 INTL DEV MKTS STOCK 16% 11% 6% 8/28/17 EMERGING MARKETS STK 12% 8% 5% 6% 8/28/17 STABLE VALUE FUND 20% 59% 8/28/17 DIVERSIFIED BOND FUND 5% 12% 8/28/17 Fidelity 500 Index (FUSVX)** 19% 11/6/15 Fidelity Mid Cap Stock Fund (FMCSX) 11% 4/25/16 Fidelity International Index (FSIVX) 16% 1/3/17 Fidelity Select Technology (FSPTX) 10% 1/31/17 Fidelity Contrafund (FCNTX) 13% 7/31/17 Fidelity Latin American (FLATX) 12% 9/25/ % < 90 days Fidelity Select Financial Services (FIDSX) 13% 9/25/17 *Buy dates are the dates of the most recent purchase. Your buy and sell dates may be different keep track of your dates. **this is the Advantage share class which has a $10,000 minimum. For those with smaller accounts, FUSEX has a $2,500 minimum. Changes in your 401k take place after the close of the market. You will see your newly updated portfolio the next day. Questions? Call American Airlines 401k Service Center at Fidelity at STEP 2: Change Future Investments Aggressive, Trend, Moderate & Conservative Portfolios: This is the money coming out of your paycheck each month and going into your 401k. Your future contributions should be set identical to your Current Investments in the chart above. Brokerage Portfolio: Set Future Investments for 95% to the Brokerage Link and 5% to Emerging Markets Stk. Then continue and set 100% of the Brokerage Link contributions to Fidelity Cash Reserves (FDRXX) Our suggested approach: When adding one new position, add 50% of your cash balance in Fidelity Cash Reserves to the proceeds of the fund you are selling. When adding two or more new positions, add 100% of your cash balance in Fidelity Cash Reserves to the proceeds of the funds you are selling and split the dollar total equally in purchasing the new funds. The EZTracker Brokerage Portfolio is a very aggressive approach for investors who want to invest in a wider range of market sectors. Managing this portfolio will require more time and greater comfort with risk than the other EZTracker portfolios. We suggest this portfolio for more experienced, knowledgeable investors. See the Monthly Fund Data on page 8 for a list of funds in this portfolio. If you are interested in using Fidelity s Self-Directed Brokerage Link, follow the instructions on the Fidelity website to set up your account or call the American representative at Fidelity ( ). 2

3 Detailed Directions November 26, 2017 The following are steps for making portfolio exchanges to your Current Investments AND your Future Investments (your payroll contributions and the company contributions). The change below is for the Aggressive, Moderate and Conservative Portfolios. 1. Log on to Fidelity NetBenefits at 2. Then select Quick Links. The sixth item down is Change Investments. Click it. (Note: If you do not see Quick Links when you log in see steps A and B below before proceeding) 3. Under Current Investments, you will see A B click on Exchange ONE Investment. 4. Click the Start button in the Choose Investment to SELL box. 5. In the Select column, choose US LG CAP GR STK IDX. 6. In the Amount to Sell %, enter 50%. 7. Click Continue. 8. Click Begin in the Choose Investment to BUY box. 9. Select US SM CAP GR STK IDX. 10. Click Continue. 11. Check the exchange you are making and click Submit this Exchange. 12. Copy your confirmation number. 13. Now update your Future Investments (paycheck and company contributions). 14. Click on the button at the top of the screen. 15. Click on Quick Links. The sixth item down is Change Investments. Click it. 16. Under Future Investments, select Change Investment Elections. 17. At the bottom of the page you will see I ll manage my own. Click on Select Funds. 18. Complete the process by entering the percentages from the chart on page 2 of the portfolio you are following. 19. Complete the procedure and copy your confirmation number. 20. Log Out. Note: If you do not see Quick Links when you log in, follow steps A & B below before proceeding with step 3 A. Click on American Airlines, Inc. in the blue bar on the top left side of the screen B. On the top right side of the screen you will see Display Preferences. Click on it and select List Format Rebalance Directions: For new subscribers or current subscribers who did not make changes last month. Rebalance Directions: 1. Log on to Fidelity NetBenefits at 2. Click on the Quick Links button. The sixth item down is Change Investments. Click it. 3. Click on Exchange multiple investments. 4. Click on Start Your Rebalance 5. In the Desired % column, enter the percentages for the portfolio you want to follow on page Click Begin Rebalance 7. Choose Rebalance my account, one time. Click next. 8. Review & Submit rebalance. Click Submit. 9. Now update your Future Investments. (Pay Check and Company Contributions ) Scroll down to the blue highlighted box at the bottom of the page. Click on Contributions. 10. Scroll to the bottom of the page and in the box labeled Choose your own investments click Select Funds 11. Complete the process by entering the percentages from the chart on page 2 in the Desired % column. Click next. 12. Review & Submit. Click submit. 13. Copy your confirmation number and Log out. All transactions in your 401k take place after the close of the market. You will see your newly updated portfolio the next day. Questions? Call Fidelity and tell them what percentages you want in each fund:

4 Continued from page 1 The PE (Price/Earnings) ratio of the market is at levels that can t be sustained. The record low spread between two-year and ten-year bond yields is a danger signal. Interest rates will increase; bond yields will jump and their prices will fall. There s too much speculation in the tech sector. A corporate tax cut to 20% is already priced into the market, anything above this will lead to a steep market sell-off. A tightening Fed policy could lead to a market correction. International markets can t continue their growth rates. The EZTracker strategy is not to guess but to take what the market gives us, to make changes to our model portfolios based not on projections, but on actual changes in market performance and trends. It s why we were largely out of the market in In our mid-month update we called attention to seven factors we think could increase market volatility over the short-term. While market headwinds and market volatility may be increasing, the market has been resilient and short-term the direction remains up. However, we don t see any evidence yet of a change in direction for the market. Help a Friend: Tell your friends about how EZTracker can help them with their 401k. Send us their address and we ll send him or her a copy of this month s newsletter. When they subscribe, we ll add a month to your subscription. Help for your IRA: The EZTracker ETF newsletter is a great tool for your non-401k investments. With e commissionfree portfolios for Vanguard, Fidelity, Schwab and Ameritrade, it s a great way to manage your IRA with the EZTracker strategy. Request a free copy of the December issue. contact@eztracker401k.com or Model Portfolios All the model portfolios consist of core holdings representing major market segments plus top performers based on current market conditions. Some market conditions may cause us to deviate from the following percentages. EZTracker Aggressive Portfolio: % invested in equities. This is a high risk/high reward portfolio. EZTracker Moderate Portfolio: 70% invested in equities and 30% invested in bonds, the Credit Union, or the Stable Value Fund. EZTracker Conservative Portfolio: 40% invested in equities and 60% invested in invested in bonds, the Credit Union, or the Stable Value Fund. This is our lowest risk portfolio. EZTracker Brokerage Portfolio: % invested in equities the Brokerage Link and an expanded list of Fidelity mutual funds. This is a high risk/high reward portfolio Which Portfolio is Right for You: Selecting the right portfolio is an individual decision based on your comfort and ability to take risk. Only you can decide. Planning your retirement is more important than ever. Your portfolio choice will vary based on age, income, lifestyle, other investment assets and your tolerance for risk. We believe you can take control of your 401k and plan for the retirement you envision. For help in thinking about your ability and comfort with risk, check out the risk quiz provided by our friends at Friedenthal Financial: Risk Tolerance Quiz. 4

5 Performance Portfolio Performance through November 26, 2017 YTD Year EZTracker Aggressive 17.14% 19.13% EZTracker Moderate 12.20% 12.15% EZTracker Conservative 7.91% 7.91% EZTracker Brokerage 16.39% 17.59% Aggressive Target Risk Index 19.24% 21.66% Moderate Target Risk Index 12.97% 14.52% Conservative Target Risk Index 6.39% 6.98% 16.24% 18.04% Morningstar Benchmarks S&P 500 The EZTracker Moderate Portfolio usually 30% invested in bonds, the Money Market Fund or Stable Value Fund. The EZTracker Conservative Portfolio is usually 60% invested in bonds, the Money Market Fund or Stable Value Fund. The Morningstar Target Risk Index series serve as benchmarks to help with investment selections. They cover a global set of stocks, bonds and commodities. While not investable indices, they represent challenging benchmarks for long-term investing plans such the EZTracker model portfolios. Historical Performance Any investment strategy should be measured one way: Results over time. Not one-week, onemonth, not even one-year. While past performance is not a guarantee of future performance, our record has been excellent in delivering long-term returns. As with any long-term investing strategy, you should not expect dramatic short-term results to offset past losses. 10-Year Total Returns EZTracker Conservative 52.94% 83.66% EZTracker Moderate % EZTracker Aggressive S&P % 80.61% 50.00% % Annual % Total Returns* *Total returns including dividends. EZTracker portfolios invest in the best performing funds. Past performance does not guarantee future results. 5

6 US Airways Retirement Savings Plan Plan Termination Effective December 3, 2017 the Retirement Savings Plan for pilots will be terminated. See the Decision Guide you recently received. To get a copy of the Decision Guide, click here: RSP Decision Guide. You can roll your balance over to the 401k or an IRA and maintain the tax advantaged status of this money. You can also take a cash distribution which will involve paying taxes (and a penalty if you are younger than 59 ½). One option is to roll-over your Retirement Savings Plan to an IRA and use the EZTracker ETF newsletter to manage it. The EZTracker newsletter provides a wider selection of investment alternatives than the American 401k and has eight commission-free portfolios using Fidelity, Vanguard, Schwab and Ameritrade. For a copy of this month s issue, contact@eztracker401k.com or Below are the final EZTracker model portfolios for the Retirement Savings Plan for pilots and the 2017 YTD performance for the portfolios. Model Portfolios EZTracker Model Portfolios Aggressive Moderate Conservative Wells Fargo Stable Fund 30% 60% Spartan 500 Index (FXAIX) 32% 25% 15% Small Cap Equity 8% 5% 3% Mid Cap Stock 8% 5% 3% Emerging Markets 12% 9% 5% International Equity 15% 11% 5% Large Cap Equity Growth 25% 15% 9% Performance Current Performance through November 26, 2017 Portfolio Performance YTD 2017 EZTracker Aggressive 17.72% EZTracker Moderate 13.21% EZTracker Conservative 8.50% Morningstar Benchmarks Aggressive Target Risk 19.24% Moderate Target Risk 12.97% Conservative Target Risk 6.39% S&P % 6

7 Pilots Portfolio Monthly Fund Data The following are the funds in the American pilots 401k plan. The Tracker Average is a weighted average of performance over the past year and is a key factor in selecting funds for inclusion in the Aggressive, Trend, Moderate and Conservative model portfolios. (See the data for the Brokerage model portfolio on the next page.). AA Pilots Fund Total Returns Tracker 1 MO 3 MO 6 MO 12 MO Average Emerging Markets Stock Index 4.41% 7.08% 15.53% 37.96% 35.44% U.S. Large Cap Growth Stock 3.56% 7.99% 12.63% 32.61% 30.97% U.S. Large Cap Growth Stock Index 3.52% 9.39% 11.84% 28.30% 28.94% International Stock Fund 2.70% 6.47% 9.93% 30.13% 26.85% U.S.Small Cap Growth Stock Index 2.32% 11.74% 12.31% 19.40% 24.97% International Developed Markets Stock Index 0.92% 5.12% 7.16% 26.91% 21.88% American Pilot Target Date % 5.76% 8.23% 22.09% 20.70% American Pilot Target Date % 5.77% 8.25% 22.04% 20.70% American Pilot Target Date % 5.74% 8.23% 22.09% 20.69% American Pilot Target Date % 5.76% 8.23% 21.97% 20.64% American Pilot Target Date % 5.68% 8.15% 21.78% 20.45% U.S. Large Cap Stock Index 1.64% 6.98% 8.58% 20.20% 20.40% U.S. Mid Cap Stock Index 1.76% 9.73% 8.21% 15.44% 19.16% American Pilot Target Date % 5.30% 7.60% 20.31% 19.06% American Pilot Target Date % 4.82% 7.02% 18.81% 17.63% American Pilot Target Date % 4.50% 6.53% 17.62% 16.50% U.S. Small Cap Value Stock Index 0.51% 9.78% 8.56% 10.31% 15.90% U.S. Small/Mid Cap Stock Fund 1.26% 6.55% 6.37% 14.41% 15.59% U.S. Large Cap Value Stock Fund -0.54% 6.13% 6.39% 16.10% 15.32% American Pilot Target Date % 4.18% 6.12% 16.23% 15.31% American Pilot Target Date % 3.70% 5.37% 14.27% 13.53% U.S. Large Cap Value Stock Index -0.08% 4.92% 5.54% 12.22% 12.33% American Pilot Target Date Post-Retirement 1.23% 2.86% 4.45% 11.65% 11.02% High Yield Bond Index -0.43% 1.13% 1.83% 8.96% 6.27% Diversified Bond Fund 0.56% 0.38% 1.52% 4.29% 3.68% Inflation Protected Fund 1.23% 0.76% 1.33% 2.90% 3.39% U.S. Bond Index 0.67% 0.19% 1.44% 3.83% 3.35% Stable Value Fund 0.10% 0.36% 0.76% 1.47% 1.47% American Airlines Federal Credit Union 0.07% 0.20% 0.47% 0.88% 0.88% 7

8 Brokerage Portfolio Monthly Fund Data These Fidelity funds are used in the EZTracker Brokerage Portfolio. These make use of the brokerage link in the American Airlines 401k plan. Brokerage Portfolio Fund Fund Total Returns Tracker Ticker Restrictions 1 MO 3 MO 6 MO 12 MO Average Fidelity Select Technology FSPTX 6.77% 14.39% 21.72% 55.72% 53.78% Fidelity China Region FHKCX 1.50% < 90 days 7.08% 14.03% 25.25% 48.60% 51.80% Fidelity Pacific Basin FPBFX 1.50% < 90 days 4.12% 11.34% 18.71% 35.80% 38.18% Fidelity Japan Index FJPNX 1.50% < 90 days 5.63% 11.22% 15.34% 27.70% 32.68% Fidelity Select Defense & Aerospace FSDAX -0.77% 9.30% 18.26% 28.69% 30.27% Fidelity Contrafund FCNTX 2.70% 8.06% 13.32% 30.68% 29.87% Fidelity International Small Cap FSCOX 2% < 90 days 3.47% 7.01% 10.99% 33.27% 29.86% Fidelity Worldwide FWWFX 2.86% 8.12% 13.50% 29.70% 29.56% Fidelity Nasdaq Composite Index FNCMX 3.72% 9.25% 12.41% 28.63% 29.47% Fidelity Small Cap Growth FCPGX 1.50% < 90 days 0.61% 10.10% 15.56% 26.84% 28.97% Fidelity Latin America FLATX 1.50% < 90 days -2.87% 3.38% 20.39% 31.34% 28.50% Fidelity Total Emerging Markets FTEMX 1.50% < 90 days 2.51% 6.28% 12.21% 30.26% 27.96% Fidelity Europe FIEUX 1.98% 7.30% 7.75% 30.79% 26.08% Fidelity Select Construction & Housing FSHOX.75% < 30 days 3.12% 11.56% 8.85% 21.74% 24.70% Fidelity Select Materials FSDPX -0.42% 8.71% 13.29% 22.87% 24.25% Fidelity Select Utilities FSUTX 2.47% 2.00% 10.71% 25.96% 22.44% Fidelity Select Retailing FSRPX 5.50% 11.46% 7.01% 16.40% 22.03% Fidelity Select Financial Services FIDSX -0.87% 7.22% 14.01% 19.56% 21.78% Fidelity International Index FSIVX 0.72% 5.03% 7.29% 26.55% 21.60% Fidelity Total Market Index FSTVX 1.08% 6.96% 9.72% 19.75% 20.47% Fidelity 500 Index FUSVX 1.05% 6.41% 9.55% 20.25% 20.33% Fidelity Mid Cap Enhanced Index FMEIX 1.64% 8.73% 9.62% 15.97% 19.62% Fidelity Select Consumer Discretionary FSCPX 5.17% 8.06% 7.19% 15.12% 19.39% Fidelity Mid Cap Stock Fund FMCSX -0.13% 6.63% 8.31% 17.57% 17.67% Fidelity Mid Cap Value Fund FSMVX 1.24% 7.45% 7.91% 15.66% 17.60% Fidelity Select Air Transportation FSAIX.75% < 30 days -3.51% 5.92% 11.50% 17.73% 17.26% Fidelity Select Industrials FCYIX -0.44% 8.37% 7.79% 14.61% 16.55% Fidelity Select Transportation FSRFX.75% < 30 days -1.96% 7.17% 11.26% 13.84% 16.54% Fidelity Select Health Care FSPHX -2.36% 2.25% 8.18% 21.90% 16.35% Fidelity Large Cap Value Enhanced Index FLVEX 0.30% 6.20% 8.30% 14.17% 15.81% Fidelity Select Banking FSRBX.75% < 30 days -1.58% 7.55% 9.30% 13.24% 15.55% Fidelity Large Cap Stock FLCSX -0.40% 5.29% 7.25% 15.28% 14.96% Fidelity Small Cap Enhanced Index FCPEX -0.34% 10.26% 7.42% 9.80% 14.81% Fidelity Convertible Securities FCVSX 1.66% 4.08% 5.07% 11.47% 12.15% Fidelity Select Biotechnology FBIOX -5.04% 1.64% 9.55% 13.89% 10.93% Fidelity Real Estate Investment Portfolio FRESX 1.47% 2.97% 4.51% 11.06% 10.92% Fidelity Long- Term Treasury Bond Index FLBAX 2.54% 1.08% 4.07% 7.30% 8.18% Fidelity High Income Fund SPHIX 1.00% < 90 days -0.27% 1.90% 2.49% 10.57% 8.02% Fidelity New Markets Income FNMIX 1% < 90 days -0.63% 0.62% 2.43% 11.38% 7.53% Fidelity Global Credit FGBFX 0.55% 0.96% 2.55% 8.33% 6.76% Fidelity Select Natural Resources FNARX.75% < 30 days 2.63% 13.97% 0.79% -5.25% 6.62% Fidelity Corporate Bond FCBFX 0.52% 1.13% 2.80% 7.08% 6.29% Fidelity Select Energy FSENX 2.75% 14.71% 0.24% -7.15% 5.75% Fidelity Total Bond FTBFX 0.29% 0.47% 1.49% 4.51% 3.69% Fidelity US Bond Index FSITX 0.46% 0.32% 1.37% 3.40% 3.03% Fidelity Inflation Protected Bond Index FSIYX 0.93% 0.84% 0.97% 2.32% 2.76% Fidelity Select Consumer Staples FDFAX -0.60% -1.81% -4.29% 10.31% 1.97% Fidelity Select Pharmaceuticals FPHAX -4.59% -0.54% 0.05% 8.09% 1.65% Fidelity GNMA FGMNX 0.18% 0.17% 0.61% 1.59% 1.39% Fidelity Cash Reserves FDRXX 0.07% 0.19% 0.34% 0.48% 0.59% Fidelity Limited Term Govt FFXSX -0.11% -0.52% -0.13% 0.57% -0.10% Fidelity Select Gold FSAGX -2.03% -2.07% -2.96% 5.68% -0.75% Fidelity Select Telecommunications FSTCX -3.56% -4.56% -2.69% 1.50% -5.08% 8

9 Questions, Comments, Problems Let us know if you have any questions or suggestions. We re just a click away at contact@eztracker401k.com. Or call (609) For help or questions about rebalancing or fund-to-fund transfers call The information and data contained herein are compiled from sources and procedures believed reliable but accuracy cannot be guaranteed. EZTracker monitors fund performance and publishes a monthly newsletter. The publisher and owners disclaim any and all liability for losses that may be sustained as a result of using the data presented herein. Past performance is no assurance of future results. All investments involve risk. You should invest only after careful examination of fund prospectuses. EZTracker401k is monthly newsletter monitoring the 401k investment alternatives available to employees of American Airlines. Published by EZ Tracker LLC, P.O. Box 388, Haddon Heights, NJ Contact us at contact@eztracker401k.com.eztracker is a publishing company founded to meet the growing demand for expert, reliable, objective information about the 401k choices offered to American Airlines employees. EZTracker is not endorsed by or affiliated with American Airlines or any of its subsidiaries. The goal of EZTracker is to take the guesswork out of 401k choices and to help every employee manage his or her own 401k plan with confidence and in an informed way. EZTracker is not a financial advisor nor is it a financial manager. It is a provider of information about the various funds within the American Airlines 401k retirement plan. By reporting the performance of each fund in a straightforward and easy to understand manner, we hope every employee, from the financial neophyte to the sophisticated investor will make informed choices to best fit their retirement goals and needs. No reproduction of any EZTracker401k information is permitted without the written permission of the publishers. American Airlines is a registered trademark of AMR Corp. EZTracker is not affiliated with or endorsed by American Airlines, Fidelity Investments or any of its subsidiaries. Copyright EZTracker LLC,