The TEA Model is a proprietary quantitative model that seeks to enhance the Portfolio’s performance by shifting emphasis among equity styles to take advantage of market opportunities. Shifts are made only when there is a confirmation of a change in both the market-based indicators and fundamentals. The last shift occurred during the first quarter of 2010, when the Model’s emphasis changed from international to domestic stocks.
Of the three shifts that the team can make within the TEA Model, the large/small and domestic/international shifts are implemented using futures, while the growth/value shift re-allocates among the underlying funds. The charts below provide information on the previous and current actual asset-class allocations of the underlying mutual funds, which include the growth/value shift. Additionally, the target futures weights for the large/small and domestic/international shifts are listed along with the charts.
Asset Allocation Shift for Underlying Mutual Funds
About the Wells Fargo Advantage WealthBuilder Portfolios
As part of our long history of pioneering asset allocation strategies, the Wells Fargo Advantage WealthBuilder Portfolios were first introduced in 1997. The WealthBuilder Portfolios use a fund-of-funds approach composed of both proprietary and nonproprietary mutual funds and offer investors a range of portfolios to match their risk profile. The portfolio managers apply the disciplines of Tactical Asset Allocation and Tactical Equity Allocation modeling to help manage risk and to capitalize on rotating market cycles.
Balanced funds may invest in stocks and bonds. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. In general, when interest rates rise, bond values fall and investors may lose principal value. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The WealthBuilder Portfolios are exposed to one or more of the following risks: alternative investment risk, foreign investment risk, high-yield securities risk, mortgage- and asset backed securities risk, and small company investment risk. Consult the Fund's prospectus for additional information on these and other risks.
Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.