Brighton Bulletin

Issue: # 33

June 2011

Happy Summer!

Welcome to the June 2011 issue of the Brighton Bulletin

May proved to be a struggle for investors as most broad indexes were down for the month. Within equities, healthcare, utilities and telecom performed well. We've noted for the past couple of months these sectors have been in vanguard of companies increasing dividends, which we take as a positive signal. On the fixed income side, longer term U.S. bonds performed well, suggesting, this month at least, investors are not concerned about interest rates increasing. Our portfolios held up well on a benchmark relative basis, but we were down slightly on an absolute basis for clients with more than 20% equity exposure.

As could be expected, our fixed income holdings did well for the month lead by our preferred stock and emerging markets fixed income funds while our equity holdings struggled lead by our emerging markets and commodities holdings. Equity sector exposure continues to favor energy, industrials and consumer defensive holdings. Scarce infrastructure resources remain in demand in ermerging markets and Japan (as it begins rebuilding after the earthquake), while developed markets continue to sluggishly push forward. On the fixed side, our fund managers are emphasizing credit quality and short to intermediate duration (65% of the holdings had remaining maturities under 10 years). We remain sanguine regarding the growth prospects in the U.S. and other developed markets and believe we have portfolios positioned accordingly.

Sincerely,

John P. Middleton, CFA, CAIA

Brighton Financial Planning

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S&P Persistence Scorecard

Twice a year, Standard and Poor's releases the "S&P Persistence Scorecard", which evaluates the ability of mutual funds managers to consistently outperform their peers. The evidence suggests most don't have the ability to consistently out-perform their peers. Note the report does not differentiate between passive (indexed) and active funds.

The results are informative as they highlight the flaws of relying solely on past performance when deciding in which fund to invest. While we do include past performance in our evaluation of funds, we do consider several criteria before making a final decision. We will evaluate the fund management - background, industry and fund specific experience and tenure; philosophy and process - to the extent information is available in prospectus', websites, etc - is the process consistent with the philosophy and does it make sense to us; fees - we favor funds with fees below the peer group median, though we do deviate occasionally. Finally, we evaluate the specific fund's fit within our overall portfolio. Does it provide for the possibility of better return or reduced volatility? Bottom line for us is we favor funds with lower fees, longer manager tenure, sound philosophy and process, good long-term absolute and benchmark and peer relative performance and which fit well with our existing holdings.

family header

Failing to change a plan beneficiary the right way can be costly to your heirs.

A 401(k) plan provided that if a participant died, the account would go to the spouse unless the spouse agreed to waive his or her rights as a beneficiary. A plan member designated his three adult children as beneficiaries after his first wife passed away. He eventually remarried, but died six weeks later. Both his kids and his new spouse claimed the balance left in his 401(k) plan, and a district court awarded it to his wife because a spousal waiver was never executed.

Home prices: 'Double-dip' confirmed

Home prices hit another new low in the first quarter, down 5.1% from a year ago to levels not reached since 2002. It was the third straight quarterly drop for the S&P/Case-Shiller national home price index, which was released Tuesday. Prices are now down 32.7% from their peak set five years ago.

"Home prices continue on their downward spiral with no relief in sight," said David Blitzer, spokesman for Standard and Poor's. The index covers 80% of the housing market, and this month's report confirmed "a double-dip in home prices across much of the nation," said Blitzer. The housing market went through a brief recovery period starting in mid-2009, recovering nearly 5% of earlier losses. After homebuyer tax credits expired last April, the slump resumed.

A separate S&P/Case-Shiller index covering 20 major cities also dropped during March, the index's eighth straight monthly decline. Of the 20 cities, only Washington has posted a home-price gain: 4.3% over the past 12 months. Minneapolis homes lost the most value over that period, with prices falling 10%.

Other big losers include Phoenix (- 8.4%), Chicago (- 7.6%) and Portland, Ore. (- 7.6%)

Prices continue to be hammered by foreclosures with high numbers of repossessed homes flooding the market. Many repossessed properties are in poor condition and sell at a big discount to conventionally sold homes, driving down overall values. Falling home prices have a devastating impact on new home construction, according to Pat Newport, a housing market analyst for IHS Global Insight.

"They are a key reason why builders aren't building new homes, even in the fastest growing states, like Texas," he said. "Existing homes are selling for so much less, the builders can't compete." Normally, new-home construction is an important contributor to the economic recovery. Not so this time, according to Mike Larson, an analyst with Weiss Research. "Housing has been an albatross for the economy as opposed to an engine powering it," he said.

If residential development had come back as it has in the past, the current recovery would be much stronger. There's be much more robust hiring of construction workers, building materials manufacturers and drivers and deliverymen to bring the products to site. Newport pointed out that when developers build a new home for $300,000 it adds $300,000 to the economy, as measured by GDP. An existing-home sale just adds 5% or 6% in broker's commission.

"As a component of the GDP," said Larson, "housing has been out to lunch."

Les Christie, On Tuesday May 31, 2011

Long Term Care

What is long-term care?

In general, long-term care refers to a broad range of medical and personal services designed to assist individuals who have lost their ability to function independently. The need for this ongoing care arises when you have a chronic disability or when physical/mental impairments prevent you from performing certain basic activities, such as feeding, bathing, dressing, transferring, and toileting.

What are the three levels of long-term care?

Because some long-term care insurance policies will subsidize only certain forms of long-term care, it is important to understand the accepted terminology. Long-term care may be divided into three levels:

Skilled care--continuous "around-the-clock" care designed to treat a medical condition. This care is ordered by a physician and performed by skilled medical personnel, such as registered nurses or professional therapists. A treatment plan is established.
Intermediate care--intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse's aides under the supervision of a physician.
Custodial care--care designed to assist one perform the activities of daily living (such as bathing, eating, and dressing). It can be provided by someone without professional medical skills but is supervised by a physician.

Tip: Note that the above terms may be defined differently by Medicare. For more information, see Medicare.

Where is long-term care provided?

Although long-term care can be provided in a number of places, long-term care insurance policies sometimes limit the facilities where you can choose to receive long-term care. Most long-term care is provided in the following venues:

Nursing homes

Although some homes for the aged provide custodial care primarily, many nursing homes can provide skilled care, intermediate care, and custodial care. When a patient no longer needs skilled care, for instance, he or she can be transferred to an intermediate or custodial section within the same facility. Nursing homes provide 24-hour care and can usually offer a great range of care, including intravenous therapy and physical therapy. For information about evaluating nursing homes, see Choosing a Nursing Home.

Home health care

Home health care makes particular sense when you're recovering from an injury or illness and don't need 24-hour care. It also makes sense when the type of care you require is custodial. Home health care is most often provided by a visiting nurse, a therapist, or a home health aide. Often, several visits to your home are made each week to provide you with the appropriate care. This care ranges widely and can include respiratory therapy, cleaning and bandaging of wounds, monitoring health, and assistance with bathing and dressing. .

Adult day care

Adult day-care centers provide care in a group setting for aged or disabled people who live at home. Such people may need help with the basic activities of daily living or perhaps have a slight mental impairment. Often, these people live with a relative who works and cannot take care of them during the day. Adult day-care centers usually provide an elderly person with social interaction, therapeutic activities, preventive health services, and nutritional meals.

Hospice care

A hospice is a place that provides comfort and care for terminally ill patients. This type of care may be provided in a special facility or perhaps at home.

Respite care

Respite care provides some time off for the caregiver (usually a relative) who regularly provides care for an elderly or disabled person. It can be offered in a nursing home (by way of a temporary confinement of the elderly person) or at home through the services of a home health aide.

As always, we are here to help, if you have any questions or need additional information please call us. - John

In This Issue

S&P Persistence Scorecard

Plan Beneficiaries

Home prices "Double-dip"

Long Term Care

2011 Key Numbers

Waived Debt

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News

Brighton Perspective