Hi 1step,
1) The asset allocation module uses the Sharpe Ratio to allocate stocks. The Sharpe ratio does not take fundamental strength into account but only concentrates on reward and risk (i.e. price performance and standard deviation).
ABT apparently had the best reward/risk score over the period you used and that's why it was given the largest allocation.
This touches on a fundamental point when investing using VSS. You should FIRST select stocks with strong fundamentals and strong moats, SECOND buy them when they're undervalued and THIRD, allocate those stocks.
That way you're assured that risk-minimization is built-in at each step. First by selecting great companies (which are at less risk of going out of business), second by purchasing stocks with a built-in margin of safety, and third, by diversifying and optimizing your portfolio to further minimize risk and increase returns.
2) VSS v4.0 is the latest version.
I hope I've answered your questions, let me know if you have any others.
Thanks,
Mark.
